I showed the technique in the last few videos with very small size assuming a small account. That doesn't have to be so. Any size can be traded. I showed it on MNQ trading 1c but one could chose to trade 20 ES contracts and each scale in (I meant to say each add on trade) an additional 20 contracts with no averaging down, doubling up or tripling up. The size depends on one's tolerance for risk and one's account size. I simply showed it on the smallest size in MNQ one could trade. I watched the videos again. I want to clarify something I said near the end of the second video. I said, "no averaging down." I know it looks like it is averaging down but I do not consider it as averaging down. In the first video when I say "I will add another contract" what I really mean in this method is I will enter a "new" trade and exit that trade with 6 points while I await the probing to eventually go back up to any previous positions that are still losing and I capture 6 points from them. At least that is the goal. So, when I refer to add on or scale in that is really not what I mean. I am so used to averaging down (and doing so with intent) that my brain defaulted to that lingo and my mouth obeyed! Just look at it as a SERIES of Indvidual trades trying to scalp at least 6 points on each trade as the market moves sideways, down, or up. This is a way to trade on most every bar. With averaging down that is not so. The context has to support averaging down. And it will certainly be fewer times than this and not on every bar. The method is a methodical way of capturing small profits on many bars (even the same bar multiple times or on consecutive bars) Most bars can render this type of trading regardless of the overall direction of the market if they, on average, are big even to render the PT of 1/2 the average size bar. ON MNQ trying to capture less than 6 points on each trade is generally not worth the effort when using this to trade 1c each time. If the average size bar is to small that 1/2 of its range is less than 6 points in the MNQ (or NQ) I probably would not use this method. Those PTs in MES, if trading MES, would be different in terms of points. It would still be 1/2 the size of the average bar but points likely wouldn't be six points unless the average bar indicates that is a probable scenario. Just thought I used clarify as I did not use the best lingo in the recorded video, and I do not want to confuse people over what I was aiming to do in this method. So, see this method as EACH trade being an independent trade focused on capturing 6 points in this example. The intent is not averaging down nor doubling up nor tripling up. It is simply taking series of trades independently while holding others previous taken until they themselves render 6 points as the market heads back up because of market CONSTANT probing on EVERY bar. On smaller TFs that probing back and forth on one bar on a larger TF bar is actually usually a series of multi-bar probes on smaller TFs. In the video those last three 1c trades I exited were held and went through big drawn down in that move down (paper loss) until the market probed back up deeply and took them out too with a profit near the end of the video. In other words, I didn't actually exit them until price probed way back up enough to give me a profit on them. The same sort of thing can be done shorting on that down move. Just doing a series of short trades over and over as the market moves down. Some would say isn't that best? Well yes it could be but I wanted to show how one can go long in a sideways move, uptrend move and even in a down trend move all the while betting on probing back at least 6 points as on most all the bars the bars as the market moved and the bars printed. One can also short in sideways downtrend..uptrend because of the constant probing. I do believe this is one PA technique that could possibly be made into an algo. I see most PA techniques as nigh impossible to program, but I could be wrong as I am not a programmer.
Good Morning Volpri, How are you doing today sir? Hope all is well with your family and yourself. I appreciate your discussion on day trading. A few questions please: Please use yesterday chart of NQ 5 minute bars and pretend you went long at the green bar shown in the picture. 1. When you are scalping, how do you know when Exactly when to exit the trade for a profits, when not averaging down? For example, let's say you enter 1 MNQ, what is your profit target and how do you know when to exit? 2. When you are scalping, how do you know when Exactly when to exit the trade for a profits, when you are averaging down? For example, let's say you add to losing position and now you holding 10 MNQ contracts, its your mindset exit at breakeven or hold the 10 contracts for more profits, exit at 1 point,4 point, 6 point? 3. Why do you not enter with 1 contract and exit at 1 fixed stop loss or exit at 1 fixed profit target for ALL your trades? Please elaborate on this question as much as you can. 4. What is the largest loss (account drawdown) you taken after adding to losing trades of XX contracts? 4a. How long did take you to recover that largest loss? 4b. Was the largest loss due to a mistake or per your trading plan? 4c. What exactly did you do to recover this largest loss (account drawdown)? 4d. How many contracts were you holding when you talk the loss? 4e. If you remember the day and trade of the largest loss, can you please post it. 5. When you are scalping and averaging into losing trade positions what profit target do you exit all the contracts at? 6. When you are scalping and averaging into losing trade positions what exactly dollar amount do you exit the trade for a loss? 7. What is the max contract size you use to average into losing trade positions? Is it 5 MNQ, 10 MNQ, or XX MNQ? 8. When you are scalping and averaging into losing trade positions, how do you know exactly when to exit the entire position for a loss? 9. Have you ever had two losses in a row when averaging into losing trades? If so, what did you do to recover those losses. 10. Are you making a trade decision on ever 5 minute bar only? 11. When you add to losing positions are you adding in a martingale (e.g.1,2,4,8,16,32,64) technique or are you adding 1 (e.g., add 1, then add 1, then add 1, then add 1, then add 1, and on and on) contract at a time. 12. When you are averaging into losing positions, when per the price action per your eyes, do you make the decision to exit for breakeven? Thank you
