simple scalping strategy

[andrewmooton]

I have a simple scalping strategy i'd like to share. I use it for forex trading:

use a 3 or 5 min bar chart and look for swings. when the trend reverses using stochastics (13/8) then pull the trigger.

example: on the chart the trend has been up, when the market pulls back and the indicator crosses down also, DO NOT take the short trade as the trend is still up. Once the market stalls on the downside and the indicator crosses to go up go long. Stay in for 20 - 30 pips and the get out.

Thats it!


Hope someone finds it useful.

 

[blade]

I have a simple scalping strategy i'd like to share. I use it for forex trading:

use a 3 or 5 min bar chart and look for swings. when the trend reverses using stochastics (13/8) then pull the trigger.

example: on the chart the trend has been up, when the market pulls back and the indicator crosses down also, DO NOT take the short trade as the trend is still up. Once the market stalls on the downside and the indicator crosses to go up go long. Stay in for 20 - 30 pips and the get out.

Thats it!


Hope someone finds it useful.

As long as it works for u, thats all that matters but I will look at it. What pairs have you traded with it?

 

[waverider]

Thanks Andrew, I've been looking for / contemplating a good start point for a forex scalping strategy. It's always an advantage to try one that someone else has used - how successful have you been with it?

You don't mention stops - at what point do you decide its not working and exit?

And what sort of ratio of successful to unsuccessful trade do you get with it? With a win target of 20 pips and a spread/slippage cost for me of 3-5 the ratio needs to be reasonable.

WR

 

[TheBramble]

I have a simple scalping strategy i'd like to share. I use it for forex trading:

use a 3 or 5 min bar chart and look for swings. when the trend reverses using stochastics (13/8) then pull the trigger.

example: on the chart the trend has been up, when the market pulls back and the indicator crosses down also, DO NOT take the short trade as the trend is still up. Once the market stalls on the downside and the indicator crosses to go up go long. Stay in for 20 - 30 pips and the get out.
.

Good start Andrew.

What's a swing?

What's a trend?

You know I'm being helpful....

 

[TWI]

Bramble has key point here, you need to decide what is trend...Could be as simple as price above or below MA. In addition.
What is a trend reversal in stochastic? is this when K crosses D ? is this only above/below certain levels e.g. 20/80?
How do you decide to take 20 or 30 pips as 20-30pips usually means 20 pips?

Need more definition of rules.

 

[BBB]

Well it sure is simple - which is a good start.

You may want to look at the original stochastic indicator developed by Ralph Dystant, rather than the crude attempt developed by George Lane which you will find on most packages today.

If you are going to use indicators, make sure you know how and why they are constructed, and of course, how to use them properly. For example, which side of %D will a valid crossover signal be generated, why?

Make sure you dont end up trading the indicator itself, rather than price.

 

[andrewmooton]

sorry for not replying for a while but ill try and answer you all in 1 reply.

blade: i've tried it with eur/usd and gbp/usd

waverider: i've only just started with it really and all the times i've attempted to use it it has worked for me. with regards to stops, i dont really have any set criteria, which is a bad thing but I was thinking of getting out when the stochastic turns back the other way if it does indeed go back the other way before i get my 20 -30 pips.

bramble: i would define a trend as when its not consolidating and a swing as a price bar pattern such as a 'spike' in the middle and two lower highs and lower lows either side of the spike, with the 'spike' itself having a higher low than the two price bars either side.

thanks for all your advice and your encouragement.

 

[John Cyprus]

Andrew that strategy was taught to me by Sandy Jadeja and he did say that there is more to it as he himself had developed the rules for entry and exit with other factors built in. I watched him trade this live and was amazed by the results which propmted me to learn more.

I have been using this as he taught me for the last few months and I must agree it works well. My stops are tight and my returns are usually around 400% plus on average.

He also taught me some other techniques but from his latest newsletter I dare not divulge this as I want to stay on the group list.

But anyway the Euro has made me happy for the last few weeks and I'm sure you will be happy with this.

JC

 

[Coinz]

I thought "scalping" was taking quick 2 to 4 pip *snips* then backing out.

//shrug//

Whereas, taking 20 to 30+ clips is more in the definition of small range position trading.

 

[TheBramble]

That's correct Coinz. But if you were in for a scalp and the possibility of a 20/30 point clip presented itself - would you take it - or would you scalp? Or would you even be aware of it?

Genuine question. Do scalpers ONLY look to scalp or do they have an eye to what the price might be doing longer term - say 10 mins.

 

[layman]

Thanks for that Andrew.

 

[randalfrost]

I thought "scalping" was taking quick 2 to 4 pip *snips* then backing out.

//shrug//

Whereas, taking 20 to 30+ clips is more in the definition of small range position trading.

Coinz,
After being banned in ET, you're here. lol.

 

[TWI]

Genuine question. Do scalpers ONLY look to scalp or do they have an eye to what the price might be doing longer term - say 10 mins.

Usually have eye on longer term in order to know direction you are scalping. Very rare to leave position on beyond a ticks as chances are you can be in and out for a tick 3 to 4 times before you can take 2 or 3 ticks out by leaving a position on. Additional ris of leaving position on is that you also risk the tick disappearing and the position being scratched if you do not take the single tick when it is there.
As far as I am concerned not only is the tick on the table worth two in the future but also turning it around 3 times will contribute more to volume rebates from exchange.

 

[jimvt]

Usually have eye on longer term in order to know direction you are scalping. Very rare to leave position on beyond a ticks as chances are you can be in and out for a tick 3 to 4 times before you can take 2 or 3 ticks out by leaving a position on. Additional ris of leaving position on is that you also risk the tick disappearing and the position being scratched if you do not take the single tick when it is there.
As far as I am concerned not only is the tick on the table worth two in the future but also turning it around 3 times will contribute more to volume rebates from exchange.

Absolutely.

 

[Naz]

Andrew check out stochastics 8/3 and see how you get on with that on Forex.

I play pullbacks in uptrends all the time,they're good moves.However i wouldnt want to place all my faith in stochastics with a US stock.If there was fresh air on the bid as the stock rose you'd be looking at another leg down.

 

[TWI]

Twalker... do me a favor... **** off.

I would try to help but I don't understand your *'s. Also cannot get used to the way you septics drop your u's.

Speaking as a trader and prepared take a view I would predict that unless you change your style slightly we will be unable to continue this fruitful dialogue.

 

[TWI]

Ahh, I see my prediction came true already.

 

[Coinz]

Predict this.... You're banned. :cheesy:

CM

 

[FetteredChinos]

cheers Coinz. nice to have you drop in.

this ain't ET here mateypants. lets try to be courteous to one another..

who wants a fruit gum then?

 

[TWI]

Coinz,
I thought California was supposed to be a laid back place. I can only assume you are the direct result of having a Terminator for Governor (His speech in NY yesterday shows he has not progressed beyond that character) or you are descended from a lab rat subjected to the CIA's experiments with psychotropic substances.