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Scalping vs Swing... again

  • #1
  • First Post: Apr 16, 2015 5:20am Apr 16, 2015 5:20am
Hello,
I just wonder what your opinion on that is. We all know that the volume of trades made by retail investors like us is extremely low compared to that of banks and other financial institutions. So if banks decide to buy/sell currency they usually make decision based on a combination of fundamentals (interest rate parity, inflation rate and monetary policy expectations) rather than technical indicators. If technical indicators taken into equation then probably we are talking about at least daily time frame to distribute large volumes across.
So I am thinking…what is the logic of using technical indicators on the lower TF’s below daily if everything what we see is based on uncontrolled flow of massive volume form banks, organizations or hedge farms etc.
There is no simply way to predict anything at this point unless your stops and targets are big.
Having said that people here successfully scalping. Lucky or educated guess?
On the collision course with 90/90/90 rule
  • #2
  • Apr 16, 2015 10:52am Apr 16, 2015 10:52am
Quoting ipoppy
... to distribute large volumes...
Exactly...volume and order flow are what drive the markets...on ANY time frame...in fact they are ALL the SAME TIME FRAME. Time is just another variable in the equation. (if you use them).

Quoting ipoppy
...There is no simply way to predict anything...
This is absolutely correct....one cannot predict the next tick with any consistency...what makes you think that one could predict what will happen in the next hour, day, or month? It is foolish to even try.

Quoting ipoppy
...Having said that people here successfully scalping. Lucky or educated guess?
Neither...skill

This skill comes in learning to "see" the order flow that creates "price action". "Seeing" a recurrent theme across ALL time frames and exploiting that to your advantage. While more difficult in the retail space to accomplish it IS absolutely possible to accomplish and master.

Happy to help if I can.
  • #3
  • Apr 16, 2015 11:36am Apr 16, 2015 11:36am
Quoting ipoppy
Hello, I just wonder what your opinion on that is. We all know that the volume of trades made by retail investors like us is extremely low compared to that of banks and other financial institutions. So if banks decide to buy/sell currency they usually make decision based on a combination of fundamentals (interest rate parity, inflation rate and monetary policy expectations) rather than technical indicators. If technical indicators taken into equation then probably we are talking about at least daily time frame to distribute large volumes across....
The reality is the lower tf, is what creates what you see on the HIGHER TF. The market boils down to only three things based on my opinion. Extension, Reversal, and accumulation (range). Simply looking at how your fellow traders trade will reveal to you that they IGNORE those three aspects, thus winning sometimes, and losing most of the times. Simply think about it in terms of being on a highway. You have 4 lanes on a freeway. A swing trader (comparing him/her to commuter) will decide which trade (lane) to take, based on factors like "That lane would most likely have traffic because......" While a scalper would move in and out of lines (looking to be crazy by those who are less aggressive) while most importantly following through traffic.
A scalper would enter a position for what ever reason, but decide to close based on the law of "extension, reversal, or accumulation". Swing trading deals more with "bias" which at best is a coin toss, and leads to horrible positions.
Imagine the world without the ability of question being asked.
  • #4
  • Apr 16, 2015 11:59am Apr 16, 2015 11:59am
Hello i think scalping is more intresting,but take a lot of time
What is intresting. Which time frame for scalping are using? 1 min or 5 min?
How you calculate short term volatility?
Do you use mean reverion strategy?
Waht y prefer flat or trend,high,low volatility periods?
(for example you have ema(50) line price goes little down and then mean reversion to ema(50 back) So you will buy,sold when Short period CCi(7), or RSi(7) will overbought oversold?
  • #5
  • Apr 16, 2015 8:31pm Apr 16, 2015 8:31pm
Quoting fintrd5
Hello i think scalping is more intresting,but take a lot of time What is intresting. Which time frame for scalping are using? 1 min or 5 min? How you calculate short term volatility? Do you use mean reverion strategy? Waht y prefer flat or trend,high,low volatility periods? (for example you have ema(50) line price goes little down and then mean reversion to ema(50 back) So you will buy,sold when Short period CCi(7), or RSi(7) will overbought oversold?

