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Scalping (USE AT YOUR OWN RISK)

Discussion in 'General Forex Talk' started by cowmadagan, Jan 27, 2010.

  1. cowmadagan

    cowmadagan Sergeant

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    I think the biggest scalp grab I've had was 40pips, and I had two friends in the room watching. After I got out, I asked them if they want to start trading for themselves (they're now resident doctors) and they gave me a unanimous 'hell no.' I asked why, and they said it's too scary..
    Fact is, it is, and should be too scary. Just ask ernest8fingers. Why do you think he lost the other two?
    Unlike normal trading, you have almost no control over the exact entry and exit prices, because they're changing too quickly. That means you might try and exit after a gain of about 5 pips as it begins to look like a reversal and end in a flash between deciding to click your mouse and the execution you've actually lost 8 pips. Bigger news releases increase the chance of loss.
    That said, there are six parts to standing a chance of profit.
    The most important skill is finding a broker that will give you your profits at all.
    The second one is finding a broker that will give you your profits from scalping.
    The third is playing lots and lots and lots and lots and lots of first person shooters, because there's no one who can touch the accuracy or speed with a mouse like a hot shot first person shooter gamer. This part actually takes about six years of practice. (I started playing video games in 1984, and have been consistently playing) Hand to eye coordination, and spastic reaction speeds.
    The fourth is knowing what the news means and getting it quickly. Having a TV on, your news website 'restored down' on either a separate screen or only taking up part of the screen of your broker program, and positioning it so it doesn't block the newest part of your minute chart, the deal button (prepare the number of lots if you need to before the news for a one-click deal) or your broker's feed. You should be working with constantly updating candles, or a tick chart. Knowing what it means also means that you must know the current trend, and that's part of the fifth part.
    The fifth is just practice.
    The sixth is high bandwidth net connection, and living somewhere important.
    Here's the chart from the bullet dodging thread, and the time frame below for actual times.
    [​IMG]
    [​IMG]

    The way I knew that I'd be scalping only was because the USD was gaining strength, and since I live in Asia, I'd know if NZ was under the economic circumstances to raise rates (it isn't).

    Edit: It occurred to me after I wrote 'practice' as the fifth part that it's a particularly annoying word if you're eager to learn, as I'm sure Eric can back me up on, when it comes to things like meditation or martial arts. Everyone wants the wisdom now, and if you're on top of things you might even be able to notice that practice without an aim is just experience, and diligence is the crux of the lessons learned from experience.
    Since I don't want to be cryptic, and there are a few nameable things I can say that come from practice, here I go. You'll notice, 95 times out of a hundred that the market spikes in the most susceptible pair before you get your news. What you need to watch for is if it's a double directional spike compared to the pre-release price or a single. If it's double directional, leave it alone unless (and until) you know at least 75% of the entire release content.
    If it's in a single direction (like this one) you can assume that the market was pleased, and so you need to wait until the very first retreat begins, and the entry target is about 75% to 50% lower than the height of that spike. Here's the important part: When the spike seems to do some real slowing down and is in your favor to a degree that you should really have predetermined (I do it by shape rather than looking at pips), get out. Stay out or reverse your bet (by stopping with more lots than your original entry) if the news isn't groundbreaking (like a US NFP) or if it's clearly in the opposition of the trend. (like the NZD trade above)
     
    #1 cowmadagan, Jan 27, 2010
    Last edited: Feb 1, 2010
  2. Ricex

    Ricex Sergeant

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    Begs the question why would you want to go through all that stress for 6 pips?

    You know that dope deal you were on about..... rather than sell it....... why not smoke it.

    :)
     
  3. cowmadagan

    cowmadagan Sergeant

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    Why'd I get in? Habit.

    I think it's more informative to show how to know when to bail than to make it look easy by a picture perfect one.
     
