Intraday Trading the Forex market to make consistent profit

[Forexmospherian]

A dynamic moving market and static MM and dead analysis ??

Do you use static targets and dead analysis ?

Normally do you take say 25 pip or 30 pip stops and look for say 50 pip targets - give or take a pip or so ??

Do use "dead " 4 hr - daily - weekly - monthly charts to work out your projected targets ??

Do you honestly think a daily or weekly chart can make you more money then a 10 second tick or 1 min chart ??

Was you taught to hang on in there - and not to be shaken out of a trade ?

If you honestly say yes to all these questions - you have been taught well by the industry - your tutor or mentor as been taught be a former commercial forex trader - who was taught by another commercial guy - who going back 80 -100 yrs might have been taught by Jessie Livermore

Wake up and smell the coffee - times have changed - crooks are now all high tech - gameplay is sophisicated - they first get inside a victim's mind - before they rob them blind

The market moves like water in a large bowl with holes in it.

It can be tipped one way or another and you do not even notice its being drained off .

You need to be dynamic and totally flexible - remember all you want is to keep making money - every day - every week and every month

To do that you have to be flexible - and to get use to losing.

Entries are paramount

Far more important than exits - simply because if you get your entry spot on and correct - even if you **** up your exit - you can still make money

Get you entry wrong - and then the only exit you might end up doing is a one with a big loss.

So if you don't get your entry right and within 30 seconds - or 3 or 4 mins you are not in profit - get out - either with 1 pip profit or 2 pip loss - just exit - because more than likely you are wrong - and no way do you need 10 pips or 25 pips to find out.

Its one of the most important skills you need to learn in scalping - and I will cover it in more depth over the course of the thread

There are many ways to skin a rabbit - and there are many ways to scalp - however some are a lot better than others - and my favourite is Sweet Spot Scalping - ie SSS.

I think that is enough for one day - but over the next week I will be covering why all I need to make money is a tick chart and a 1 min chart and a stopwatch - along with my favourite LR's

With regards to Money Management and how to deal with losses and so many other parts of my complex method - I will cover it over the next few weeks - giving you time to see me carry the strategy /methodology out every day of the week in the other blog

Regards

F

 

[Forexmospherian]

hi fxmos
this is my first post here on t2w,been trading on of for 5 years now and getting no were fast,blowing accounts,buying systems, strategys ,indicators,u name it i got it,so after reading your tread u seem to no what your talking about and to tell u the truth i still hav nt got profitable,so i will follow you on your travel's here cheers

Hi Sodajoe

You could be another perfect student for me to get profitable on this thread

You are welcome and hopefully I will be able to answer your questions and show you how over the next 6 - 9 months you can become consistently profitable,

Will be trading most days this week from say 7 00 am to 5 00 pm with many breaks in between

Please refresh the page on the other thread every 30 seconds in the busy periods to keep up with the comments

Regards

F

 

[scoop]

GM F & all.
Id like to reserve a front row seat in your old grey F, looks like it could get quite crowded in there

 

[Zokynho]

I like what i see so far...Will follow you F.....

I am in this bussiness almost 5 years (more profitable than not) but still not satisfied as I always think that something missing...

My goal is to be constant,and think that this is the most important part of trading (make money everyday) and i love scalping so guess i can teach a lot from you...

Keep up a good work

You said that that the entry is most important and i agree with you,are you using some kind of trigger or?

Regards!

 

[Liquid validity]

Also if on a live account - don't use over 2% of your capital . I appreciate on say just $500 or say $1000 capital accounts you will be on small min lots

That's OK - after say a few hundred trades - less than a couple of months - if you have achieved over 65% win ratios and kept your stops under 5 - 7 pips ( including spreads) you can review etc

http://www.trade2win.com/boards/for...ders-v-commercial-traders-31.html#post2255004

http://www.trade2win.com/boards/for...ders-v-commercial-traders-25.html#post2254014

F, you haven't forgotten about the account leverage issue I raised have you?
I know you said on your journal thread you use 0.5-1% risk.

Even 1% risk with a 5 point stop is still 20x account leverage.
Anyone using 2% risk with a 5 point stop is running 40x account leverage...

Its fair to say that with volatility as it is at present, it may not be as big an issue.
Not if, but when volatility increases again, 20-40x account leverage
could catch quite a few people out...

I'm not going to knock the 5 point stop size.
Doing so would imply that tick scalping is the same.

With this kind of trading, account leverage and trading costs
are the make or break factors.

You agree on the above point in the posts linked.
So why now say 2% risk is OK with a 5 point stop - it isn't.
That is the exact reason Lehmans went bust - over leveraged real estate deals.
Bit bizarre that you agreed in the past yet here we are again,
2% risk with a 5 point stop is 40X account leverage

With a 5 point stop, 0.5% risk per trade keeps account leverage at sane levels.
Even then it is still 10X account leverage.
Generally, 5X account leverage is regarded as safest.