I believe if you scalp, "over-bought" and "over-sold" should never be in your trading vocabulary. Reason being that "over-bought and over-sold" has nothing to do with "extension", "reversal", or "Accumulation". Being that no "indicator could tell you how the next candle will close, we should not even consider using any of them when we scalp. Example, you will see indicators say "Overbought", and once it does you will see people take sells, without 1 engulf of the green candles. That order (the sell) goes against the rule of "extension", "reversal", and "accumulation".

I think you should use the 5m or 15m and first be able to identify "accumulation". Once you have that, the breakouts, reversals and extensions will be as clear as day. If you need any help, it would be my pleasure to share all the information I have. Simply ask away.
Imagine the world without the ability of question being asked.
  • #6
  • Apr 17, 2015 1:18am Apr 17, 2015 1:18am
Quoting HowAreYou
{quote} .
So recommend lso using reversal and accumulation candles patterns for enter,exit right?
  • #7
  • Apr 17, 2015 2:03am Apr 17, 2015 2:03am
Quoting gspajon
{quote} Exactly...volume and order flow are what drive the markets...on ANY time frame...in fact they are ALL the SAME TIME FRAME. Time is just another variable in the equation. (if you use them).
Of course I am not an expert but I am guessing that starting point for distributing large volumes will be based at least on daily timeframe. What will happen on lower TFs is not relevant anymore and is simply reaction to large volume distribution and that is exactly my point.everything below daily timeframe is hectic, confusing and cannot be trusted for any technical analysis, but then again, you still can draw/see clear S/R lines on 5M chats!

Quoting HowAreYou
{quote} I think you should use the 5m or 15m and first be able to identify "accumulation". Once you have that, the breakouts, reversals and extensions will be as clear as day. If you need any help, it would be my pleasure to share all the information I have. Simply ask away.
I do tend to believe more in your theory rather than some Eliot waves etc. There must be some visible areas of accumulation before expanding either way. How to spot the difference? Well, I wouldnt mind to get some pointers from you.
On the collision course with 90/90/90 rule
  • #8
  • Apr 17, 2015 4:35pm Apr 17, 2015 4:35pm
Quoting ipoppy
{quote} Of course I am not an expert but I am guessing that starting point for distributing large volumes will be based at least on daily timeframe. What will happen on lower TFs is not relevant anymore and is simply reaction to large volume distribution and that is exactly my point.everything below daily timeframe is hectic, confusing and cannot be trusted for any technical analysis, but then again, you still can draw/see clear S/R lines on 5M chats!.
That is because you are relying on "technical analysis" and the (to be kind) "inaccuracies" they propagate. The only ones who make money from those methods are the ones who charge for selling them and/or "teaching" the garbage they claim to do.

All time frames show the SAME price you see on the right hand edge...the only difference is how much history you see on the left side and how that history is organized...it is still the same history...and has NOTHING to do with the present and even less to do with the future.
  • #9
  • Apr 17, 2015 11:26pm Apr 17, 2015 11:26pm
Quoting ipoppy
Hello, I just wonder what your opinion on that is. We all know that the volume of trades made by retail investors like us is extremely low compared to that of banks and other financial institutions. So if banks decide to buy/sell currency they usually make decision based on a combination of fundamentals (interest rate parity, inflation rate and monetary policy expectations) rather than technical indicators. If technical indicators taken into equation then probably we are talking about at least daily time frame to distribute large volumes across....
IMHO,
I think even scalper can succeed because most of the successful one are discipline enough.
lets say the bullish movement is 100pips. Swing trader eat 50% of those or more. in this case maybe 50pips or 80pips or more or maybe less..
for scalper they just take buy entry 5-20 pips max?then they entry again take the retracement, take sell entry 5-10pips or so. then entry buy again, etc.

same i think. we can gain pips whatever our strategy. because we follow the same movement. just different entry/exit therefore there's also difference in pips gained per trade.

even scalper have to be very discipline about their SL, if they can't cut loss fast then it's not good.
if they can take SL fast, and move on next trade then they maybe have another chance.

just my 2cents..
  • #10
  • Apr 18, 2015 3:45am Apr 18, 2015 3:45am
This is a difficult question.

