How I scalp emini NQ (Bubble and Bounce Scalp)

[lux.lu]

Hi Everyone,

I just started trading emini NQ and Dow using the method attached with some success,
please have a look, and let me know what you think.

I am Chinese, English is my second language, please bear with me if you don't understand me occasionally.

Cheers.

Lux


Bubble and Bounce Scalp (BBS)

I use Hull’s moving averages to scalp (workable if you use GMMA, please Google GMMA to read how Daryl Guppy interprets short term and long term relationships), they are 3,5,7,9,11,13,21,24,27,30,33,36,55,60,65,70,75,80 exponential moving averages. In my mind they represent short term middle term and longer term market participants.

Stochastic: 10, 3, 2 overbought 90 oversold 10

Time frames: 3m, 5m, 15m, 144 tick

Theory: when short term moves too far away from main trends, a bubble will be formed, and it needs to be broken and therefore collapse back to main trends to either get more strength to continue (bounce) or persuade other participants (longer termers) to join the collapse.

Compression of the spacing between moving averages means agreement between short termers and longer termers, expansion of the spacing mean disagreement, in other works, the market is having a supply and demand problem when you spot a bubble or bounce, you should then set up a scalp trade in the direction of the market agreement (bounce) or disagreement (Bubble). Market needs agreement from supply and demand sides to proceed, therefore bubbles and bounces come in cycles.

Bubbles and bounces in longer time frames have more strength than ones in shorter time frames.

A bubble is formed, when supply and demand is imbalanced, therefore bubbles need to be grounded onto the main trend for the market to generate an answer to the imbalance, it can be a bounce or main trend is smashed into joining the short termers. Generally speaking, it is easier to spot trend changing bubbles using longer time frame, they are more powerful.

How to spot a bubble or Bounce: I don’t know, but after some screen time, you should be able to recognize them with some ease.

Bubble: 3m or 5m Stochastic turns, and Doji candles or candles with long wicks (exhaustion), longer term moving averages pointing up (down) but short term down (up), more space in short term group becomes obvious.

Bounce: 3m or 5m stochastic turns, and Doji candles (exhaustion), longer term and short term moving averages both are pointing up (down) after short term group falls back to longer term group, both groups move in the same direction after compression.

Scalp trade set up: trade in the direction of the bubble (collapse) or bounce (compression), in other words, when scalping always take sides with the short term market strength (because we are scalping), if bubble is about to collapse, join the collapse, if short termers bouncing, join the bounce.

Only take trades from your 144 tick charts, and 144T Stochastic has to be the same direction of 3 or 5m stochastic, and take the trade when the confirming candle is about 20 trades to finish, no buy or sell when Stochastic is in overbought or oversold, always take trades after 144T pulls back if the market has gone 6 ticks away.

Trade Size: 2 contracts

Stop Loss: 8 Ticks for both contracts, first lot profit target 5 ticks, second lot 10 ticks, after market moved 6 ticks in your favour, move stop to 2 ticks below entry.

I use 15m to spot bigger bubbles and the overall market direction. I use esignal to set up charts, because this method requires screen time to familiarise yourself with bubbles and bounces, it is preferable when setting up charts, don’t choose auto scale your charts, it helps you properly estimate the size and strength of the bubble or bounce.

 

[lux.lu]

I forgot to mention don't place any trades 15 minutes before or after significant new announcements.

I live in Sydney Australia, and my email is [email protected] if you interested in the above trading method.

 

[jokepie]

I forgot to mention don't place any trades 15 minutes before or after significant new announcements.

I live in Sydney Australia, and my email is [email protected] if you interested in the above trading method.

Hi Lux,

I have a question about ur stocks, is it a custom study or a predifined setting in esignal. as i see only one black line for stock rather than 2 spaced lines.

thanks

 

[lux.lu]

Hi Jokepie,

The reason it only has one line is because I make the other line (more sensitive one) the same color with the background color, I don't want to see it, it just distracts me, overall it turns out the setting gives more reliable signals as it filters out those ambiguous ones, I am refining the chart a bit now, once it is done I will post it.

Cheers




Lux

 

[jokepie]

Hi Jokepie,

The reason it only has one line is because I make the other line (more sensitive one) the same color with the background color, I don't want to see it, it just distracts me, overall it turns out the setting gives more reliable signals as it filters out those ambiguous ones, I am refining the chart a bit now, once it is done I will post it.

Cheers




Lux

Sounds good, I will test this on stocks and futures and let you know how it goes,,!!

'Thanks for sharing !

 

[lux.lu]

Thanks Jokepie, Please let me know your progress.

Lux

 

[marty]

Hi Lux

im in Sydney too.. you must be up all night trading!! Haave you tried this method on the SPI??

Cheers

Marty

 

[lux.lu]

Hi Marty,

I only trade the afternoon session starting from sydney time 5:30AM here now, SPI is much much less liquid than Eminis,if you unilise the bubbles bounces method to trade SPI, you will have to change the time frames to properly assess bubbles and bounces and their strength, the thing is if one intends to play scalp game, wouldn't he or she want to see fast action? SPI doesn't provide a good scalping environment in my opinion. Another factor is Eminis NQ and Dow are good for money management as far as my accout is concerned, and they are $USD 5 a tick.

I have to say every time I replay the morning session after downloading the data, my method makes a killing (of course every one does that if it is sim trading), the afternoon is more choppy and less prodictable to me.

I am trying to do only 4 trades maximum a day, I stop when I have either 2 consecutive wins or 2 consecutive losses or 4 trades max.

Lux

 

[lux.lu]

To AndrewFutures,

I never look for moving averages crossing each other, the way I watch the three groups of moving averages is like figuring out the supply and demand situation, if you could have a look at the charts I attached before, area 2 and 4 are for bubbles trades, trader needs to join the bubble being grabbed back to the longer term moving average group, because that is the direction of the short term market "strength', in this case short term sellers have gone too far and fast, slow but willing longer term sellers just can't catch up quickly, therefore the fast moving down trend is not sustainable unless those in short term moving averages wait or even dive back to the longer term groups to get supply, this is about time for us to see a bubble forming .(Note: if supply of 'short ammunition' from the middle term group is not enough, short term can go to longer term, even penetrates all of the longer term groups, if the bubble is too big, it is trend changing.)

On 144T chart, we can take all the trades on the bubble direction (take when Stochastic turns and turns, evidenced by area 4 on 144T chart), when to take caution: Stochastic turns on longer terms, or shorter term group is in contact with longer terms and bends, and it usually accompanies with stochastic turning.

I think when we spend time observe the moving average groups, it is like observing price action, the only thing is the colored groups help us visually interpret relationships.

some tips from me: when contruct the charts, take candles out, leave just moving averages on 3 5 and 15 m, only keep candles on 144T, another thing is don't scale the chart, this way helps train your brain recognise the size of the bubbles and strength of the bounces, because if you scale the chart then the space (vacuum) is distorted, our brain will have difficulty in comparing past bubbles and bounces with the upcoming ones.

Overall this method is just another way to watch price action in my opinion, and it conveniently erases the need to draw trend lines and support resistance lines, if longer term supports or resists, then you should be able to see the longer term Visually compresses and short term bounces, it is like shooting an arrow. There is no need to force oneself to draw lines, every thing can be reflected by how three groups play each other, we just need to react to what we see, no prediction. (easy said than done of course, most of losing trade i have taken were due to I couldn't or refused to see, only when 15 minutes later, I can't believe my self not seeing, Buddha says let go let go let go let go...)

Cheers

Lux