Advice on Scalping Dax

[echizen]

Greetings,

I am relatively new to trading but have begun working on Dax scalp that works on the principle that:

1. Use 3 minute chart
2. 3 MA has crossed 6MA and 12 MA is in a positive gradient (reverse for selling)
3. 10 point stop loss
4. Exit when 3MA crosses 6MA (still not sure whether to use the 1Min Chart or 3Min Chart regarding this)

Overall, it kinda works, although there is a lot needed refine it. In particular:

1. Avoiding false dawns and channelling/bearing in mind support/resistance levels.
2. What limit do I go for? In other discussions we've batted around the idea of 50-100 points (there is normally a handful of such movements on each day). Of course not all trades go to 50 let along 100 so there is the possibility for 20/30 point gains to be lost.

So my questions are:
1. Should I use another indicator, if so what would you recommend and why?
2. How could I calculate an optimum limit to set?

Just for clarification I am using Capital Spread/IG Index and the method has worked on live accounts.

Many thanks

 

[anley]

If there are a handful of 1:10 movements each day in the Dax then you don't need to alter your strategy, and you're going to be very rich in a very short period of time.

Good luck.

 

[echizen]

Thanks.

I've begun to adjust to 2 min and use a stochastic oscillator to determine if the market is overbought or oversold. but it's not helping with the false dawn scenario which is eroding the bottom line. Once the thing goes over 80 or under 20 it in effect becomes useless. Any advice?

 

[rawrschach]

dont use it when its >80 <20

 

[echizen]

I've tried that approach but it appears I'm leaving too much money on the table i.e. I have less than 10 points by the time it reaches either the 80 or 20 but then it will shoot off and go up another 20+. I'm just wondering if there is a way to adjust the stochastic to reflect that

e.g. At the moment %k is 14,3 and %d is 14,3,3

Should I use a more sensible setting. I have been trying to find material that tells you how to adjust the stochastic but so far I haven't found anything... any advice would be much appreciated.

 

[rawrschach]

sorry, I don't use indicators

 

[anley]

If you go for more sensitive settings you'll soon wish you went for more liberal ones.

If you go for more liberal settings you'll soon wish you went for more sensitive settings.

My advice, dump all the crappy and outdated indicators and use price action, ie where is price, where was it, how did it get to where it is now, what are the other punters doing/thinking. That's the key, but it can take years to learn, just like being a top lawyer or surgeon. The trouble is, most don't want to wait that long, instead thinking they can beat the people with 10+ years of experience with their 3 months.....

Good luck anyway

 

[rawrschach]

some basic distribution theory - you can't use (in general) individual trades as a basis for any adjustment to your settings

so a couple trades kept on going after you got out, so what. What happens on balance before and after the adjustment?

 

[echizen]

@rawrschach I am inclined to agreed

@anley I am trying to do that at the moment by reading Al Brook's 'Reading Price Charts Bar by Bar' although I am open to suggestions.

I was also thinking about doing some back-testing on this but am unsure how to go about it. From what little I've read a lot of people seem to be using Matlab. Any tips?

 

[marcela 2020]

It is a very dynamic operational trading strategy. where it requires a good resistance to stress, but that can be very profitable. The good results depend on the trader being disciplined, having solid knowledge of trading and following the guidelines of the strategy to the letter.