@SML to kind of answer in a live sort of way your first three questions I thought it better to record a video of section of the chart in your post. I make comments as to my reasoning for scalping that price action and you will see how I handle PT and SL in the video. You will see why I would have gone short at your bars and not long. For me fixed SL ad PT are for the most part a useless exercise simply because the market operates on tendencies and probing's, and I cannot structure a trade expect the market to "fit" into my structure that I devise. I do not know what the market is going to do next, but I can see what it has done in the last few bars and extrapolate out into the near future and arrive at some idea as to the directional probability it will likely take next and then place a bet on that. You will see how I move SLs and PTs around depending on "what" price is doing and "how" it is doing whatever it is doing. But the market is uncertain, and I cannot know why it moves the way it does. I can only postulate from what I observe has happened and take a position with tactics ready to employ should my judgment on the next move be wrong. These scalps in the price action captured 128.50 point in the NQ in about 1 hour and 40 minutes of trading. This is likely how I would have traded that section of your chart. That said, I may have traded it different also because I have a variety of discretionary techniques I use. There were some bars big enough and with enough momentum I could have scalped several times on the same bar, if I was in the that mood. Or I might have taken the slower road and did it the way I show in the video. Some days I feel really good and think clearly and can just go to town clicking away. Other days my brain is in granny gear and I have to slow trading down. I did not answer your question #1 directly but tomorrow if I get time I will make another video showing how I would have traded your two bars you have indicated with arrows HAD I gone long instead of short on those bars. It is after 4:00 a.m. and I got to grab a little shut eye as I have to arise at 9:00 a.m. IF I can crawl my carcass out of bed. LOL Take note this was trading very small; 1 contract NQ. The same could have been done with 10 contracts. But 1 contract at a time grabbing 128.50 X $20.00 per point is nothing to frown at for less than 2 hours of work. When trading ranges are broad enough usually in the first two hours of RTHs there are several opportunities to trade wedges and micro wedges and make money. They don't have to occur just in TRs. If there is no TR but price going up and down in trends even trends can have wedges forming. Look to the left on my platform and you can see that the trades render 128.50 and look at the trades and every trade had an actual risk less than the profit. That is they took on some adverse move but then went in my favor on a larger move than my risk. None ever came close to where I moved my SLs around to as the trade was working. I have the SLs in case of a catastrophic crash or say internet goes down or broker goes to sleep LOL.
1. When you are scalping, how do you know when Exactly when to exit the trade for a profits, when not averaging down? For example, let's say you enter 1 MNQ, what is your profit target and how do you know when to exit? Like in the video it depends on "how" price is moving. IF is stalling around after I take a position I may exit with 1 point. If it is showing me, it is moving fairly well, I may go for more and keep sliding my exit price down or up depending on whether my trade is long or short. I have no set agenda on PT. I prefer to let the market dictate that to me via its constant probing and "how" it probes or the character of its probing. 2. When you are scalping, how do you know when Exactly when to exit the trade for a profits, when you are averaging down? For example, let's say you add to losing position and now you holding 10 MNQ contracts, its your mindset exit at breakeven or hold the 10 contracts for more profits, exit at 1 point,4 point, 6 point? If averaging down which I didn't do in the video my minimum goal is to make money on all my averaged down entries and at least BE on my initial entry. That always doesn't happen but that is what I like to see. The fact that I averaged down increase "probability" in my favor that I will exit with a profit or at least scratch the trade. Anytime you increase probability you decrease reward. It is extremely hard to increase probability and capture big reward. You either got low probability and bigger reward/small risk (if the trade works) or high probability and small reward/big risk. The perfect trade is to have both high probability and big reward with small risk but that doesn't happen often. This is the reason why I say as a scalper I "grab the profits" as the market give them to me. The fact that I averaged down to make a losing trade more likely to become a winner I cannot generally expect a big reward because price has to move back to my initial BE point and above it for more profit. Too much of the probe would have already been made just to get me to BE to then hand me a big reward. So, I grab what I can. I know this sounds ass backwards, but traders seem to think that if a trade is high probability, then the reward will likely be bigger. However, that is wrong