Hi folks, its that time again and I want to write an article today about scalping. Perhaps scalping is NOT for everyone. I personally LOVE it to death. I do personally have trouble finding trades that can move several hundred pips without giving me the possibility of incurring a WIDE stop loss (which, I just don’t like). So, I would like to go over today a few trades taken from our room this day. I will start with the most recent one, just before I left for the day. Below is a picture of the NZD/USD. Lets look at the 15 min chart first:
Here we see a multiple bar run down on the chart. Seven bars down towards a psychological level (we all know as we approach the whole numbers they tend to act as possible support or resistance areas). We have a nice narrow range body with some wicks (shadows, tails) whatever you want to call it. Do we HAVE to know the correct name for this bar? A long legged Doji? Or do we just have to understand what is happening? Guys, all I am looking for is HIGH probability setups and “pockets” of price movements to take advantage of. The entry is so very clear and the stop loss is so very clear. The risk to reward is good, and the probability is high. I am a manager of risk.
Take a look at the 5 min chart
Now, you can see in the first yellow area the 5 min bullish engulfing bar, followed by a couple of pause bars that DID NOT retrace more than 50% into the buy bar. Which is a good sign. The correct entry is approximately .7020 to .7022 and the stop loss is about 5 to 7 pips or so. Now as a scalper I scale out half around .7030 ish and lock in about 8 to 10 pips and set the stop to break even on the balance. Because I do not KNOW that it is assuredly going to .7040 do I? Now the balance of the trade (in my opinion) should be taken off at that price for about 20 pips on the back half. NOT complicated, just simple. I and the fellow traders in the room seek to do this ALL day long. I personally enjoy ringing the cash register as often as I possibly can. I like getting paid and I enjoy scalping for 10 to 20 pips at least 10 times a day.
FOLKS, I have one computer running just 6 monitors. and currently only trade about a dozen pairs at a time. I casually sit there and observe price action and make money for 4 or 5 hours a day. That is NOT a long day, it is so easy and no one holds a gun to my head and says: “TRADE!” I get to sit here and pick what I want at the KEY opportune times. And at the end of each day sitting with anywhere from 100 to 200 ish pips a day is a great, great feeling. Trading does NOT have to be hard, stressful, or complicated. We do not have to LOAD our charts up with a half a dozen indicators. There are days I have WAY more than that. My best ever was 500 pips in one day. I have not beaten it yet, but sure would like to. Am I a trading “God”? NO! I will be QUITE honest with you and tell you I have loosing days. I have even had a very bad loosing streak, but I overcame it. But overall my performance is quite good. At least for me. I am very happy with about a 70% consistency and that is acceptable to me. So, should anyone think that trading for just a hundred pips in a day is gambling, well, I just politely do not know what to say to you. That is a strange opinion, in MY opinion.
Is scalping worth it? You be the judge! I LOVE it!
Here is another. This one I missed. Why? Because I dictated to the market the exact price I wanted to see before I shorted. I wanted it just a few pips higher and that was a mistake. I wanted to short it at 1.0707ish (wishing for the 200 Ma to get hit first) and once I got that stupid idea in my head it was hard to get out. What can I say, I am human and fallible. In the 15 min chart below is the proper entry highlighted and the target zone. Why the 50 level? Well If you look at an hourly chart you will see that that level is basically a 50% fib level of the prior 200 pip run. and 50% fib retrace is a very common one. Also 50 is a psychological level.
Now let us look at the 5 min for the proper entry:
Here we see very clearly that price was being rejected MULTIPLE times at the figure. It was just NOT able to get over there. Now we see a doji, followed by an explosive wide range bar igniting the move. Notice that this WRB is taking out the prior pivot low at 1.0687. As soon as I saw prints of 85, that would have been the correct entry and I know it. The stop would be just above 107. The risk about 15 pips. The target is around 50 so the reward is aprox. 35 pips. Which is just over 2 to 1. This is just fine. Now, this exceeded the target and I often choose to scale out in thirds or quarters. If I had taken this trade, I think I would have been happy. Especially if I held the last quarter or third and got out somewhere near the bottom. Ok, so I think my point is made. You know where I stand. I LOVE scalping. I find price, price action and “reading” it one of the greatest pleasures of my life. And this is a good thing because I have been trading for a long time. If you do not enjoy it, don’t get involved in this business. Please remember trading involves risk and you MUST manage that risk well and in accordance with YOUR plan. Alright, till next time. Happy trading !
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