The single most influential reason for large gains (and large losses)
with 2% risk / 5 point stop is over leverage, pure and simple.

This is basic stuff, and dangerous if abused.
There are new / newish people reading this...
Anyone who does not understand the account leverage issue should not be doing this.

 

[ffsear]

To be fair he did say....

Hi Members



I also recommend that you only start following what I am going to explain if you have at least 18 months or 2 yrs of existing forex trading knowledge behind you - so that you at least understand the basics - and also have already experienced how easy it is to lose money day trading.

F

 

[Liquid validity]

To be fair he did say....

I know he did.
Experience does not mean over leverage becomes a non issue.
I said earlier, over leverage is the exact reason that lead to Lehmans downfall.
Over leverage is not good, no matter who you are.

 

[DowJones]

I'm not trying to denigrate fxmo here (he's always been v polite to me, & to be fair I don't know his a/c size details, trade stats etc) but new traders should be aware that LV is completely correct in the points he makes about over-leverage.

 

[Liquid validity]

I'm not trying to denigrate fxmo here (he's always been v polite to me, & to be fair I don't know his a/c size details, trade stats etc) but new traders should be aware that LV is completely correct in the points he makes about over-leverage.

Just for the record, me neither.
I have to admit it rattles me that this has come up again,
when I've mentioned it previously though.
Even more so as this thread is specifically aimed at new or newish traders...

 

[Forexmospherian]

Hi guys - yes - i agree with LV and DJ

I am speaking with forked tongue here - as with my own main account with over $50 -70k in it - I rarely use over 1 % on 5 pip stops - and my free trades can be as low as 0. 2% stakes and when I have 2 scalp on I am on 0 .4 / 5 %

However on smaller account sizes under 10k - I personally would use 2 % stake sizes - even with 5 pip stops - but only because I feel I have a good enough track record to get away with it.

I actually personally suffered when Lehmans went down - as had a large amount of funds ( over several 100k's) in an unsecured account

Actually the real reason they went bust was due to Goldman Sachs not paying them a loan back on the Monday morning - when they knew they were already in trouble and of course GS are notorious for putting the boot in too any of their financial colleagues ;-)

Also I am going to look silly when I open a $500 fun account and start using 15% stake sizes with leverage at 500 or 1000 - but I have done it before and accept if I lose and wipe the account out - the actual risk is still less than 1% on my $50+ k account

So for me its all relative - numbers in isolation can be very misleading

Would I ever use 3% or even 5% stake size on an account over $10k - NO - but yet again its still in actual money risk terms still less than me placing a 1% stake off a 100k account with a 5 pip stop

Regards

F

 

[Liquid validity]

I actually personally suffered when Lehmans went down - as had a large amount of funds ( over several 100k's) in an unsecured account

Actually the real reason they went bust was due to Goldman Sachs not paying them a loan back on the Monday morning - when they knew they were already in trouble and of course GS are notorious for putting the boot in too any of their financial colleagues ;-)

That was just the final nail in the coffin.
It was over leverage that put them in the position of having to
be reliant on GS.

http://www.senseoncents.com/2010/03/dick-fuld-unaware-of-lehmans-cooking-the-books-stop-it/
http://rt.com/business/lehman-brothers-5-year-817/

Anyway, more to the point, what you do is your concern alone.
In a thread like this aimed at new traders,
I wouldn't recommend more than 0.5% risk with a 5 point stop, end of.

 

[tdezo]

2%

A 2% loss is a 2% loss of account value regardless of account size , stop loss or leverage , is'n it?

One can have 30-40 straight 2% losses and still in the game if a high enough margin keeps the margin call away. Is that true?

 

[Liquid validity]

A 2% loss is a 2% loss of account value regardless of account size , stop loss or leverage , is'n it?

One can have 30-40 straight 2% losses and still in the game if a high enough margin keeps the margin call away. Is that true?

Yes, completely true - a 2% loss is a 2% loss regardless.

Now we come to leverage.
Not margin leverage - margin leverage is merely the deposit
required by your broker to open a trade.

Account leverage is something else and often overlooked.
The main reason for this is that with a stop wider than 20 points,
account leverage simply is not an issue - stick to 2% risk and you will be fine.

Play around with this calculator to see what I mean:
http://www.babypips.com/tools/forex-calculators/positionsize.php

Try these values:
Account Balance = 50000
Risk % = 2

Now leave those 2 values constant, and adjust the stop size.
Try these:
5 point stop = 40X account leverage.
10 point stop = 20X account leverage.
20 point stop = 10X account leverage.
40 point stop = 5X account leverage.

With each stop size, note down the position size.
Then divide the position size by the account value to get
account leverage per trade.

