Price Action Scalping

[Mike Kshemaraja]

I was in a trade and Oanda widen my spread to more than 10 pips, just to see my SL got hit and my TP reached, *******s, I am looking forward to change broker. That was my 5th trade of the day and I went in red.

6h trade, normal stuff. Took my profit @ 7.5 pips, just at resistance. Finished in Black. But made more money with one trade only yesterday.

I do not feel like I am travelling with the flow today, I feel all kind of contracted. This is my last trade for the day

 

[Mike Kshemaraja]

The following was clearly a bad trade, I got out break even once I noticed my mistake, consciously rid myself of all thoughts of hope, then took my error seriously, see the circle, at the 40 level indicating support at the bottom of the bull flag. Also looking at the more textbook type block breakouts, you want price action to be closer to the edge of the block just prior to the breakout, but PA was >2 pips above for the last 4 bars before the breakout. Perhaps the block was a bit small, the pattern approaching the look a double doji rather than a BB so maybe I should have waited for the block to build up more tension or touch the 20 ema before taking the trade. Also maybe the market was not giving the best signals and I read too much into the news induced spike up just prior to my trade.

Also an important point quoting Bob, p. 151, "Currency trading, like it or not, is a big players game, and the 50-level is arguably their favorite toy." These areas are definitely "unfavorable conditions" type areas.

I think that if you took out all numbers and lines that an experienced EUR/USD price action trader might be able to look at a chart and pick out the 50-levels.

Trade should not have been taken during "unfavorable conditions." Lesson learned, hopefully.

Chart

Chart

Good trade.

I would like to point out tough a trade that I missed and that we should more look into it.

You see were you have the circle? ok, that is a pullback of a uptrend. Notice where it stopped, just at the previous bull flag (left of the pic).

So if you draw a line below that bull flag, the circle pattern just stopped there.
Also you can draw a nice box around that pattern (I will do that later).

The prices broke the box and closed just above the 1.3140.

Bulls were screaming buy buy, I was not listening.

 

[Charticist]

When you start to trade live, I suggest that you risk 0.1% per trade, if at the end of the day, you close with profit, next day you risk 0.2% per trade, if you have a losing day, the following day you risk again 2% per trade, until you get to 1%. Once you get to 1 % you remain there.

You should start with a small account, if at the end of the month you are in good profit, you may add more capital and so on.

Also when you know your game inside out, you can risk as much as 2% per trade, but not more than that.

That is a great plan, thanks. I might add that trading a micro account does give you some some element of a real feel, without much risk.

On the other hand trading demo first allows you to concentrate on the number of pips which is what should be done initially. The move to real money trading must be made eventually and may increase the seriousness taken in the endeavor.

 

[Mike Kshemaraja]

Chart

Good trade.

I would to point out though a trade that I missed and that we should more look into it.

You see were you have the circle? ok, that is a pullback of a uptrend. Notice where it stopped, just at the previous bull flag (left of the pic).

So if you draw a line below that bull flag, the circle pattern just stopped there.
Also you can draw a nice box around that pattern (I will do that later).

The prices broke the box and closed just above the 1.3140.

Bulls were screaming buy buy, I was not listening

Here is the pic.

Today I missed at least 2 to 3 good trades. Never mind, some days is easier, some are not. Keeping focus is essential.

 

[Mike Kshemaraja]

That is a great plan, thanks. I might add that trading a micro account does give you some some element of a real feel, without much risk.

On the other hand trading demo first allows you to concentrate on the number of pips which is what should be done initially. The move to real money trading must be made eventually and may increase the seriousness taken in the endeavor.

Chart

Treat you $500 account like it is $500000.

 

[Mike Kshemaraja]

Here is the pic.

Today I missed at least 2 to 3 good trades. Never mind, some days is easier, some are not. Keeping focus is essential.

And this is my favourite passage of Bob's book:

Nevertheless, the path to failure is paved with traders who were right on direction, yet very wrong on timing. Whether they lacked the proper skills, the right setups, or simply the patience to time their trades is not of our concern. An aspiring scalper should realize, though, that he is just as human and susceptive to the vagaries of the mind as all those who failed before him. To think oneself above that can be a costly mistake that sooner or later may come to collect its debt. Arguably, the only way for a scalper to stand a fighting chance is to acknowledge his personal follies and not deny them. Behavioral scientist belevie that the human mind is not cut out to entertain continuous rational thinking. And they may very well have a point. What’s more, we do not need to look around us, or watch the six o’clock news, to find daily evidence of the constant moronic idiocies dispayed by our fellow human beings, even by those deemed intelligent. One honest introspective look will most certainly bring our own warped view on reality to light, and if we ourselves can dispay irrational tendencies even in the most calm and non-threaatening surroundings, as we often do, then we are best advised not picture ourselves beyond such follies when under pressure in a live market enviroment.
But if we look on the bright side, the inability to dispay rational behavior in a continuous
fashion does imply the ability to do so short term. The trick is to apply these brief spells of mental clarity at the exact moment they are needed the most. Can we really be that selective? I don’t see why not. An excellent trick to counter intuitive folly is to force yourself beforehand, mentally and verbally, to rationally defend your reasons for taking a trade, as oppsed to just pulling the trigger beacuse things look good. Rationalizing your next step will instantly
demobilize a big chunk of potential irrationality. This is crucial concept to grasp; it is also the very reason why I have been so elaborative on the specifics of price action building in any chart as a whole.

Is late for me, take care.
Mike

 

[Charticist]

But if we look on the bright side, the inability to dispay rational behavior in a continuous fashion does imply the ability to do so short term. The trick is to apply these brief spells of mental clarity at the exact moment they are needed the most. Can we really be that selective? I don’t see why not. An excellent trick to counter intuitive folly is to force yourself beforehand, mentally and verbally, to rationally defend your reasons for taking a trade, as oppsed to just pulling the trigger beacuse things look good. Rationalizing your next step will instantly
demobilize a big chunk of potential irrationality. This is crucial concept to grasp; it is also the very reason why I have been so elaborative on the specifics of price action building in any chart as a whole.

Nice quote. My favorite quote now as well.

I am trying to connect what he is saying to my "best decisions".

Currently my best decisions occur after a long term buildup where the direction seems obvious, say after an obvious topping pattern, or one of these obvious defeats of, or poor plays by the bulls or bears. And these "best decisions" take place several minutes before the setup appears, and by that time I am just biding my time waiting for an entry.

Most of the times I imagine the trader does not have a good overall read on the market (even thought they are making a good effort to read the market) and must use that knowledge of not knowing the direction of the market as a rationale to ignore setups and to stay out of the market. It seems to me, Mike, from watching your trading, that the best decisions are those decisions to stay out of the market.

My understanding of this is still a work in progress.

Chart

 

[Mike Kshemaraja]

Nice quote. My favorite quote now as well.

I am trying to connect what he is saying to my "best decisions".

Currently my best decisions occur after a long term buildup where the direction seems obvious, say after an obvious topping pattern, or one of these obvious defeats of, or poor plays by the bulls or bears. And these "best decisions" take place several minutes before the setup appears, and by that time I am just biding my time waiting for an entry.

Most of the times I imagine the trader does not have a good overall read on the market (even thought they are making a good effort to read the market) and must use that knowledge of not knowing the direction of the market as a rationale to ignore setups and to stay out of the market. It seems to me, Mike, from watching your trading, that the best decisions are those decisions to stay out of the market.

My understanding of this is still a work in progress.

Chart

Yes, stay out is a good decision but is the same time, we do not want not to act. So there is a very fine line there. That is why I suggest previously to write down which are the prerogative to a valid set ups, and read them before you trade. If a DD does not meet all my conditions, I will skip the trade, and if that trade makes pips I do not care.
When all the condition are met for a DD setup, I take the trade and if the trade goes against me, I do not care.

What I do care about is that I execute a valid trade and do not an invalid one.

I think if the above is done we will build a mental strength that is required to take our work to higher levels.

The market has many variants, if defined guides are not set we risk to be at the merce' of the market.

To have a piece of mind when dealing with the market is very vital in my view. Maybe the most important thing.

 

[Mike Kshemaraja]

Yes, stay out is a good decision but is the same time, we do not want not to act. So there is a very fine line there. That is why I suggest previously to write down which are the prerogative to a valid set ups, and read them before you trade. If a DD does not meet all my conditions, I will skip the trade, and if that trade makes pips I do not care.
When all the condition are met for a DD setup, I take the trade and if the trade goes against me, I do not care.

What I do care about is that I execute a valid trade and do not an invalid one.

I think if the above is done we will build a mental strength that is required to take our work to higher levels.

The market has many variants, if defined guides are not set we risk to be at the merce' of the market.

To have a piece of mind when dealing with the market is very vital in my view. Maybe the most important thing.

