Scalping 90% win/loss but how BIG is the loss?

[tar]

Unless you are constantly picking tops and bottoms, this simply is not the case.

I know it is the case . But as i said you have to scan a wide range of different markets ...

 

[tar]

With a 10 pip s/l purely as a safety net. I should hope never

I don't really see how that's relevant though.

Your original argument about activity and probability of targets being hit cuts both ways and it is applicable to stops as well .

 

[ffsear]

Well that backs up my argument in that case. But i'd rather cut a small loss then have a trade underwater and racking up costs for a few days before finally cutting it. I never mentioned targets, they are purely opened ended and are based on experience of reading markets

For the example of this thread of course. Technically i am a position/swing trader who only puts on about 3-4 trades a week and uses much larger stops. This is purely experimental for me.

 

[tar]

I use dynamic targets and stops as well , i don't have to wait for market to hit my hard SL , price action and market conditions will tell me to exit, its not working time to move on .

 

[ffsear]

Plus there always that chance in scalping.. the 10/11/12/20:1 return. If you did pick up that 70 pip move having only used a 5 pip stop then WOW!

As a swing trader, in all my years, a 6/1 r:r is the best i have ever achieved on a trade. ( and tha'ts only because i put the trade on then buggered off to ibiza for 4 days.)

 

[Sigma-D]

Plus there always that chance in scalping.. the 10/11/12/20:1 return. If you did pick up that 70 pip move having only used a 5 pip stop then WOW!

As a swing trader, in all my years, a 6/1 r:r is the best i have ever achieved on a trade. ( and tha'ts only because i put the trade on then buggered off to ibiza for 4 days.)

Spooky. My best trade in the 3 months I've been trading was one which I put on with stops an limits and then had to go out. Which is where I came to the conclusion that you shouldn't be interfering in a trade which you've assessed as having a higher than 50% chance of success, you should just leave the bloody thing alone. But do I? Not on your life.

 

[Forexmospherian]

What is FX noise - for me about 1-3 pips

The devil is in the detail

Au 1 min chart - with scalp sell after top at 9275 - mentioned prior in my thread and also on NVP's thread prior to 4 00 pm UK time

Stops as normal under 5 -7 pips - even show a scalp buy - which could be with a 3 pips stop with brokers cost in there

Please never compare FX trading to roulette - yes chess or other gains of pure skills are more accepted - but not spinning a blooming wheel

Look forward to your definition of "noise" ?

Most traders - what 20 -35 pips - longer term traders - what 40 -70 pips - and me -what - 1 to 3 pips

Trading is all down to your own skill levels and how good you want to be - but it takes years and years to get to a great level


Regards


F

 

[Sigma-D]

Please never compare FX trading to roulette - yes chess or other gains of pure skills are more accepted - but not spinning a blooming wheel

Forex is random. Roulette is random. Your scalp trades are quite random. The only skill (and it is a major one) is in managing loss. If you took all your trades and then did nothing, your results would be extremely poor. But given your expectations in terms of pips, you're able to kill quickly those that don't perform and let the winners run to your average target number of pips, whatever that is but typically in a very short period of time.

On that basis, we could agree a forex pair, I could spin the roulette wheel and you would go long if red, short if black. And we could do that all day and you would manage your trades from the quite random entry and I believe at the end of the day you would have a profit because of your superior risk management skills and experience. Would you agree?

Look forward to your definition of "noise" ?

You could always look backward; post #12 is where I defined it.

 

[Sigma-D]

Noise: For any given timeframe the amplitude of price movement through which you expect it to move both with and against your direction without it being indicative of any major change to the current bias currently being exhibited in that timeframe.

I'll save you the trouble of looking back. Here it is.

Hasn't had any comment at all so maybe it got lost in all the other stuff that was being discussed. Or maybe it was so dire nobody had the heart to tell me.

Top of my head attempt at a definition, which as I think about it now, has certain elements of PnF about it. That's all about filtering out whatever you decide is considered to be noise too.

Time for me to read du Plessis and Rivalland again. Maybe it'll stick this time.

