Well, when you scalp you simply follow the trend, but it can turn back anytime.
Usually i set my target at 10 points and the stop loss at five.
Obviously if i have a strong trend and i can take far than 10 points i will do it but most of the times it goes lets say in 9 and then it comes back and i close the position as an average at 4-5 points,
so i will never go far than 5 points to make a stop. My success depends on making a lot more sucesful entrances than those that fail.
Someone told me once, your stop loss must be half the way of your profit target, so i am giving you these tip that does not belong to me but has done well for me.
Usually i set my target at 10 points and the stop loss at five.
Obviously if i have a strong trend and i can take far than 10 points i will do it but most of the times it goes lets say in 9 and then it comes back and i close the position as an average at 4-5 points,
so i will never go far than 5 points to make a stop. My success depends on making a lot more sucesful entrances than those that fail.
Someone told me once, your stop loss must be half the way of your profit target, so i am giving you these tip that does not belong to me but has done well for me.
tar
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which market ?
nunrgguy
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When I occasionally 'scalp' GBPUSD (only) I use an initial stop of around 20 pips at a level where I think the market will not go. This is an 'emergency stop' only in case the market spikes against me. If in a trade and PA appears to be going the wrong way or stalling I get out for a small loss between 3 and 10 pips depending on where the swings are on the 1 min time frame as my reason for entering will have been invalidated. I don't hold on hoping for price to come back. Sometimes it does, sometimes it doesn't IMO you shouldn't be hitting and hoping.
I think this is one of the reasons people who are more used to swing trading look at scalping and think '20 pip stop, 3 pip win, R:R is awful you cannot win' etc etc etc. But you can win becaause your risk is dynamic and reduced agressively once in a trade, not fixed at 20 pips or whatever.
You should NEVER let your losers run to your stop if you can help it. You'll never win that way.
I think this is one of the reasons people who are more used to swing trading look at scalping and think '20 pip stop, 3 pip win, R:R is awful you cannot win' etc etc etc. But you can win becaause your risk is dynamic and reduced agressively once in a trade, not fixed at 20 pips or whatever.
You should NEVER let your losers run to your stop if you can help it. You'll never win that way.
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tar
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Do u average up and down ( scale ) ?
nunrgguy
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No I don't. All I do is 2% of equity risked over 20 pips or so and then get risk off the table as soon as possible based on the swings on the 1 minute timeframe - 'dead loss stop' is trailed behind the last swing. Generally there is only 20 pips at risk when the trade is first opened. I trail my mental stop when price moves in my favour and I'm ruthless with it. I don't have a fixed target and take what I can get from the market. Sometimes I'll be out and the market will continue, too bad, others I'll trail a nice 20 to 30 pip move, if the market gives you the opportunity for more pips, take them.
I only trade this when the 15min is in a reasonably strong trend, and the current hour is moving in the same direction. I use a 13 simple moving average on the 15m to gauge that price hasn't already moved too far (and is due to revert to mean) and I only trade in the direction of the 15m trend: but that's all the mumbo jumbo witchcraft stuff and very much dependent on beliefs i.e. does trend really exist, does price revert to mean? why does it? what makes it? do i need to know to grab a few pips? etc etc etc
IMHO, talking about R:R before a trade has been placed does not compute. Controlling your risk is the only known quantity when you open a trade. R:R only comes in when you examine a history of trades - it's your Win/Loss and average R:R that's important, not R:R on an individual trade.
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nunrgguy
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Yes I only do it with cable - I use a bucket shop (IG) so spread is not optimum for this type of trading, so spread wise EURUSD or cable would be the choice but I prefer the extra volatility cable affords on short term trades, although I've seen some research somewhere that says EURUSD is the better bet. As I mentioned before this isn't the main way I trade but I do it sometimes with reasonable success.
I don't scalp, but there have been a few points made in this thread that I don't understand and would be interested to hear what the reasoning behind them is. These are not criticisms, I'm just interested in how people approach a totally different style of trading.
Stop Placement
Why would you assign a random number? Is the correct place not where the market tells you that you are wrong, according to your method? So if the logical point was 7 pips away, why place it 5 pips away? Or if it was 3 pips away, why risk 5? You can use the 3 you need and have a larger position size.
Targets
A couple of people have commented on targets, being arbitrary and whatnot. Certainly to me it makes no sense to say that your target is 50 pips or whatever it might be. But does anyone set targets that way? Surely the market sets your target for you?
Stop Placement
Why would you assign a random number? Is the correct place not where the market tells you that you are wrong, according to your method? So if the logical point was 7 pips away, why place it 5 pips away? Or if it was 3 pips away, why risk 5? You can use the 3 you need and have a larger position size.
Targets
A couple of people have commented on targets, being arbitrary and whatnot. Certainly to me it makes no sense to say that your target is 50 pips or whatever it might be. But does anyone set targets that way? Surely the market sets your target for you?
tar
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Good comments , i didnt mean random number i meant what is the average stoploss scalpers use based on their systems ...
