Scalping 90% win/loss but how BIG is the loss?

[LauraRomans]

Do you scalp?

What is you profit/stop loss ratio?

For example I use a stop that has a loss 4x greater than the profit limit. A TIMED stopped takes me 50% of the time so the average profit and aferage loss per trade are almost equal. If I can be right 75% of the time then Im in the black.

Does this seem out of the box? Bad thinking? Too risky? Leaving profit on the table? Etc.

ALL comments are welcomed!

 

[icmarketsfx]

The only way to scalp successfully is cut your losses earlier and let your profit to go little further.

 

[ffsear]

I position / swing trade, however i'm 7 weeks into demo scalping at the moment and i'm thinking about going live with what I've been doing.

To me scalping is purely about chart patterns, and not about having a mathematical system or fixed stoploss or or profit targets. Its trading what you see in its purest terms.

See attached a scalp sell I just took on AUd/USD. My entry was the pin that sticks its neck out. If the pattern failed i'd exit straight away, ( in this case, about 3 pips) rather then stick to some form for fixed 10 pip stop loss. In this case the pattern did not fail.

I'm doing ok with this method, slightly over 50% strike rate but the main thing is the losses are getting cut, the winners are running.

 

[ffsear]

It dosen't always work, here's one that failed on the FTSE100. But it only cost me 4 points. While AUD/USD made me 8

 

[Forexmospherian]

The only way to scalp successfully is cut your losses earlier and let your profit to go little further.

And also advanced money management with stake sizing via pyramiding and peeling with stops moved into a least 1 or 2 pips profit from the start.


Regards


F

 

[wallstreetwarrior87]

To me scalping is purely about chart patterns, and not about having a mathematical system or fixed stoploss or or profit targets. Its trading what you see in its purest terms.

Good point ff, but I would go even further and say all trading should be seen in this light (purest form), and not just scalping.

Only my opinion of course.

 

[Sigma-D]

I position / swing trade, however i'm 7 weeks into demo scalping at the moment and i'm thinking about going live with what I've been doing.

To me scalping is purely about chart patterns, and not about having a mathematical system or fixed stoploss or or profit targets. Its trading what you see in its purest terms.

See attached a scalp sell I just took on AUd/USD. My entry was the pin that sticks its neck out. If the pattern failed i'd exit straight away, ( in this case, about 3 pips) rather then stick to some form for fixed 10 pip stop loss. In this case the pattern did not fail.

I'm doing ok with this method, slightly over 50% strike rate but the main thing is the losses are getting cut, the winners are running.

Nicely interpreted chart pattern and sound risk management. These setups occur in all timeframes don't they; not just on the 2 mins? And in place of 3 pips and 8 pips it could just as easily be 30 pips and 80 pips. Not that the relative difference in size with respect to return/risk is significant in any way, but trading so close to the noise and looking for stops and targets just a few multiples of the spread is surely a disadvantage? The price 'noise' of any pair which is truly random and therefore unavoidable is something we can tune out by using the higher timeframes. It just feels like the closer you get to that level of action the more you have to factor in the zero on the roulette wheel.

 

[wallstreetwarrior87]

The price 'noise' of any pair which is truly random and therefore unavoidable is something we can tune out by using the higher timeframes. It just feels like the closer you get to that level of action the more you have to factor in the zero on the roulette wheel.

Please can you define noise?

I really think that it needs a more accurate description. This is nothing like roulette (although it may well appear that way). Every action is a decision, whether it is systematic or conscious, this is not the same for roulette.

I really think you are putting yourself at a disadvantage if you just consider noise as nothing more than random.

Its not my job to try to convert anyone, but maybe a nudge now and again wont hurt

But lets first get a true meaning to the definition of noise, then maybe it may start to become apparent that it is relevant to the context you are basing your viewpoint on.

You could always try to use ffsear's charts as a starting point?

 

[tar]

Please can you define noise?

I really think that it needs a more accurate description. This is nothing like roulette (although it may well appear that way). Every action is a decision, whether it is systematic or conscious, this is not the same for roulette.

I really think you are putting yourself at a disadvantage if you just consider noise as nothing more than random.

Its not my job to try to convert anyone, but maybe a nudge now and again wont hurt

But lets first get a true meaning to the definition of noise, then maybe it may start to become apparent that it is relevant to the context you are basing your viewpoint on.

You could always try to use ffsear's charts as a starting point?

He was comparing the spread with the roulette's zero which is valid .
3 points targets will never be like 30 points targets , and the reason is the costs factor % wise , i gave examples about this many times but a quick repeat :

If you aim for 7 pips and pay 1 as a spread then if the market moved in your favor 7 points you are up 6 and if it moved against you 7 then you are down 8 , there's a huge difference between 6 and 8 , although the market has moved equally in both instances .
Now if you aim for 70 pips instead then it would be 69 vs 71 for a 70 pips movement .

 

[SpreadDoctor]

To me scalping is purely about chart patterns, and not about having a mathematical system or fixed stoploss or or profit targets. Its trading what you see in its purest terms.

I hear what you are saying however for me at least situational awareness is very important. So time of day, scheduled/unscheduled news and market sentiment are important and they are the context to which the game is played.

I wish you continued good luck.

 

[ffsear]

Not that the relative difference in size with respect to return/risk is significant in any way, but trading so close to the noise and looking for stops and targets just a few multiples of the spread is surely a disadvantage? .

This was my issue, and why i decided to demo this new approach. I'm only trading markets that have a 1 pip or less spread, which in my case is FTSE100, DAX30, UJ, AU, and EU.

 

[Sigma-D]

Noise: For any given timeframe the amplitude of price movement through which you expect it to move both with and against your direction without it being indicative of any major change to the current bias currently being exhibited in that timeframe.

 

[ffsear]

I hear what you are saying however for me at least situational awareness is very important. So time of day, scheduled/unscheduled news and market sentiment are important and they are the context to which the game is played.

I wish you continued good luck.

100% - Always have 1 eye on the news and will never trade around those times.

 

[ffsear]

If you aim for 7 pips and pay 1 as a spread then if the market moved in your favor 7 points you are up 6 and if it moved against you 7 then you are down 8 , there's a huge difference between 6 and 8 , although the market has moved equally in both instances .
Now if you aim for 70 pips instead then it would be 69 vs 71 for a 70 pips movement .

Ok, but how many times a day can you target 70 pips? Not many i should think. For me its a case of increasing trading activity. Yes your costs will increase, however if you are still able to make a margin, then the more you do it, the more you will make.

 

[wallstreetwarrior87]

He was comparing the spread with the roulette's zero which is valid .
3 points targets will never be like 30 points targets , and the reason is the costs factor % wise , i gave examples about this many times but a quick repeat :

If you aim for 7 pips and pay 1 as a spread then if the market moved in your favor 7 points you are up 6 and if it moved against you 7 then you are down 8 , there's a huge difference between 6 and 8 , although the market has moved equally in both instances .
Now if you aim for 70 pips instead then it would be 69 vs 71 for a 70 pips movement .

Your posts about cost factor, I totally agree with, but it is the ability, speed of reaction, knowledge (and dare I say talent?) which make this style of trading viable to a few and a non starter to the majority.

The problem when using roulette as an example to compare to trading is that it relates random activity to trading as being the same as playing roulette. This is not the case. Anything trading based is done so via decisions, with roulette there is no decision to the outcome.

Now if we want to get into the nitty gritty, and talk about timing the market,so that the trader enters as the pros sweep the book, then very rarely do we find ourselves behind the spread, and we must know the order type to use, but to be able to do this we must first get rid of this notion about noise.

This is way beyond the scope of the original post, but it does happen. How can we know?

T&S volume data in a transparent market does not lie.

Then once we have mastered our craft in a transparent market, we can use these principals on any chart/market (that is relatively liquid and has a tight spread).

I once again understand your point about costs and you are correct, but costs dont relate to achieved profits. Opportunity = "potential" profits.

 

[wallstreetwarrior87]

Ok, but how many times a day can you target 70 pips? Not many i should think. For me its a case of increasing trading activity. Yes your costs will increase, however if you are still able to make a margin, then the more you do it, the more you will make.

Yes, this is the point that seems to be misunderstood.

All businesses have costs.

Sometimes we need higher revenues to achieve higher net profits.

All about the bottom line.

 

[tar]

Ok, but how many times a day can you target 70 pips? Not many i should think. For me its a case of increasing trading activity. Yes your costs will increase, however if you are still able to make a margin, then the more you do it, the more you will make.

And how many times a day you will have the market goes against you 70 pips ?

 

[tar]

Your posts about cost factor, I totally agree with, but it is the ability, speed of reaction, knowledge (and dare I say talent?) which make this style of trading viable to a few and a non starter to the majority.

The problem when using roulette as an example to compare to trading is that it relates random activity to trading as being the same as playing roulette. This is not the case. Anything trading based is done so via decisions, with roulette there is no decision to the outcome.

Now if we want to get into the nitty gritty, and talk about timing the market,so that the trader enters as the pros sweep the book, then very rarely do we find ourselves behind the spread, and we must know the order type to use, but to be able to do this we must first get rid of this notion about noise.

This is way beyond the scope of the original post, but it does happen. How can we know?

T&S volume data in a transparent market does not lie.

Then once we have mastered our craft in a transparent market, we can use these principals on any chart/market (that is relatively liquid and has a tight spread).

I once again understand your point about costs and you are correct, but costs dont relate to achieved profits. Opportunity = "potential" profits.

Neither i said it cant be done or impossible , just stating the facts about the weight of costs and odds against you when scalping for few points here and there .
You have many markets to trade fx , indices and commodities , moving all day long , if you scan these markets you will find proper daytrading opportunities in a daily basis , so a 50-100 points isn't much to ask .

 

[ffsear]

And how many times a day you will have the market goes against you 70 pips ?

With a 10 pip s/l purely as a safety net. I should hope never

I don't really see how that's relevant though.

 

[ffsear]

You have many markets to trade fx , indices and commodities , moving all day long , if you scan these markets you will find proper daytrading opportunities in a daily basis , so a 50-100 points isn't much to ask .

Unless you are constantly picking tops and bottoms, this simply is not the case.