In the case of a 5 point stop, the position size = 2,000,000.
divide that by account balance of 50,000 = 40.
So account leverage is 40X.

Thats what it means in practice.
50k to control 2million.

Think about slippage, internet connection problems, broker server problems etc.
Then think about whether you would be happy if any of the above happened
whilst sitting on a 2 mil position.

Its fair to say that most of the above points are rare,
but that certainly does not mean you should disregard them.
Now try 50K account, 0.5% risk and 5 point stop in the calculator.

2% risk is just a general ballpark one size fits all starting point.
It does not suit every situation.

 

[Forexmospherian]

Hi guys

Sorry have not made any comments this afternoon on this thread - unfortunately had difficulties getting onto T2W via google chrome

All my other web links were working fine - but not T2W - strange ???

Well last 20 mins it been OK - so will try now to clarify a few points and go on with some comments on my method etc

Regards

F

 

[Forexmospherian]

I think LV and DJ have bought up a few points i need to clarify

First point - this thread and my other trading thread are not really for new traders - ie repeat - NOT FOR NEW TRADERS WITH LESS THAN SAY A YEAR'S EXPERIENCE

They are geared at traders who might have been studying forex trading for 2- 5 yrs and not really getting anywhere. They need to know and understand all the basics and ideally to have traded "live" with real money - at least 50 times

Without this basic experience behind them - they are going to have big problems trying to understand what I am doing - as my way is not that simple and is fairly complex.

I don't mind assisting suitable traders - totally free of charge - I am not selling anything etc - and the reason I am doing this is because I was helped along the way by a couple of very experienced traders - who gave me tips I don't think I would have discovered on my own for many more years - ie they saved my 2- 4 years off my fx trading learning journey.

Further more - I do the live blog to really help me and to get me into my own particular trading zone - I even look back on my notes to see what I was saying or thinking in the price area of question. If other like minded intraday traders join in - great - company is always welcome as some days trading is boring - and you need breaks and interaction.

With regards to how much you risk on 5 pip stops - that must be your own decision but as both LV and DJ have said keep it small -LV suggests only 0 5% but I would have to disagree on small account under say $5 or 10 k and I will explain more

Commercial FX day trading and retail FX day trading is totally chalk and cheese - it is different

I can do 30 -50% per month on a $50k account - quite easily actually even only using small leverage and stakes under 1%

However on a $5 million or $50 million - I would probably struggle to do 30% in a year - it's whole different game that retailers would not be used too.

Similar if I have entered the FX "game" - all and sundry are told - you can lose more money than you started with - and we all know accounts can be wiped out

That is a fact.

So therefore when you are learning any new way - system - or method - try it on demo first and don't go live for a month or two - or certainly only after 100+ trades - just 10 or 30 are not enough

For my method I have already stated-

Entries are paramount - a key part to the equation far more important than exits etc etc

Therefore you have to learn to get them right. You should no proceed live if you cannot get over a minimum 60% win ratio on at least 100 trades

You will have losses in a row - I many weeks have 3 losses in a row - but in over 9000 trades and 4 yrs + I have never had more than 7 losses in a row.

During that time I have many day of 12 - 16 consecutive wins in a row and my best is over mid 20's

Now you would expect me to be quite good with the amount of trades I have taken - but anyone new - will need at least 500 trades + to be more consistent

This might only take 7 - 12 weeks - so no real hardship.

I know LV and DJ might question my low "Black Swan" bad period and scalpers with even a 70% win ratio can still have 10 -15 bad trades in a row - even over a few days or week.

But there are simple answers - stay with very low stakes after you have finished your demo trial - and if you have more than 4 losses in a row - stop whether for an hr or two or even a day - find out what happened - before recommencing.

But once you have done a few hundred live trades with 5 - 7 pip stops - ( MM has already now on demo) - then proceed up to 1% or what you feel comfortable with your account - but please dont go then over 2%

Retail traders advantages include leverage - but you do need to know what you are doing before you really start playing with it - and that will be another lesson for me to pass on to any members who end ups doing over 500 live trades with their win ratios on small stops over 60 -65%

If you do just ignore advice given - be it on your own head

 

[Forexmospherian]

How to get a perfect scalp entry

If only it was so easy

Its a skill - that can be taught - but to accomplish it you do need lots of practice and to know what your are actually looking for

A perfect scalp entry - can easily be achieved under 5 pips - including 1 - 2 pip stake as well - and then can lead to 7 -25 + pips all within 10 - 15 minutes.