Sorry, "random" wasn't the right word to use without an explanation - I didn't mean to imply that people were just picking numbers out of thin air. I suppose what I was driving at is if you fix on a number such as 5 pips for whatever reasons (that may be perfectly sound in themselves), on any given trade will the stop not be "random" in that situation? In that it doesn't (or at least doesn't necessarily) correspond to where you would judge the trade to have gone againat you, according to your method?
As I say, I have no idea about this kind of trading - it seems totally different to the type that I am attempting to develop - so I'm not criticising anybody's approach. It's just quite interesting to hear the reasoning behind different ways of tackling the markets.
tar
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When we say scalping we mean short or very short term trading and this will result in a stoploss that averages around certain number , scalpers stoploss will not vary that much in every trade sometimes 5 sometimes 12 , this is a wide range , usually it will be around certain number , i read about Dax scalpers some of them will give room for a few ticks only ( 2 -3 points max ) , the idea in scalping is that u will c your account grow in a daily basis if u r profitable ofcourse , u will use little risk in every trade for example 0.5% for 4 pips in Euro/Usd , this way u can recover your losses streak quickly , 20 pips in euro is quiet achiveable , at the end u need low or very low spreads , commissions , fees , slippage , and a smooth platform , quick reaction , and the most important rule discplane cuz scalping will make u emotinal if u dont trust yourself but if you trust your self and you believe in your abilities u will make it at the end , it is hard but it is great if u can make it .
nunrgguy
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The number isn't random at all, rather it is based on typical recent volatility and is placed beyond where the market should not go under current circumstances. If it does go there you are DEAD wrong or very unlucky.
Stop loss is for emergencies only. You shouldn't be relying on it to get you out of a trade that has started to move the wrong way. You don't sit and wait for your stop to hit, you get out anyway. How I trade it ,the stop will only be taken out if I get spiked.
IMO all this, set a stop of 20, set a target of 20, systems type trading is nonesense. Place trade, wait for price to dilly and dally around at -2, -10, -12, -4, -14, -5, waiting, waiting, waiting, hoping, hoping for it to go on side...or the alternative, set, forget...come back...20 pip stop hit ....this is just mechanical trading. EAs don't work so why, if you add the human element and trade the same way would you expect it to work??
It's wrong to apply what is at best, simple binary logic to the markets.
"Using the laws of probability I conclude I need a R:R prior to entering the trade of 1.5:1 given my back tested win loss ratio of x:x, this will give me positive expectancy so over time I will win"....sorry but...b0ll0cXs
. You need to have a method of trading (notice I didn't say system) where you take what gains the market offers at that time and where you agressively and fluidly reduce risk depending on market conditions. CONTROL YOUR RISK
If price is not going the way you thought it would, get out. You are not swing trading, this is more like breakout trading. If it doesn't break out convincingly or retrace a few pips then go on side you are wrong. Get out. Yes, sometimes the odd one will come back from -19 and go into profit bit TBH that is a really sloppy, SH1T trade.
This isn't set and forget trading, you actively manage every aspect of the trade when you're in it.
On the other side - the target setting thing, if a trade goes onside by 15 pips but the next 1 minute bar closes below the previous bar are you going to get out (good move), move your mental stop up to the last swing (good move) and be ready to sell immediately price hits that mental stop or are you going to sit there hoping for your 20 pip target to hit and sit and sit and watch price go completely the other way and end with a losing trade?
Risk and reward are fluid, not absolutes. Just like the market.
Stop loss is for emergencies only. You shouldn't be relying on it to get you out of a trade that has started to move the wrong way. You don't sit and wait for your stop to hit, you get out anyway. How I trade it ,the stop will only be taken out if I get spiked.
IMO all this, set a stop of 20, set a target of 20, systems type trading is nonesense. Place trade, wait for price to dilly and dally around at -2, -10, -12, -4, -14, -5, waiting, waiting, waiting, hoping, hoping for it to go on side...or the alternative, set, forget...come back...20 pip stop hit ....this is just mechanical trading. EAs don't work so why, if you add the human element and trade the same way would you expect it to work??
It's wrong to apply what is at best, simple binary logic to the markets.
"Using the laws of probability I conclude I need a R:R prior to entering the trade of 1.5:1 given my back tested win loss ratio of x:x, this will give me positive expectancy so over time I will win"....sorry but...b0ll0cXs
Have to say I disagree. A stop is there to control your risk plain and simple. "Emergency"
should never come into it in my opinion.
I trade with a positive reward to risk ratio. I know that i only have to win 50% of the time and I still make money.
The benefit of mehanical trading is that there is no decision making to be had in real time. You know your risk; you know your reward; you know you best outcome and you know your worst.
That is not to say it is the only way to trade but to any discretionary trader who isn't making consitant money I would look at their stop and target levels before anything else...even before looking at their entry reasons. It is the closing of the trade that makes or breaks a trader not the opening.
nunrgguy
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You don't know your reward are you telling me you know where the market goes next?
The only thing you truly control is your risk. If what your'e doing is setting a stop and an arbitrary take profit of more than twice the stop (it has to be to take care of dealing costs) then long term it will fail. If you are bringing discretion to the table with entries then you are not trading mechanically.