  4. Ricex

    Ricex Sergeant

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    No I'm not questioning your method, every trader has their own thing, it just seems a very stressfull way of picking up 6pips. I guess if your used to it that's fine but I personally couldn't trade like that, my blood pressure wouldn't take it.
     
  5. cowmadagan

    cowmadagan Sergeant

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    Yeah man. I always tell people to stay out of forex if their hearts can't take it, and I thought I was on the lower end of the forex curve for being able to handle the ups and downs until I got to know more traders. That said I can also tell you that the guys at 7-11 make about $2US/hr and 6 pips in thirty-odd seconds seems enviable.

    When I quit my job back in August 09 I made the dumbassed mistake of trying to make a day's wage trading every day. That sucked. One thing it did, though, was get me VERY well acquainted with a one minute chart. I always look at the one minute to set up my hour or daily chart positions. It only saves me 4-10 pips but...C'est la vie.

    What I can't wait for, though is to compare notes with another trader. I'm hoping that Pharaoh and I can have a tete et tete once he's on this hemisphere. I've learned a lot from this student of mine who's the head of the currency division of a major Taiwanese bank, and he used to be a trader (keywords: used to be), and I have another who just got his Ph.D. in Economics...That really, really helps, but actually sitting next to another trader who's profitable would be great.
     
  6. ernest8fingers

    ernest8fingers Master Sergeant

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    Scalping is like trying to flush your toilet using only the big toe on your left foot. Why would you do that anyway is my point? Some swear by it-others -like me-swear at it. That style of trading WILL-IMO-reduce your lifespan. So will trading during a Major News release(like todays FOMC statement) I stayed out all day. As for the fate of my 2 missing fingers?-Well-thats a tale for another thread-lol.:)
     
  7. Music Man

    Music Man Corporal

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    What?!? I always flush with my left big toe. Doesn't everyone?
     
  8. RahmanSL

    RahmanSL Major

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    Begs the question why would you want to go through all that stress for 6 pips?
    You know that dope deal you were on about..... rather than sell it....... why not smoke it”


    Ricex….hahaha…you got me laughing out loud there buddy! Thanks for the stress relieve!

    Cowmadagan, I have been playing “scalping” since +4months now on many Demo accounts, and I have to confess it’s beginning to get a bit boring. A couple pips here & there, and then, “wham”, I turned away from the screen and got hit with many2 pips lost.
    Now I am setting semi-long positions by setting SL & TP and come back later to see what I got. Sometimes I set SL but leave the TP open and am occationally pleasantly surprised to see so many pips up. It’s like placing out many baited hooks and coming back to find some big suckers on some of the lines. But on the other end of the scale, I come back to see all set position closed due to SL. So I am still uncertain on which strategy to use when I go Live.

    Hmmmm, ernest8fingers, so there is tale on your 2 missing fingers! I would very much like to hear your tale on this.
    …hehehe…Anything to do with bashing them for pushing the wrong keys while trading???

    Cheers!
     
  9. cowmadagan

    cowmadagan Sergeant

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    Scalping? Boring? Maybe you're not talking about news reports..(See Ricex's second post)
    There's nothing boring about an entire day's range retraced inside two minutes.

    Also, demo scalping and live scalping are apples and oranges. Demos don't need to even go through a large fraction of the processes like 'straight through processing' that live ones do, so if it seems to work on a demo....that doesn't mean it'll work live.

    Last, if you're scalping news...you don't turn your head, you don't go to the bathroom, you don't listen to your wife, you don't even lean over to pass gas.

    I'm going to set up my camera and make a video for scalping and put it on youtube for y'all, just in case that helps at all.
     
  10. RahmanSL

    RahmanSL Major

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    Opppoohs! Sorry if my comment came out as offensive Cowmadagan…Haven’t gone live yet…Newbie excuse yah!

    Trading news report; yah! That I have not tried as I imagine that would require quite a bit of time and I just do not have the luxury of time.

    Ok, I would l am game for anything that would enlighten me more on being successful on forex trading as, so far, my strategy really sucks!
     

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