So you have low risk and a possible RR of over 3 or 4 - all within 15 mins - - that's efficient trading

I call it Sweet Spot Scalping - or SSS

To find the entry price within 1 or 2 pips requires total focus and many clues to assist on your decision

1. We need to have price moving up or down the previous 30 mins - with at least 2 or 5 mins of good movement

2. It needs to be ideally in a time window

3. Price need to hit a S or R - it can be horizontal - of any nature - ie fib level or just a scalp interim level - or it might be a dynamic S or R level - off a trendline or a strong LR / MA - etc

4. Ideally price need to be OB / OS on under 30 min frames

5. Is there any divergence going on ?

6 Are we stopping for a LH or a HL ?

7. Are we in a fade out or false move - I did post a GU chart on I think Friday of a perfect false wave - set up to confuse and catch traders out

8. Will price structure support my planned scalp ??

9 Have we breached under or over a 1 min trend line and done a HH and HL in under 4 minutes?

10 Have we gone over 30 mins without a new interim low or high ?-

I can go on - but out of just 10 things to look for - if you get over 5 or 6 - its looking good

Over 7 - brilliant - under 3 - not enough

So.........

We enter the scalp

We need to be in profit ideally under 2 mins - even if its just 1 pip up

Good entries will see profit up by 3 - 5 pips in under 4 minutes

Expect a pullback - allow 1 or 2 pips under entry - but not 3 or 5 - that shows your entry is wrong

Targets ?

Watch your stop watch and PA -

Look for opposite correlations and multi pairs also stopping and turning

OK - you get it wrong - and you only make 4 pips and you take profit

No problem - thats still a win even if not quite a RR of 1

You get it right ........... great - and after 10 - 14 pips you take 70% off - lock in your 30% stop in say 2 pips of profit - and then move on

There are multi ways to play it - but if that entry is nor right - you might end up with a loss

Every move over 7 pips can be another trade for me - if need be

You can end up getting there - but it will not happen under a year or so - any skills take a lot of hard work and practice to get to the level you are after

Good Luck - and I can assure you after you can read PA at the "coalface" - it all gets easier

 

[ffsear]

Do you look at any individual candles themselves (assuming you use candles) such as pin bars, engulfing bars etc etc ?

 

[Liquid validity]

This has nothing to do with 'commercial Vs retail'.
Over leverage is over leverage end of.

If you want to over gear a 10K p1ss about account - fine.
Someone whose entire pot is 10K, in my view should not
be increasing account leverage.

To go someway to mitigating over leverage risk:
1. Backup net connection (USB stick etc.)
2. Uninterruptible power supply.
3. Broker phone nos. to hand.
4. Backup broker account to freeze open positions that can't be closed.
5. Avoid scenarios where slippage is more likely:
a. market open
b. exact time of news release.
c. rollover.

That just leaves normal slippage.
If someone chooses to accept that slippage risk with an
over geared position, fine, but they should be made aware of the issue.

Search this site for slippage, here are a few cases:
http://www.trade2win.com/boards/for...rokers-fx-horror-fill-1-26-slippage-stop.html
http://www.trade2win.com/boards/for...rokers-fx-horror-fill-1-26-slippage-stop.html

Now consider just 20 points slippage on a 5 point stop at 2% risk.
That is a 10% account loss.
Rare, maybe.
Worth dismissing - no.

 

[tar]

This has nothing to do with 'commercial Vs retail'.
Over leverage is over leverage end of.

If you want to over gear a 10K p1ss about account - fine.
Someone whose entire pot is 10K, in my view should not
be increasing accou0ATo go someway to mitigating over leverage risk:
1. Backup net connection (USB stick etc.)
2. Uninterruptible power supply.
3. Broker phone nos. to hand.
4. Backup broker account to freeze open positions that can't be closed.
5. Avoid scenarios where slippage is more likely:
a. market open
b. exact time of news release.
c. rollover.

That just leaves normal slippage.
If someone chooses to accept that slippage risk with an
over geared position, fine, but they should be made aware of the issue.

Search this site for slippage, here are a few cases:
http://www.trade2win.com/boards/for...rokers-fx-horror-fill-1-26-slippage-stop.html
http://www.trade2win.com/boards/for...rokers-fx-horror-fill-1-26-slippage-stop.html

Now consider just 20 points slippage on a 5 point stop at 2% risk.
That is a 10% account loss.
Rare, maybe.
Worth dismissing - no.

Agree but i don't think a 20 pips slippage is rare , the currency could gap 50 pips easily , not to mention at high volatility times the currency could move hundreds if not thousands of pips all day long i.e : 2008 .

 

[Liquid validity]

Do you look at any individual candles themselves (assuming you use candles) such as pin bars, engulfing bars etc etc ?

Change timeframe or chart tick value and they disappear,
which to me at least, demonstrates their true worth, i.e. - none.
Same with indicators.

Price and price levels are the only constant, regardless of chart settings.
Pin bars don't show up on the tape either.

For me the high / low of a bar is more relevant than an arbitrary open close value.
Either that or a line chart.
The market is not a 1 min chart, its a collection of trades...