I think the most reliable technical analysis comes from the bigger time frames, especially the daily one. And that is ALTHOUGH trading here relies on fundamental aspects. But think about it: All fundamental aspects known until today have already been considered in the price. Otherwise, it wouldn't be where it is right at that moment in the market. Coming from that, the chart represents how the fundamental analysis was taken into account in the past. TRENDS emerge. And these trends are used for technical analysis. Daily charts often represent a nice and steady trend.

There is movement, then retracement and then outbreak. That's where technical analysis comes in. Institutions will wait for retracements in price because they know, it has to come some day. That's the state that you call "overbought" or "oversold". They will let it retrace and then decide to enter again. Institutions are not trading their whole volume at once. They are "stepping into" the market.

Now all this is of course affecting the smaller time frames as well. And the smaller time frames also have working trends that can be used in the exact same way that the higher ones are used by institutions.
But the important thing to remember is: You never know when one of the "big boys" will enter the game. So it is crucial to always consider the higher time frames aswell before entering a (swing) trade.

From my experience, the best results come when I am trading trends on a smaller time frame when a retracement seems to have ended on the higher time frame or when there is an outbreak creating a new high / low.

My two cents to swinging. Now onto scalping:

Scalping is a technique that puts risk into money rather than the market. You just want to take advantage of the short-term movement. The dangerous thing with this kind of trading is that you are always prone to the "noise" in the market. On tic charts or 1 minute chart, technical analysis does work too - but because the volume is so small it is always possible that the price is affected by other traders who trade different signals in such a way that you get stopped out of the market. I, for myself, have come to the conclusion that scalping is too much "gambling" for me to seriously consider it for a long-term strategy. With long-term, I mean a strategy that I might use over a longer period of time. But that doesn't mean it can't work - it just doesn't work for me.

On the other hand, scalping definetly provides an opportunity to make a lot more money due to the sheer amount of signals you get during the course of a trading day. It also makes trading more "thrilling". Whether that's a good or a bad thing, is dependant on your personality.

Overall, I would say there is no "better" or "worse" that is universally applicable. Everyone has to decide for himself what is suited to him better. I hope I could give you some insight into the pros/cons of these trading methods and what mindset is needed to effectively trade them.
  • #11
  • Apr 19, 2015 3:41am Apr 19, 2015 3:41am
For me its mid to long term trading
FXlobster
  • #12
  • Apr 19, 2015 7:41pm Apr 19, 2015 7:41pm
If you scalp, there will be many more false signals (aka 'noise')

If you swing trade with higher TF's (using daily charts) you will have a lot of more quality trades plus your stops and take profits would be further apart, so the chances of getting stopped due to 'noise' will drop dramatically.
Losers only have goals but winners have goals with a system - 'Scott Adams'
  • #13
  • Last Post: Nov 23, 2015 11:48pm Nov 23, 2015 11:48pm
Quoting HowAreYou
{quote} I think you should use the 5m or 15m and first be able to identify "accumulation". Once you have that, the breakouts, reversals and extensions will be as clear as day. If you need any help, it would be my pleasure to share all the information I have. Simply ask away.

Hi

I do use this technique, what I'd like to know is, is it a good idea to enter a trade by using a 1 minute chart after identifying buying/selling on a higher timeframe chart say 30min or 1 hour chart?

Thanks
The loss was not bad luck. It was bad Analysis - D.Einhorn
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