Scalping

An update - I hope this image will show what the problems are.

Talking Points:

• Scalpers should look to systematize their approaches and strategies.
• Multiple Time Frame Analysis can help day-traders see ‘the bigger picture.’
• Traders can use MACD to initiate positions in a day-trading approach.

When a scalper begins their day, there are usually quite a few questions that need to be answered before ever placing a trade.

What’s moving the market this morning?
Which markets are most active?
What drivers (or news) might come out to push the market further?
Is my coffee ready yet?

These are just a few examples… but suffice it to say that those who are day-trading in markets have quite a bit on their mind every single trading day.

In this article, we’re going to look at how day-traders and scalpers can look to integrate MACD into their trading strategy.

The Setup

Before a scalper ever triggers a position they need to first find the appropriate market environment.

For fundamental-based traders, Multiple Time Frame Analysis can be helpful; but more important is their outlook or opinion and the fact that that outlook or opinion should mesh with the ‘bigger picture’ view of what’s going on at the moment.

For scalpers, the hourly and 4-hour charts carry special importance, as those are the ideal timeframes for seeing the bigger picture.

After that, traders should look to diagnose the trend (or lack thereof).

A great indicator for investigating trend strength is the Average Directional Index (ADX). Also popular for investigating trends is the Moving Average Indicator.

In the below graphic using a 4-hour chart on GBPUSD, a 55 period Exponential Moving Average is being used as the ‘trend tool.’ If prices are above the moving average, the trader looks to only scalp to the long side (in the direction of the price relationship with the Moving Average). If prices are below the 55-period moving average on the 4-hour chart, then only short positions are investigated.

Using a 55-period EMA as a ‘Trend Tool’ on the 4-hour Chart before looking for scalp-positions




The Entry

After the day-trader has found a promising setup, they then need to decide how to trigger into positions, and MACD can be a very relevant option for such situations.

Because the trader already knows the direction they want to trade in, they merely need to wait for a corresponding signal via MACD to initiate the position.

When MACD crosses up and over the signal line, the trader can look to go long.

After a long position is triggered, the trader can look to close the position when MACD moves down and under the signal line (which is usually looked at as a sell signal, but because you did the ‘bigger picture analysis’ with the longer-term chart, this is merely a ‘close the long signal.’)

Scalpers can trigger positions when MACD Signal takes place in direction of their bias




On the other side of this equation: If the trader had determined the trend to be down on the longer-term chart or if their fundamental bias is pointing lower, they can look for MACD to cross down and under the signal line to trigger their short position.

And once MACD crosses up and over the signal line, the trader can look to cover their short position.

Scalpers can close positions when opposing MACD Signal takes place




The Context

The aforementioned approach can work phenomenally in a day-trading/scalping approach. But the fact-of-the-matter is that scalping profitably entails a lot more than just a trading plan, and an entry strategy.

Risk management is the undoing of most new traders; and day-traders and scalpers fall victim to this susceptibility even more so than most.

--- Written by James Stanley

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Talking Points:

• CCI is a momentum oscillator used for Overbought / Oversold values
• CCI can be used in conjunction with a MVA to determine trading signals
• Scalpers can time entries when momentum returns with the trend

Timing entries is one of the most difficult parts of trading retracements in the trend. This is especially true for scalpers looking to take advantage of quick changes in price and momentum in the market. Normally an oscillator can be used to simplify this process and give traders a clear execution signal. Today we will review using the CCI (Commodity Channel Index) oscillator for scalping trends. Let’s get started!

CCI and Overbought / Oversold Levels

If you are already familiar with RSI, Rate of Change, or other oscillators you are one step closer to trading with CCI. Like many oscillators, CCI uses a mathematical equation to depict overbought and oversold levels for traders. Pictured below is CCI, which uses a +100 reading to indicator overbought conditions, while a reading below -100 represents an oversold level.

Normally 70-80% of the values tend to fall between these points, which can be interpreted as buy or sell signals. As with other overbought/oversold indicators, this means that there is a large probability that the price will correct to more representative levels. Knowing this, trend traders will wait for the indicator to move outside of one of these points before reverting back in the direction of the primary trend. Let’s look at an example using the strong trend on the GBPCAD.

Learn Forex –CCI Overbought / Oversold



Timing a CCI Entry

Below we can see an example using a 5minute GBPCAD chart. The currency pair is in an established uptrend with price remaining above a 200 period moving average. Knowing this, trend traders should look to initiate new buy positions. The primary way of timing entries with CCI in an uptrend is to wait for the indicator to move below -100 (oversold), and enter into the trade when CCI moves back above -100. This creates an opportunity to buy the currency as momentum is returning back in the direction of the trend. In the event you are trading a downtrend, the process can be reversed. Trades to sell can be timed as momentum pulls the indicator back beneath an overbought value.




