Pro Scalping, by Tommy Charles - page 7
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If you cap it at -20 and then get out with another pip, leaving you with -24
First of all thank you for taking the time to explain these examples, it makes things much more clear.
So lets take the trade from this point. You've capped your trade at -20 and are now waiting to get out at 1 pip. Once that happens you now have an OPEN trade at -24.....what happens now, do you wait for this trade to move all the way back to the discount area before hedging it again? That would be a 20 pips move just to get back to discount. And of course, what happens if it keeps moving against you, say to -30, or how about it just oscillates between -30 and -20? At what point would you have to cap it a second time or does it ever happen that you have to cap a trade twice?
Lets say it just oscillates between -30 and -20, do you just leave it open until it either moves back to discount or needs to be capped again? How long would you leave such a trade open, possibly overnight? Or do you close all trades after a certain time period?
Hope I'm not asking dumb questions, but I'm still trying to wrap my head around all this
Tommy,
I appreciate all the comments you are providing, but I am a bit lost in what you are saying. It looks to me that now you are letting profits run some times to be more than +1. I think people have to try this for themselves and they will understand what I am saying. I dont want to be a negative person here so I will wait for other people to see how it works. Good luck on this one.
If you cap it at -20 and then get out with another pip, leaving you with -24
First of all thank you for taking the time to explain these examples, it makes things much more clear.
So lets take the trade from this point. You've capped your trade at -20 and are now waiting to get out at 1 pip. Once that happens you now have an OPEN trade at -24.....what happens now, do you wait for this trade to move all the way back to the discount area before hedging it again? That would be a 20 pips move just to get back to discount. And of course, what happens if it keeps moving against you, say to -30, or how about it just oscillates between -30 and -20? At what point would you have to cap it a second time or does it ever happen that you have to cap a trade twice?
Lets say it just oscillates between -30 and -20, do you just leave it open until it either moves back to discount or needs to be capped again? How long would you leave such a trade open, possibly overnight? Or do you close all trades after a certain time period?
Hope I'm not asking dumb questions, but I'm still trying to wrap my head around all thisGreat questions, not dumb at all. I realize that this is very unconventional, after all, who would want to close a trade at a negative like I did in the example above. It just doesn't make sense. Actually though, it does, it just requiurs a different angle of thinking. Now, let's be clear that what you are asking about is the worst case scenario. The hole is getting wider, so we capped it, netting another pip in the pocket, but it's still going against us. Let's say it gets to -30 and we only have 2 in the pocket. So closing now would leave us with a loss of 28 pips. What I would do (and have done, but never as high as negative 30) is cap it again. This will widen the hole (cost) for the another chance to get back to discount (benefit) Now if THIS fails then I would close the trade, and open a new play. A new play being a new hedged trade on a different currency pair with spread 3 or lower. In order to recover that loss in one day you would probably have to set your hedge to capture 5 pips at a time instead of 1. I would regain as much of that loss as I can in the time I have left and then stop for the day.
I usually would NEVER leave one of these trades over night. I did last night because I had to get up early and it was 1 AM, I was waiting for the hole to fall to my limit, which would close the play for a gain of 5 pips but it was getting late so I put a stop loss on it and went to bed. I set the stop loss to cut the trade if the hole reached -25. That to me is an acceptable loss given that I can make it up today most likely and then some. Not surprisingly the trade hit my limit at 2 AM, when I was fast asleep, giving me the 5 pip profit.
It traded within the daily range, which is what I expected it to do. If it wants to go up 100 points, fine, but it can do that after it moves the measly 5 points the other way that I need it to give me my profit.
Tommy, I appreciate all the comments you are providing, but I am a bit lost in what you are saying. It looks to me that now you are letting profits run some times to be more than +1. I think people have to try this for themselves and they will understand what I am saying. I dont want to be a negative person here so I will wait for other people to see how it works. Good luck on this one.
I wondered about that myself. The method as described talks about one pip at the time, but the examples given show five pips.
Hey guys, good questions. You can do it either way. The risk is about the same but different in either case. It is a matter of preference. I'm posting 5 pip plays in anticipation that people using this would prefer to go for more pips at a time. Personally I prefer going for 1 at a time, it is a bit faster. Last night I had to wait 3 hours to get the first 5 pips in pocket, but if I'd been trading for 1 I would have had it sooner.
Do whichever you are most comfortable with.
Whether you go for 1,2, or 100 pips at a time the concept is the same. Subtract the pocket from the hole.
cyclesurf, if I were you I'd close this thread now.
The method works.
Don't get 100,000 people using the exploit and coach the slow ones through it as well. It's so simple, and so easily applicable just close it down man.
I wondered about that myself. The method as described talks about one pip at the time, but the examples given show five pips.
No wonder why 99% of forex traders fail.
No wonder why 99% of forex traders fail.
And your point is?
Today's play has me at 10 pips in the pocket with 10 in the hole with only 2 trades.
I forgot to take the screen shot for the first 5 in pocket before it reset at 5 but ill post the other pics.
This one shows the initial hedged trade: