Scalping

[Caseynotes]

Interesting video on scalping. It shows the video recording of a live trade that was turned into an educational video for trainees at a prop firm. The trading takes place on the price ladder with a running commentary and explanations by the educator having debriefed the trader.

The trader was looking to scalp 20 tick with 248 Lots but midway through an unscheduled breaking news event plunged the trade deep under water. The educator explains the traders rationale on how he set about trying to save the trade.

Not for the faint hearted and certainly a 'don't try this at home' unless you really know what you are doing.

"Big Trade Goes Wrong"   15 min.

 

 

[Turnip230248]

Scalping - does anyone trade using the one minute time frame?

Do you prefer to scalp Indices or forex or other instrument (state please) ?

Other comment on scalping techniques or educational sources please.

Thanks in advance.

[Caseynotes]

Hi @Turnip230248,  I often use the 1 min for periods of high volatility or highly volatile markets such as Dax. If you are looking to test scalping strategies this is a good basic introduction to practice with.

 https://admiralmarkets.com/education/articles/forex-strategy/forex-1-minute-scalping-strategy-explained

 

 

[Caseynotes]

With the long ranging trend move in the dax this morning was perfect for a simple MA crossover strategy.

[Turnip230248]

Scalping dax -one loser one win

 

[Caseynotes]

OBOS Entry Signals.

To add to the MA cross-over entry signal generator above here's one on overbought - oversold signal generators.

There are 3 types of OBOS entry signal generators you might come across, the first one is made by programmers who are not traders and doesn't work. They simply signal sell when price goes OB  (and vice versa)  but as we know price can remain OB for a long time and is often the best time to stay in.

The second type is better and they signal sell/buy when the  K line and D line cross over in OB or OS.

The best one is where a signal is generated when price is exiting OB or OS.

There are many OBOS indicators you can experiment with, let's take a look at Stochastics on a 1 min Dax chart.

As usual we have to play with the settings to match the market and time frame. The default settings for stochastic are K period 14; D period 3; and slowing 3. 

The K is very twitchy and gives many false signals so remove the K line and use the D line instead. The D is slower so the added Slowing is not needed so reduce Slowing from 3 to 1. And finally the K periods which is needed for the calcs, we want to adjust to give a reasonable number of signals but not too many and after back testing on this market and time frame I've elected 56. The OBOS levels are default (20,80).

So we have Stochastic 56,3,1.

As with the MA cross-over this will only work in a trend (though Stoch can be adjusted to work in a range), also on the 1 minute chart is the 100 EMA and the 240 Linear Weighted MA, we need these to be in correct order and sloping and not crossed.

Once the up trend is established by the ordered (100 above 240) and upward sloping MAs we have trend and direction so in the up trend we are only looking for Longs.

We want to enter on a dip and the pullback should be strong enough for Stoch to reach the oversold and turn to start a new upward leg, we are using the momentum of a leading indicator to signal a change in price direction from down to up to continue the trend.

As can be seen to the right of the chart the trend weakens and the MAs look to crash into each other so caution should be used at that point.

On the chart we have 7 times when Stoch turned at oversold over the course of the day after the MAs signaled a new up trend earlier in the day, there was 1 fail and 1 where the MAs were confused but Stoch still gave a correct signal so 6 of the 7 correctly anticipated price reversal and trend continuation.

 

 

[TheGuru12]

Scalping would by nye on impossible with IG. Even using the API it would be difficult. 

[Caseynotes]

@TheGuru12,  I've absolutely no idea what your definition of scalping is nor why you think it's impossible. True enough many wouldn't call 7 trades a day scalping and would be thinking more in terms of 20-50 or even more a day. The title is loose and I'm just clumping in anything I like that comes within the day trading boundary.