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• Always identify market conditions prior to trading
• Your strategy and entries should reflect the market
• Plan your risk and write your trades down to stay accountable

Traders should have a checklist to consult prior to making any major trading decisions. These steps are critical for Forex scalpers as they often have to make these choices on a moment’s notice. To help with the process it can be helpful to keep a checklist and determine your options prior to approaching the market. Today we will review the scalper’s checklist. Let’s get started!

Identify Market Conditions

The first task assigned to day traders and scalpers is to identify market conditions. Is the market trending or ranging? Is the volatility of an asset low or high? These are both important questions that should be answered prior to entering into a new trade idea. Not only will this help Forex traders which currency pair to trade, but also help determine their strategy. Every scalper and day trader should check this off their list, prior to considering any market entries!



Choose a Strategy

Once market conditions are found, traders need to identify a strategy that is congruent with the market. If you are trading a trend, you will need to not only find market direction but also decide if you are going to trade a retracement, momentum or breakout strategy. In lack of a trend, traders again need to decide how to approach pricing patterns, support & resistance values, as well as potential breakouts. With so many strategies to choose from, it is worth taking your time and doing your due diligence prior to checking this off your scalping list.

Plan Your Entry

Next traders need to select how they are going to enter into the market. Typically traders need to first determine if they will trade with market orders or entry orders. Market orders allow you to trade immediately if conditions are met and you are immediately in front of your trading terminal. Entry orders can be used and will execute at a designated price even if you aren’t watching the market.

Once this is decided, traders need to evaluate which indicators if any will be used for trading. In the event an indicator is added to the graph, prior to execution, plan on its use and know its strengths as well as limitations. When you are 100% certain on your entry triggers then you can proceed to the next portion of the checklist.

Manage Risk

This point of our check list goes beyond the simple placement of stop and limit orders. Scalpers must carefully consider how much they should risk on each trade. At this point specific questions should arise. How many pips are you risking per trade? What is your average profit target per trade? How does a stop order being executed equate to a loss on my account?

While no trader wants to take a loss it is paramount to determine these values prior to scalping. Once these values are set, you can mark this point off your checklist. Now all you have left is to hold yourself accountable to your trading decisions.



Log the Results

Traders, especially short term scalpers, have a tendency to always be looking for the next trade. While looking for trading opportunities isn’t a bad thing, we should also remember to go back and review past events. Keeping a trading log can help us establish market patterns and reflect if your strategy is working in current conditions.

To help with this process, traders should note, why, when and how they entered into a trade. If your strategy is working, stick with it and keep your original strategy rules. If you’re trading is not working out as planned, with a log you can identify what must be changed and make appropriate adjustments.

While this checklist may seem daunting at first, these are all important steps to consider before scalping. To help you along the way, read through The Definitive Guide to Scalping. This is a great resource to review prior to tackling some of trading’s tougher challenges!

The Definitive Guide to Scalping, Part 1: Market Conditions
The Definitive Guide to Scalping, Part2: Currency Pairs
The Definitive Guide to Scalping, Part 3: Time Frames
The Definitive Guide to Scalping, Part4: Support & Resistance
The Definitive Guide to Scalping, Part5: Scalping Ranges
The Definitive Guide to Scalping, Part6: Scalping Retracements
The Definitive Guide to Scalping, Part7: Scalping Breakouts
The Definitive Guide to Scalping, Part8: Risk Management

---Written by Walker England, Trading Instructor

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• The good, bad, and ugly of scalping
• Fundamental requirements for proper scalping
• Scalping time frames
• Not all products scalp alike
• Tape reading and its uses
• Basic risk and position management for scalping
• Basic scalping techniques
• The importance of tracking your effort
• Exaggerated impact of trading errors in scalping

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WEEKLY DIGEST 2014, October 12 - 19 for Scalping Trading

Trend scalp
- Trend scalp indicator is on this post.
- Trend scalp_v1 indicator is on this post. This is MTF version with ability to plot the color levels

Trend Scalp Hacolt trading system is on this post.

Scalping thread is here.
The Definitive Guide to Scalping thread is here.

I am just testing some system - this is variation of the system uploaded on this thread:

I tried it on M1 timeframe for EURUSD, GBPUSD, USDCHF and GBPJPY.
The best pair is EURUSD.

Originally Posted by newdigital

I am just testing some system - this is variation of the system uploaded on this thread ...

I tried it on M1 timeframe for EURUSD, GBPUSD, USDCHF and GBPJPY.
The best pair is EURUSD.

This is the statement for today:

This is updated statement

Updated statement once again:

• scalping
• EURUSD and GBPUSD (mostly EURUSD)
• starting deposit is 1,000
• finishing with 4,178.66
• For two days trading