 

[Forexmospherian]

Forex is random. Roulette is random. Your scalp trades are quite random. The only skill (and it is a major one) is in managing loss. If you took all your trades and then did nothing, your results would be extremely poor. But given your expectations in terms of pips, you're able to kill quickly those that don't perform and let the winners run to your average target number of pips, whatever that is but typically in a very short period of time.

On that basis, we could agree a forex pair, I could spin the roulette wheel and you would go long if red, short if black. And we could do that all day and you would manage your trades from the quite random entry and I believe at the end of the day you would have a profit because of your superior risk management skills and experience. Would you agree?

You could always look backward; post #12 is where I defined it.

Hi SD

I would totally agree with you that managing risk and the level of any loss is important and is a very important part of having a successful winning strategy.

However the random part - as you associate with say a roulette wheel is totally different - as i look upon the FX markets movements as not being totally random and not beyond the scope of working out the "bias".

I know personally of a professional gambler who is in his 40's who spends 4 - 6 times a year in Vegas playing on his favourite gaming machines. He has a massive annual gambling budget ( £12 million a year) and he has one main "edge" - that he discovered in his early teenage years - ie He has a photographic memory - and therefore is able on fruit machines to work out sequences that are manufactured.

I do not know how possible it is on a roulette wheel - because normally the croupier would be changed often - so that any bias he has on his throws cannot be calculated over say 200+ throws - maybe when the croupier returns to the same wheel every day - a formulae could be worked out to find any bias with certain numbers - due to many different factors

With Forex Trading it is far easier to find an edge to make sure you probability levels are above 50 /50 and can be as high as over 75% in your favour - even over 1000's of trades.

I know of about 3 "edges" I have discovered and use myself - one that i discuss openly - and that is time windows around the 30 min and 60 min frame changes.

There is a sequence - and is so common - and happens many times a day on all pairs.

In fact my chart example on the AU - shows it happening at 3 51pm UK time today.( start of the hr time window)

These sequences are not totally random - I can assure you of that - otherwise I have been the luckiest gambler ever over my last 5 -7 years of FX trading.

The market for me is controlled random manipulation.

Many suggest its say millions of traders - all buying and selling against each other every hr of the day - and one groups say bulls win one period and then the bears take over - etc etc.

Really though - its not like that at all.

You can have say 100k of retail traders all selling the EU - because their charts supported by PA and a few technical theories suggest a lower price. This takes place for 30 minutes or even hours and price starts to fall - and more join in.

Meanwhile a few big players - ie say a couple of banks or large hedge funds etc - have a time and a "window " to place a massive buy on the EU.

They are encouraged by seeing the EU fall - and actually having a good idea on what volumes of sells and money is involved in it falling. They can to put it frankly "out-trump" the sellers simply due to their size.

So say 2 commercial organisations - can in fact take out 100's of thousands of retail traders - and basically change the ball game.

The market is moved by money and via buying and selling - so it make sense if you are large enough - to try and take that money out of the market - and claim it as profits - as maybe many 100's of millions etc are needed to be able to do it.

They will not be able to win all the time - simply because other large banks or organisation have a different plan or "agenda" and then it might end up as a proper "tug of war" match - rather than men against small boys ( ie us the retailer traders)

Also - you need to think more out of box - as ffsears has mentioned - no fixed targets and exiting - play with stake sizes and locking in profits and build on it and then that initial 5 - 10 pip stop - of risk might end up as 30 - 50 or even 500 pips - and so one trade with a RR of say 20 or even 40 - can certainly allow you a load of consecutive losers - without any worry

The market is dynamic and is always changing - within certain parameters.

Discover them all - and you are on your way

Have a great weekend and don't spend to much time reading about the past theories - there are many new ones all started within the last 10 yrs that nowadays have far more credence

Regards


F

 

[Sigma-D]

There is a sequence - and is so common - and happens many times a day on all pairs.

In fact my chart example on the AU - shows it happening at 3 51pm UK time today.( start of the hr time window)

These sequences are not totally random - I can assure you of that - otherwise I have been the luckiest gambler ever over my last 5 -7 years of FX trading.

What is the sequence?

 

[Forexmospherian]

What is the sequence?

Top marks - you SD will go far in life - asking the correct question is always key to what ever you do in life

There are 24 hrs in the trading day - ie 24 x 60 mins = 1440 minutes

My daily window of opportunity is normally 12 hrs - ie 6 00 am UK time to 6 00pm.

