Critique my SCALP Strategy!

[lbranjord]

Hello T2T!

Please critique my proposed system (I have used one similar to this, but am trying to make it more effective.)

MY HEIKEN ASHI SCALP SYSTEM

CHART / INDICATORS
Heikin-Ashi Chart (15 Min, 5 Min & 1 Min)
RSI 12, 70, 30

PAIRS
I'd like to be able to use any of the pairs with a small (scalpable) spread. I'm on Oanda, so EUR/USD should be the bread and butter for this system.

ENTRY
15min chart - Active candle must be correct color for the trade. Does not need to be completed

5min chart - Must have two completed candles in direction of trade with second candle's body or shadow longer than the first. (third candle-active candle-must be correct color)

1min chart - Must have two completed candles in direction of trade with second candle's body or shadow longer than the first. (third candle-active candle-must be correct color)

RSI - On 1 min chart must be touching middle line (50) or past it. This means above for long positions or below for short positions.

EXIT
This is where I am having difficulty. I want to use support and resistance lines to plan my S/L and Targets, but I also want my system to be cut and dry, so I can enter a trade the same every time and not be tempted to change my stop loss farther away or target closer.

My thought is to use Target of 5 pips and S/L of 5 pips during consolidation and Target 10 pips and S/L of 10 pips during active hours.

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Let me know what all your thoughts are. A plan similar to this was working with some success, but it used larger time frames and I held positions longer. I'd like to hone in on a scalping strategy that works for me.

Thanks all! :clap:

 

[Sang Froid]

Hello T2T!

Please critique my proposed system (I have used one similar to this, but am trying to make it more effective.)

MY HEIKEN ASHI SCALP SYSTEM

CHART / INDICATORS
Heikin-Ashi Chart (15 Min, 5 Min & 1 Min)
RSI 12, 70, 30

PAIRS
I'd like to be able to use any of the pairs with a small (scalpable) spread. I'm on Oanda, so EUR/USD should be the bread and butter for this system.

ENTRY
15min chart - Active candle must be correct color for the trade. Does not need to be completed

5min chart - Must have two completed candles in direction of trade with second candle's body or shadow longer than the first. (third candle-active candle-must be correct color)

1min chart - Must have two completed candles in direction of trade with second candle's body or shadow longer than the first. (third candle-active candle-must be correct color)

RSI - On 1 min chart must be touching middle line (50) or past it. This means above for long positions or below for short positions.

EXIT
This is where I am having difficulty. I want to use support and resistance lines to plan my S/L and Targets, but I also want my system to be cut and dry, so I can enter a trade the same every time and not be tempted to change my stop loss farther away or target closer.

My thought is to use Target of 5 pips and S/L of 5 pips during consolidation and Target 10 pips and S/L of 10 pips during active hours.

------------------------------------------------------------------------------------------------------
Let me know what all your thoughts are. A plan similar to this was working with some success, but it used larger time frames and I held positions longer. I'd like to hone in on a scalping strategy that works for me.

Thanks all! :clap:

5 pips t/p? Seriously?

I tried a very similar system to yours not so long ago, Heiken Ashi bars with gmma layed over the top on a 30 min with macd. On the third consecutive same coloured bar once the macd had crossed the 0.00 line and the bars pointing the same way as the gmma lines then a trade was entered. This was it in a nutshell. My t/p was 5 pips too.

Dude, have you ever heard the expression "pissing in the wind"? This is what you're planning to do here. I'm not an expert trader by any means, I'm not really in any position to be offering advice to anybody, but if I can stop people making the same mistakes as me then at least I've succeeded in something.

What you're effectively trading here is noise. On such a small timframe with such a low t/p you don't need rsi or Heiken Ashi Bars or anything, you might as well draw a random line anywhere on the chart and buy or sell everytime that line is crossed.

You said that you were going to use s/r lines for exit rules. Why not use these for entry rules too, that's pretty much all you need. Move up the timframe to at least H1 or maybe even H4.

Like I said, I'm a failed trader, but I failed doing EXACTLY what you're doing now, I posted my methods on here and everybody said the same thing. Maybe you can make it work, maybe it was me that was the problem, I'm just giving you a 'heads up' as to my failings.

Happy trading,

Chris

 

[DionysusToast]

I think if you could explain to us (and yourself) exactly why this should work, it would be a great help.

What forces are at play when a trade triggers with this system that are stronger than a purely random system of entry ?

Where is the edge in this system and why does it exist ?

 

[timsk]

hi lbranjord,
I tend to agree with Chris and DT.
You might have the basis of something that will work, but it sounds as if you haven't thought it through quite enough yet. Have you backtested it and then paper traded it with good results? With your stop and targets set to a mechanical 5 or 10 points, you'll need a strike rate of around 60% or better just to break even, once you take commissions and other costs into account. To be confident about trading the strategy with real money, personally, I'd want to see a pretty consistant success ratio of 70% or more. I can see the idea behind the two longer timeframes in that, in theory, you'll always be trading with the dominant trend. But unless you're entering at a point where you have good reason to think that the balance of probabilities are such that price will move 5 or 10 points the 'right' way, then you're not much better off than doing a 50:50 coin toss to determine whether to go long or short. In addition to DT's questions, can you explain your thinking behind your use of RSI - as I'm not clear what its function is?

On a positive note, I see no reason why this shouldn't form the basis of a profitable strategy once you've developed it a bit more.
Tim.

 

[Paulie_5]

SangfroidFX, DionysusToast and Timsk have vaild points, but don't be put off by people saying that you should trade longer timeframes and that 1 minute trading is only noise. This is true, but it is still possible to be profitable from trading smaller timeframes.

It really comes down to trading what works for YOU and what fits YOUR personality.

I prefer to trade the lower timeframes because it suits my personality better. If that's the same for you, go for it. Just make sure you backtest and paper trade first.

Good luck

Paulie

 

[morfisher]

Hi everyone
Has anyone used Trade Chimp or know anything about. This EA is sold by steve rundhammer owner of renegade fx?
Thanks

 

[DionysusToast]

Some people take trades based on order flow - that's a lot lower level than a 1 min timeframe and it makes a lot more sense than any indicator based system.

That's why I asked the question - why would this system work ? What's going on in the markets at this time that would make it work ?

Often the answer is - "I don't know the markets, I just know the TA".

 

[uniqcle]

I think these indicators for scalping will be useful for your trading. And you'll find out how to use them.

Good luck!

Hello T2T!

 

[Black Swan]

I'm not going to analyze or criticise your strat., or the edge you're trying to develop. No disrespect but I can't be ar5ed. However, trading off 3-5 min charts, IF you concentrate on a single security, can and does work.

Whilst waiting for longer term triggers to reach confluence, I play around taking cable trades off 5 min TFs and it's consistently profitable...Mightn't work too well with SB but with dma for sure you can make v. good returns...

 

[lbranjord]

I appreciate everyone's comments on this plan, and I don't think I'll be using it. One problem is that I cannot backtest it very well, small time frames so who is to say what quote I would get and whatnot. Also, I decided to find something a little more realistic and not thought up by me lol.

Doing well with a nice simple:
1 hr chart
5 ema +10 ema - crossover signals
RSI + Stochastic - confirmations

I still plan to TRY.....my heikin ashi idea, but not seriously, more experimental...