thinking for a scalper. If I increase my probability to get out with a winner (by averaging down) then I actually decrease big reward. The fact I averaged down shows my initial entry point was not that good, and price may not get me back to BE or a small reward without averaging down. So, to at least NOT LOSE I average down try to make money on averaged down entries and at least exit BE on my initial entry. Again, a scalper HAS TO MAINTAIN A HIGH WIN RATE. There is no other route for him. This all said I do not look to exit those 10 contracts at 1, 4, or 6 points. Whatever the market gives on that averaged down position I grab it. If I get out to early and it keeps moving in the right direction I can always enter again. My minimum goal is to try and at least get 1 point in the ES or maybe 2 in the NQ on any position average in or not. I have no set agenda on profit taking. On the ES as a scalper I consider 1 to 8 points a scalp. Finally, when I will scale out and "how" I will scale out depends on "how" the market is moving. Again, I have no set agenda in terms of profit taking. The market is like a snake that darts here and there. The goal is to avoid getting bit while at the same time getting out with a profit. 3. Why do you not enter with 1 contract and exit at 1 fixed stop loss or exit at 1 fixed profit target for ALL your trades? Please elaborate on this question as much as you can. Sometimes I use a fixed PT in certain scenarios. Like on Friday's videos that second video has a fixed PT of 6 points (even though at times I call it ticks on the video by mistake LOL) To just have a SL of 1 point and a PT of 1 point is not really very congruent with how the market works. The market on EVERY bar is probing and on every group of bars is probing. There are bears and bulls active on every bar and every group of bars. How active and with what strength show up as the bars print and the context in which they are printing. Are the bars bigger range bars? Closing on high? Are there gaps between a bar Closing on low? Are there gaps between the close of a bar and the high of 2 bars back and other types of gaps that indicate urgency? Doji? Are they getting smaller in size? Bigger in size? Are there consecutive bull bars or consecutive bear bars? Are bull bars bigger than bear bars. In a group of bars are there more bull bars or more bear bars? What is the size of the probing up or down. Finally, setting a 1-point SL and 1 point PT is a dead-end alley. It is bleeding to death with a thousand paper cuts. Tight stops will not work for scalping. With tight SLs it becomes a guessing game. SLs have to be "price action" based stops if one is going to trade PA. For a scalper that usually means upside down on R:R on initial entries but however, by the time the trade is said and done very often the actual SL (adverse movement plus 1 tick) is often less that the PT gained on the exit and often renders a great R:R It is impossible to know if the market will tick up or down on a bar 1 point. One would be guessing and hoping it goes 1 point in one's favor before it goes 1 point against one's position. In such a tight scenario there is no premise to gauge one's entry and exit on. Price is constantly moving up and down by 1 point on most every bar.
4. What is the largest loss (account drawdown) you taken after adding to losing trades of XX contracts? I do not remember as I never track that sort of stuff. It just never interested me. Actually, it has never even occurred to me to track such a thing. At the end of a session I have either made money or lost money that is all I care about. 4a. How long did take you to recover that largest loss? I usually try to get back a loss immediately on my next entry. Sometimes it may take more than one entry to do so. Look at Friday's second video. My first three entries on the move down were in draw down. What did I do? I didn't go short and exit those with a lose. Instead I changed tactics and began to take a series of long trades one after the other and keep those three long. I did this even as the market continued against me. So, how did I manage to end up winning on all the trades in the video? By locking in a 6 point LONG profit on each succeeding trade as the market continued down. Then it turn back up and I kept up that action until it reach above those 3 higher up entries and I got out with a profit on those. Yes, I was in draw down but I was betting that the market would only go so far down then because bulls and bears were both active it would eventually turn back up. It coud have gone down..down..down.. but sooner or later somebody has to buy...buy..buy. So, I whittled away at 6 point long profits until it probed back up enough to get me out of those three trades with the biggest drawdown at a profit. I reasoned it would probe down to support, and I indicated that on the video and hsowed the likely supoort area. I also reasoned that because of probing back and forth on each bar that I could continue to get a series of 6 points gains easily enough. So, I am picking up breadcrumbs as fast as I can when when the big probe came I had me a loaf of bread in my hands by the time I got out of those three trades. Watch that video again if you did indeed watch it the first time. I mis-spoke several times calling 6 points 6 ticks and also called adding on another trade but the strategy I was using was NOT averaging down but instead taking many subsequent trades picking up crumbs until the bigger move (probe) back up got me a profit on all positions. Now what would an unexperienced trader have done? He likely would see that move down emerging and said "OH my the pain is too much I got to get out" and he would take the loss only to find that a few bars later had he held he would have made a profit. He would have panicked on that move down. Instead, I used a strategy betting on small probes (capturing at least 6 points each time) until