10 Min EUR Chart

[elvis]

Here is a scalping method I have been playing with, having some success. It certainly isn't perfect, but it is a start. Looking for constructive comments to refine the method and hopefully make it consistent and profitable.

The set up being a 10 min EUR/USD chart. I use CMS and the VT platform, but I trade live with Oanda to reduce the spread (0.9pt).
Attached I have a Stochastic (Slow) set at 10,6, 6 with horizontal lines at 80 and 20. Then I have a MACD set at 4, 12, 1 with a zero horizontal line. With the MACD, I background colour the histogram so I can't see it on my chart. So what you should end up with, is a indicator that looks similar to a RSI (one line snaking around the horizontal line)

Now I mainly trade during the UK session and part of the US session. Obviously there is more action during these times.

I have been looking for a cross on the Stoch and taking the entry on the open of the new candle once the cross has been confirmed. It seems to work better when the Stoch is either up over (or near) the 80 line or down below (or near) the 20 line. However it does work with just about any cross. I will also look for the MACD line to be at least pointing in the same direction on entry ie going long, I want MACD pointing up and vice versa for a short. It would be preferable to have the MACD pointing both up and above the horizontal line to long, but this isn't really necessary.

The cross of the Stoch is the main indicator, and MACD is used for confirmation.

Tight stops and monitoring are required. Look for Stoch to cross back for exit, or even MACD change direction. Normally you can just eyeball the chart, and you should get an idea of the big picture, so probably best to keep a very close eye on trades against what appears to the main trend.

Also watch out for major news. Time to be out altogether if scalping. Consider trailing a stop, maybe closing out 1/2 at a certain level and then moving remaining half stop to B/E.

As stated, a work in progress, so feel free to experiment and submit ideas or comments. Cheers.

 

[Victor90]

Hi, sounds great. Could you post a picture of your trading screen?

 

[elvis]

Thanks Victor90, but I have no idea how to attach a screen shot. I'll have a dig around and see if I can find some instructions on how to go about it. Cheers.

 

[Victor90]

1. Press the button PrintScreen on your keyboard.
2. Press cntrl+V in photoshop or paint and the picture will be there, save it
3. Go into advanced posting and scroll down, there you will find a button called "Attach files", press it and attach your pic.

:clap:

 

[elvis]

Okay, thanks.

Hopefully this will work, but it looks as though you will also get my 2nd monitor desktop also. Not sure how to get rid of this. Lucky it wasn't porn! Thanks for the education Victor.

 

[Victor90]

Oh, that is really nice!
I wouldnt mind if you could teach me that way of scalping sometime.

 

[elvis]

Thanks Victor,

Basically what I stated in my opening post are the rules. Pretty rough at the moment, but working on refinement.

I have switched to my laptop to see if I can produce a more user friendly screenshot.

I have also labelled a potential divergence between price and the Stoch, marked A & B on both charts. Also the next high after B could also be considered as a part of a head and shoulders.

As you can see I have marked a good sell entry, which to date, would have nailed 50+pts and this was after the UK open. This would have been a safe trade to take. Cheers.

 

[elvis]

Just an update.

A new buy signal would have been generated on the open of the 0620hr candle at 1.5486. Keep in mind I use VT charts via CMS, so this is New York time. There was a cross of the Stoch and MACD was heading up. My only concern would be that the market has been dropping down for the last 2 1/2hrs, so I would be more inclined to go short, so a pretty tight stop on this long would be the go. Cheers.

 

[elvis]

An update.

Looks as though the previous long was a non event by only going up by about 10pts. Now short on the open of the 0800hrs candle at 1.5481. Much more confidence going this way, but there is major news in just over 30 mins. Cheers.

 

[elvis]

As it turned out, not much more happened. There were a few small trades that could have easily got you 10 pips, but nothing to really get excited about. Cheers.

 

[elvis]

Update 20th June

Just to let you know how my trading day has been so far.

Trade 1 was a good start with a potential of 25 pips.
Trade 2 was a loss.
Trade 3, again was a +20 pip mover.
Trade 4 started a bit ugly but may still come good. Presently banging it's head on the Daily Resistence Level 1 at this time.

My trading for the day after Trade 1 would have been done as I am quite happy with 20 pips for the day. Cheers.

 

[elvis]

Update 20th June contd

Just to show you how the rest of the trading day panned out.

Trade 4 turned out to be a dog, where I will record it as a 20 pip loss. More than likely I wouldn't have let it get this far, as I would have been out on the break of the previous high on the 0440hrs candle. But for arguments sake, it was a 20 pip loss.

Trade 5 had the potential for 25 pips profit.

There is no trade 6 as I jumped straight to Trade 7 for some unknown reason, which turned out to be a 22 pip ove.

Trade 8 had the potential for just over 30 pips.

Trade 9, which wouldn't have been taken by me due to the time, would also have managed 20 pips.

Keep in mind I trade with Oanda, so the majority of the time, my spread is only 0.9pt. I would always be looking at a hard safety stop of 20 pips, but either closing out prior to this if a significant high/low taken out, or there was a reversal signal prior. My target is always around at least 10 pips where I then look at tightening up my stop and riding the market nice and close. The plan is to have a lot more winning trades than losing trades, therefore take the ususual complaints of risk:reward out of the equation.

So overall, the 20th June was not a bad trading day where I could have easily nailed more than enough pips. I'll continue next week with the trades to see if there is some consistency. Enjoy the weekend all. Cheers.

 

[elvis]

Monday Update

Started off pretty well and probably a little earlier than usual. The reason for this was the divergence shown between price and the Stoch. I was expecting the market to fall, so I went on the next sell signal marked at No.1. Potential of 25 pips there.