12 hrs = 720 minutes of movements and do I want to be glued to my screens for that amount of time a day ?......... - correct - NO

So - break every 1 hr down into 2 sections - each one spreading 18 minutes - so your 60 mins as now been compressed down to 36 mins out of every 60 minutes.

Now from 720 minutes a day - I am down to 432 mins to cover only (approx) - still over 7 hrs a day to cover ................ too much still

Micro manage - in those 432 minutes and then you can use my time windows - mentioned every day on my thread - (and also the trading system thread) thats cuts every 60 mins to basically 12 -13 minutes of watching the charts for the other clues as well.

I am now down from 720 minutes a day to 432 mins and now with micro management after watching live charts for thousands of hrs to 12 hrs x 12 = 144 minutes - or 12hrs x 13 = 156 mins

I take approximately 10 - 20 intraday trades a day spread over a 12 hrs period( the main busy period of the 24 hr day) and i am taking them all in the 144 -156 minutes i check my charts every day - ie less than 3 hrs work a day in true "focus" time.

The one i posted on the AU started at 3 51 pm - 9 mins to the hr. - others might be 1 min past the hr change or the 30 min change - or even 9 min past

Why 10 -20 trades ?

Well I am not going to have 100% success every day - and I don't really know whether the first few hrs will be busy or not - and also factor in news announcements - are the main ones pre US open - or all in the US session.

So I never know whether i will take 10 trades by lunch time - and get every one right clock up 100+ pips and then finish - or whether I struggle to find 5 trades and get 3 wrong - meaning the US session is important to me to help me get my 50 pip daily target

The market is dynamic - I need to be - my micro management helps me to look at the high probability times and then using other high probability clues - guess what - I make money most trading days of the year

Hope that helps


Regards


F

 

[wallstreetwarrior87]

Noise: For any given timeframe the amplitude of price movement through which you expect it to move both with and against your direction without it being indicative of any major change to the current bias currently being exhibited in that timeframe.

I didnt forget you Sigma:cheesy:

Nice statement, so an observation if I may;

So basically you are saying, if you are trading off a 30 min chart, it is the action of the traders using a 10 min or 5 min chart? So noise to you could actually be a sweet, harmonic symphony to traders trading a lower time-frame/interval?

Can you see where i'm coming from? If you then decided to trade off a 5 min chart, the same "noise" would exist for you, and the same sweet music would also exist for 1 min/ 2min traders.

Then if you traded from a 2 min chart, your noise would be the sweet sweet sounds of traders using a 30 second chart.

How far can you go??????????

Also consider this;

For the traders using a 4 hourly chart - they may not even see the "noise" that is ringing on a 2 min chart, but it does not mean that it is not happening, it is just not relevant to them.

So does noise really exist?

Or is it more to do with perception

 

[Sigma-D]

Top marks - you SD will go far in life - asking the correct question is always key to what ever you do in life

I'd likely go even lot further with some specifics.

What is the sequence?

You've posted at length about your your daily ritual which was interesting but may well be idiosyncratic. What you did specifically say was that there was a sequence - you explicitly intimated it in a reference to audusd at 3.51 pm UK - a sequence relating to price action. What was the sequence?

 

[Sigma-D]

I didnt forget you Sigma:cheesy:

I wasn't pushing, I just figured my response had landed in the middle of a more immediate and interesting debate and had understandably been overlooked.

Nice statement, so an observation if I may;

So basically you are saying, if you are trading off a 30 min chart, it is the action of the traders using a 10 min or 5 min chart? So noise to you could actually be a sweet, harmonic symphony to traders trading a lower time-frame/interval?

Can you see where i'm coming from? If you then decided to trade off a 5 min chart, the same "noise" would exist for you, and the same sweet music would also exist for 1 min/ 2min traders.

Then if you traded from a 2 min chart, your noise would be the sweet sweet sounds of traders using a 30 second chart.

How far can you go??????????

Also consider this;

For the traders using a 4 hourly chart - they may not even see the "noise" that is ringing on a 2 min chart, but it does not mean that it is not happening, it is just not relevant to them.

