Pro Scalping, by Tommy Charles - page 6
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This is the 'bad trade' of this method. It is however, rare.
I really don't understand why the "bad trade" you describe would be rare at all. In your USDJPY example, once you have taken your 1 pip profit, youve got the other side of that trade at -7. This trade has just as much chance of turning into a "blowup" as it does of moving back into your "discount" area, or am I missing something?
So you've got your open trade at -7 pips. What happens when -7 moves to -10 instead of -4? I mean this has to happen at least 50% of the time, so at what point exactly do you "cap" a bad trade? You said that you would hope that you would cap a trade before it got to -23, when exactly does a trade need to be capped?
Sorry but I still don't understand how you're limiting losses with this method.
Looks like I missed most of the action today, got caught up writing a paper about world systems theory or something to that effect. I did let Don's EA run in the background though and got a little bit of a better feel for things, though I'm not sure it follows the original system 100%. I need to study both more though. Anyway I hope to try and trade manually tomorrow.
As far as offsetting you losses is concerned, I think that is a totally arbitrary choice. 10 pips or 35, whatever you are comfortable with. I think the theory is that by trading only the Asian session you pretty much protect yourself from a major trend and just capitalize on the oscillations waiting for the Frankfurt or London open.
The EA still needs work. It is getting better...
Don
The EA still needs work. It is getting better... Don
Don,
Not sure how involved you want to get, but it might be wise to have take profit (positive pips) based on a 5 min ATR. Taking +1 at all times is counter productive.
Just a thought.
MM
Looks like I missed most of the action today, got caught up writing a paper about world systems theory or something to that effect. I did let Don's EA run in the background though and got a little bit of a better feel for things, though I'm not sure it follows the original system 100%. I need to study both more though. Anyway I hope to try and trade manually tomorrow. As far as offsetting you losses is concerned, I think that is a totally arbitrary choice. 10 pips or 35, whatever you are comfortable with. I think the theory is that by trading only the Asian session you pretty much protect yourself from a major trend and just capitalize on the oscillations waiting for the Frankfurt or London open.
Pretty much, yea. Generally, trading low volume market zones is the idea. We get caught up in the idea that the market trends all the time, because we need it to if we are using systems like MA crosses or Brain Trend, etc. The reality however, is that the market is only really trending about 30% of the time. If it isn't making significant new highs or lows for the hour, your good. Just use ADX set to default settings if you want and only trade when the trend indicator line is below both signal lines. Really, as long as the pair trades within it's high and low for the day, you should be ok.
There are indicators here that calculate daily range on a daily, weekly, and monthly basis, those may be useful too.
This is the 'bad trade' of this method. It is however, rare.
I really don't understand why the "bad trade" you describe would be rare at all. In your USDJPY example, once you have taken your 1 pip profit, youve got the other side of that trade at -7. This trade has just as much chance of turning into a "blowup" as it does of moving back into your "discount" area, or am I missing something?
So you've got your open trade at -7 pips. What happens when -7 moves to -10 instead of -4? I mean this has to happen at least 50% of the time, so at what point exactly do you "cap" a bad trade? You said that you would hope that you would cap a trade before it got to -23, when exactly does a trade need to be capped?
Sorry but I still don't understand how you're limiting losses with this method.Which do you think is more likely, that the trade will go straight to -20, or that it will retrace to -3 first? I have observed that the price is more likely to retrace (fall towards zero) before taking off again. If it does retrace to -20 right off the bat then you can cap it, send some pips to the pocket, and see what it does this time. That' s why I call it a 'play' instead of a 'trade'. This method does not depend on a single movement occurring, and so is much more flexible. If you cap it at -20 and then get out with another pip, leaving you with -24, but what happens if then the hole shrinks to -4? Your good again, that's what. Your floating loss is your hole, and your hole can at any time go straight to 0, leaving you with an easy exit.
Don,
Not sure how involved you want to get, but it might be wise to have take profit (positive pips) based on a 5 min ATR. Taking +1 at all times is counter productive.
Just a thought.
MMI like your signature Mr. Marketz.
Here is the profit from last night's trade:
After having risen so far to give me the 10 pips on the two long trades the market retraced far enough to exit. This is the 'oscillation' that I am talking about. The market has a natural elasticity, like a rubber band, that keeps it more or less in one area for the amount of time that we are in one of these plays. Times of anticipated chaos, like news releases, should be avoided for obvious reasons. Atleast until after the initial rush is over.
I like your signature Mr. Marketz.
I like yours too. Elder opened up my eyes to MTF. I always have 2 screens open. Almost impossible to trade with out it... imo.
Choppy VS Trend
Just so I can be sure that I'm being clear, i'm going to say again that this method seeks to exploit the more commonly choppy low bar time frames. If you look at a 1 hour chart it might look like it is always in either an up trend or a down trend. However, if you were to cut those bars into smaller pieces you would see that it is actually traveling in a tight range. This range might go incrementally lower or higher as the hours pass, but it is usually going back and forth between two key prices while it is doing so. The extremes of these two points from the range that I am talking about. For example, a trader named Sam is using brain trend and he gets a sell signal at 111.11. He waits for the bar to close and then makes his trade. The price falls to 111.07, then comes back up to 111.11. He gets a bit nervous, he was about to make some good profit but now his trade is in negative again. Well, maybe Sam's trade will work for him, but if you were using the method described here you would already have a pip in the hole and you would be reentering the trade for the second pip now. Of course maybe Sam's trade goes straight into profit, leaving us with 1 pip and a high negative hole, but chances are good that Sam's trade will turn around at 15 profit and head back towards zero. When it does we can reenter. Currencies, at lower bar intervals, tend to trade in a range most of the time and it is in fact these so called "choppy" markets which drain the equity from the accounts of 'trend followers'.