Trade 2 wasn't a good one with a loss pretty quick smart. Probably would have been out on the break of the previous low, but I'll call it a 20 pip loss just for consistency.

Trade 3 more than made up for the previous loss, going +50 pips in my favour and still open.

That would be more than enough for me for the day, but I'll keep tracking the signals as they appear. Cheers.

 

[trendie]

kudos to you, elvis, for sharing your settings. (good start for the morning as well)

what rules do you have in place to avoid a losing streak?
ie, if the session is choppy, do you have a 3-losses and out for the day rule?
or just keep at it?
do you have a max loss per day rule?

do you recognise sessions, ie, best times to trade, or slog at it all the day?

There are times when the market loves you tender, but you need to be light on your blue suede shoes, or you'll get all shook up if you're on the wrong side.

(ok, ok, that was corny, but the gist of the post is serious)

I suspect that, done well, you exhibit 20 pips a day average or greater.

EDIT: whats your experience of how the trade should pan out? in that, if the market doesnt go in your favour within 2-3 bars of entry, do you bail out thinking the signal was a weak one?

 

[elvis]

Update

Trendle,

Good questions but I'll have to get back to you with my thoughts later today after work. Just wanted to get the update in before I lost my chart settings.

I added the Main Daily Pivot Line and also S1 to the chart, which then clearly shows why trades 2 and 4 were always going to struggle. Trade 4 only managed just over 15 pips before falling away.

Trade 5 was a little choppy on the Stoch on entry, but having S1 there was a good thing and as long as price remained below it, I was confident of a break down. Over 40 pips there.

There were a few more trades after this going into the US session, but I was in bed by then. Cheers.

 

[elvis]

Now to answer your questions Trendie.

As stated in my first post, this particular method is a work in progress, so I am still trying to work out the glitches, and exiting is one of these.

I do think anyone can jag a good entry on a trade, but closing it out or obeying a stop is another matter altogether. This has been my problem in the past. This is especially the case where you start the day with a loss or two, and you are tempted to play catch up.

I don't want to be sitting at my computer all night trading, so the sooner I can get out of my office the better. Living in QLD, Australia and normally finishing work around 3pm local, I normally start looking at my charts from anytime on, ideally starting anytime after 5pm which is around the UK open. Today for example, there were a few good trades during the Asian session where 10-15 pips were there on offer, but this is not always the case.

Recently I purchased a course by George C Smith called 'Forex Trading Made E-Z'. He had some good ideas with regards to keeping your stops nice and tight and also having a 5% profit target for the day. He also would quit if he lost 10% for the day. Me, I'm not that greedy needing 5% for a day as I would be happy with the 2-3% range (which is still pretty good). My risk is normally 1.5% on a trade, and my max stop on this time frame would be 20 pips, however I am more inclined to use a previous high/low as long as they are not too close. There are times when a reverse signal will come before your stop is hit anyway.

I guess I know when I'm personally having a bad day, and I normally reduce my position size but keep on trading looking to recover some losses. It doesn't bug me taking a loss overall as long as I haven't done anything real stupid. You have to watch the major news releases, and this is especailly the case if trading the GBP on Oanda, as the spreads just become ridiculous at times.

With this particular method, I am now looking at the Daily Pivot Lines, just to give me an idea of where I expect price to bounce around etc. I have found pivot points extremely useful in the past when used with other indicators, but just keep in mind that price is king, and by that I mean that you should go with what price is doing, not what you think it should be doing.

In answer to your last question Trendie, I'm not too fazed if a trade is not going my way initially as long as I am not receiving reversal signals. I'll hold on as long as reasonably necessary without massaging my ego, to see if it develops. Once I see that it's not happening, then hopefully the discipline is there to close out. That's the tough part.

So in a nutshell, still trying to wrap my head around it all with regards to exits, with tight stops being my preferred method, maybe the '3 bar reversal' method. Or another option would be to close half of the position, let the remaining half run with a stop at break even and then take it from there. Food for thought! Cheers.

 

[elvis]

Today's Trades

Here's a shot of the EUR 10min today so far. Trades 1 and 2 were a couple of 25 pip winners in the Asian session, with Trade 3 being a loser. Normally I don't trade the Asian session and if I were to, then normally I would just shoot for 10 pips and be done with on each trade.

The start of my trading day would have been on Trade 4 which has been up 30 pips already and still open. Just prior this trade, price bounced around the main pivot line. Watch this space for further updates. Cheers.

 

[elvis]

Not much happening tonight as the market is just going sideways for now. I've had Trade 5, 6,7 and 8 since my last post. This is where it gets a little ugly as none of these trades have really gone anywhere with 5 - 13 pip losses on the the first three. Trade 8 has just opened, a long on the 0810hrs candle at 1.5558. I guess it has to break out soon (one way or the other). So a pretty quiet night thus far, and it is my bedtime. Cheers.

 

[elvis]

Wednesday update.

The EUR hasbeen very flat today and in a real tight range. Possibly due to the FOMC Statement and Federal Funds Rate in about 12hrs from now. Also Trichet speaks in about 2.5hrs. So probably sittings on the sidelines for now and would only look at entering on a breakout. And I type this, the EUR has just dropped about 20 pips. There you go....

 

[elvis]

Well I have come to the conclusion that this method is not really working for me the way I want it to. Consistency is an issue, where I am getting whipped around a fair bit in flattish markets. Don't get me wrong, it did produce some good trades, but I'm not that comfortable trading it, as exits are still an issue for me.

Having said all that, I have been working on something else that uses 5 min charts. Still working on it, and it is a little different using horizontal lines on a Stoch. I'll keep to myself for now and give it a bit of live testing before I start spruiking about it.

Thanks to those members that took an interest in this thread and hopefully I can contribute further in this trading community. Cheers.