This is what Bob says":

Peace of mind throughout your trading by sticking to your plan is of crucial importance. If you knowingly deviate from your plan by trading prematurely, then your impatience is simple stronger than your calm. Conversely, if you knowingly deviate from your plan by not trading a balid break, the your calm is probably bested by your fear. In either case, what you are essentially doing is trying to outsmart the odds by predicting when a valid setup will fail and when an invalid one will work out. Wouldn’t life be much simpler if we just regard all valid setups as valid an all invalid ones as not. Why not relieve ourselves from the fruitless task of prediction and let probability do the right thing.

 

[Mike Kshemaraja]

Three trades, 3 losses, nothing wrong with the trades (maybe only the first one), market is in a constant trading range.

 

[Mike Kshemaraja]

Three trades, 3 losses, nothing wrong with the trades (maybe only the first one), market is in a constant trading range.

-10, -4.7, scratch, -8.5

 

[Mike Kshemaraja]

Got one back, a DD.

 

[Mike Kshemaraja]

made another back, now I am about 6 pips under.

 

[shadowpug]

So can I use NinjaTrader to import DDE data and view tick charts?

Yes absolutely.

NinjaTrader stock, futures and forex charting software and online trading platform. Use NinjaTrader Free.

 

[billyd]

Hey guys,

Finally found a thread discussing Bob's book. Yay! I've been demoing the methods only so far but this is what I came up with this morning. I'm using 30s charts on oanda so not sure how comparable these are to 70 tick but this looks to be a BB

-Billy

 

[Charticist]

Hey guys,

Finally found a thread discussing Bob's book. Yay! I've been demoing the methods only so far but this is what I came up with this morning. I'm using 30s charts on oanda so not sure how comparable these are to 70 tick but this looks to be a BB

-Billy

Billy,

I am in the same boat and looked far and wide until I found this thread. I finished my first read of the book last week, and am currently trading very small positions. Setups seem clear but there is still quite a bit of grey areas for me in terms of determining favorable conditions.

Here is a mock up of your trade on prorealtime, the 70 tick may have given you the signal on previous high, but your signal was right on. They have a free 7 day trial.

Welcome aboard. Mike will be very happy to see that you posted a chart.

Chart

 

[Charticist]

Yes, stay out is a good decision but is the same time, we do not want not to act. So there is a very fine line there. That is why I suggest previously to write down which are the prerogative to a valid set ups, and read them before you trade. If a DD does not meet all my conditions, I will skip the trade, and if that trade makes pips I do not care.
When all the condition are met for a DD setup, I take the trade and if the trade goes against me, I do not care.

What I do care about is that I execute a valid trade and do not an invalid one.

I think if the above is done we will build a mental strength that is required to take our work to higher levels.

The market has many variants, if defined guides are not set we risk to be at the merce' of the market.

To have a piece of mind when dealing with the market is very vital in my view. Maybe the most important thing.

Well said Mike. I'll begin my second read of Bob's book this weekend, while doing so I can further parse the setups and construct the guide that you recommend.

Chart

 

[billyd]

Very cool to see that lined up with the 70tick chart. Thanks for that. Have you subscribed to prorealtime?

Billy,

I am in the same boat and looked far and wide until I found this thread. I finished my first read of the book last week, and am currently trading very small positions. Setups seem clear but there is still quite a bit of grey areas for me in terms of determining favorable conditions.

Here is a mock up of your trade on prorealtime, the 70 tick may have given you the signal on previous high, but your signal was right on. They have a free 7 day trial.

Welcome aboard. Mike will be very happy to see that you posted a chart.

Chart

 

[billyd]

Mike,

I'm really enjoying reading through your thread and all the trade examples you've shared.

I'd be curious to know if you're willing to share how long you've been scalping with this method?

Are you successful, making a living doing it?

I completely understand that one can earn a steady income with a 50% win rate using 10pip TP and 8 pip SL. Expected value = 10(.5)-8(.5) = 1pip/trade

Are you finding that your winrate is around 50% Mike and are you making around ~1pip/trade over the long run?

Don't mean to put you on the spot but it sounds like you're very successful. I'd love to hear more about it.

Thanks,
Billy

 

[Mike Kshemaraja]

Hey guys,

Finally found a thread discussing Bob's book. Yay! I've been demoing the methods only so far but this is what I came up with this morning. I'm using 30s charts on oanda so not sure how comparable these are to 70 tick but this looks to be a BB

-Billy

Billy

Welcome, please post your chart as you wish.

That looks like a good trade, also bounced from the previous resistance.