So does noise really exist?

Or is it more to do with perception

I'll give your comments deeper consideration as they feel particularly relevant.

But what I so poorly explained was my sense that at any given time for any given instrument there is a recent volatility which defines noise i.e.the price moves hither and thither but doesn't maintain or sustain any determined intent. That's the noise - the amplitude trough to peak that has not gone anywhere. Then you get a move which is outside the currently established amplitude - sticks out like a sore thumb.

Take audusd as an example on a 15 minute chart.

From 03:30 BST on Friday it didn't move out of a 9270-9278 range - 8 pips. Noise.

At around 10:00 it had moved down outside that range and provided an astute trader an opportunity to short.

The tick and 1 min and 5 min traders who have no lower timeframe to consider as noise may or may not have been scalping fractional pips for glorious profit all the while (unlikely), but my point is, it is completely irrelevant. For someone trading the 15 minute chart, their assessment of what constitutes noise was sufficient for them to establish a basis point form which to initiate a trade.

On the next trading day, for this pair, the amplitude could well be different - 2 pips or 20, but having established what is to be considered 'noise' we also establish what is not.

I realise I've just talked myself into suggesting I'm a range breakout sort of guy. I hadn't' previously thought about that.

 

[Sigma-D]

If my hypothesis above has legs, it also suggests that where amplitude represents a significant (TBD) fraction of typical daily range then we're in whipsaw/consolidation phase and no directional trade makes sense.

 

[Forexmospherian]

I'd likely go even lot further with some specifics.

What is the sequence?

You've posted at length about your your daily ritual which was interesting but may well be idiosyncratic. What you did specifically say was that there was a sequence - you explicitly intimated it in a reference to audusd at 3.51 pm UK - a sequence relating to price action. What was the sequence?

Well if you look at the sequence as an ordered list of events - then as I have said -

eg - From say 6 00 am or 7 00 or 8 00 am - ( to suit you) every morning - look at your charts - and expect to see some changes every hr every approx 9 mins and then every approx 14 mins ongoing - throughout the whole day.

Sometimes the price movements will carry on in the same direction - up or down - then as happened on the AU - at 3.51 pm on that day ( 9 mins to the hr - and in the hr time window) the price stopped at its interim high level - and then fell or retraced

If you want me to show a load of old chart shots of chart shots with prices changing directions at say 8 39 am or at 9 15 am or at 10 09 am or at exactly 11 00 am or at 12 21 pm or exactly 12 30 pm or at exactly 3 00 pm or at 4.21pm etc etc - ( there is a sequence as you might spot)

So in a 12 hr period if there is 24 or 36 or 48 - or more of price changes worth over 5 or 7 pips + - its then up to you as a trader - to sift out the best - and trade them- the best being the ones that also are aided by other clues - ie OB / OS - patterns / S & R / etc etc

With regards to noise and your comment on say 8 pips as noise

Well an 8 pip move to me can be a RR of 1.4 to 2.

So if I place $50 per pip on entry with a spread of 0 5 - 1.5 pip and allow 3 pips on top and the move goes my way by 8 pips - I have netted $400 gross with then the cost to come out - leaving say $320 - $360 net

That move may last 3 mins or 10 mins or even a long 20 minutes - so I would expect to take many a day

Meanwhile other traders may risk the same as me - ie $50 x 5 pip stop - ie $250 on a trade - eg - 35 pip stop and have a target of 70 pips - but pull after say 2 hrs at 52 pips - ( not to bad)

There results would be 35 pip stop - $250 risk - so they would have $7 14 cents per pip - and there win on 52 pips would be - $371 gross and then after costs say $350 -$360 net

These traders are happy at one or two similar trades a day - and delighted if both win. if one loses - they have got a profit - but nothing to write home about

Meanwhile - i am after 10 -20 trades a day and delighted if I only have 1 -3 losses - and even if I have 5 losses - still might end up over my 50 pip target

Hope this helps again

Regards



F

 

[SpencerTyler]

Scalping was my way of trading... but it just left me with too much excitment and in order to cut my lossess earlier, I even CUTTED my good trade coz of fear which slightly went in to the red zone... But now I am quite happy with my non-scalping trend riding