a bigger probe back up would get me out with a profit on those earlier entries. I WAS BETTING ON THE PROBES. Another strategy that is too is also feasible is to just exit those first 3 contracts with a loss (since I find myself on the wrong side of the market) reverse double or triple up short and in short order I would get that loss back and likely be back to printing money again. The market shows me its hand and I play that hand using whatever different strategies I hve in my toolbox and which one seems to fit the context as best to use. I react to whatever and however the market is doing whatever it is doing. The goal is to be sync with the market enough to make a profit. There is no reason to panic. Switch strategies or tactics and get back in sync. This is precisely why it is hard to algo PA. Too many things can happen so fast that to program all the possible scenarios..well you are a programmer (right?) it is extremely difficult to anticipate the variables and account for all them. In my opinion true PA can only be done discretionary. But what do I know I am not a programmer nor am I very smart. 4b. Was the largest loss due to a mistake or per your trading plan? I don't have a trading plan. I let the market create my plan each day. I am a discretionary trading and I respond to it as it is printing the PA. I look to capitalize on patterns and the market cycle and the constant probings that are there in the patterns and market cycle. I don't remember my largest loss. I don't track such stuff. I can say it was never big enough to make me want to jump out of a sky scraper. Since learning and trading price action I have never ever blown a real account that I can remember. This is primarily because I practice over and over most every week on a SIM before I put real money to the test. I see practice as the only way to keep my skills honed and sharp. Can you image Tom Brady never practicing football and just going into a real game with no practice? Why would I want to take on trading with real money and not practice till I was confident? Now back in yesteryear many moons ago back when stocks traded in fractions, and I didn't know a hill of beans about PA trading I may have suffered some bigger losses and may have even blown an account. I just don't remember. But my accounts at any rate were small and I remember no loss causing me an enormous amount of grief or pain. What has caused me some grief is learning how to trade price action on a SIM. If you want to discuss SIM then yes I have had some big draw downs in the thousands of dollars but even then do not remember ever blowing a SIM account. But when I was developing strategies and tactics for PA and learning how to trade PA by practicing it there were many times, I felt like just throwing the towel in and giving up. 4c. What exactly did you do to recover this largest loss (account drawdown)? I have strategies to deal with draw downs. Like that video Friday. That was one. Another is reversing and doubling down or tripling down when I realize I am out of sync with PA. Any loss I usually try to get back quickly in minutes as I don't want to wait the rest of the session trying to get back a loss. Or if the loss is big enough or consecutive losses I may just call it a day quit trading and go do something else. Tomorrow will come again until it doesn't. 4d. How many contracts were you holding when you talk the loss? I never track that and I don't remember. I take too many trades during the day to track that sort of stuff and it never interest me anyway except to influence my next immediate size to get back my loss. The best I can reply to that is took a loss on say 5 contracts because I mis-judged PA or some other reason then I may double that and reverse (10 contracts) or triple up (15 contracts) 4e. If you remember the day and trade of the largest loss, can you please post it. Never ever track that. I prefer to never remember any big losses but just long enough to learn from them. I am like a soldier on the front lines in a battle. I cannot and do not remember over detail of my advance ) direction (zig zagiing..straight..jack rabbit darting..and speed..etc) towards the enemy.My only goal is to get to them enemy and eliminate the threat. And win the battle! Well, I must say SML I felt like I was being investigated with all these questions but there you go. There are my answers. I now pat myself on the back for taking the time to provide the answers or not provide them. I guess it depends on how you receive my answers is they answered your questions or not. Are you on some sort of a mission here with all these questions? Have a good day!
Good Morning Volpri, Thank you for responding. Question please: 1. When you trade ES, some times you exit the trade for 1, 2, 3, 4, 5, 6, 7 or 8 points based on price action and the way price is moving at the time you take the trade? 2. Are you stating you are never just fixed at 1 point for all trades for the entire rest of the year? 3. Does any of your decision making to exit at 1, 2, 3, 4, 5, 6, 7 or 8 points have to do with your current drawdown or prior losses for the next upcoming scalps? Thank you,
Ok here is the second video pretending I went long at your first arrow. How would I have managed a long trade at your arrow? I would have also likely used one of the same strategies at your second arrow as in this video but I don't think I will make a third video. LOL I talk slow as my brain works slow and my mouth even slower so as to not be so boring I suggest as you listen to my videos speed them up and I think they will be more pleasant to listen to and take less of your time. I hope I have addressed your questions adequately. Here is the second video.
Well I have scalped for 1 point. Or two points. If I was scalping on a 2m or 1m chart I would use 2 points IF the average size bar was around of 4 points tall (a scalp 1/2 size of the average bar..just a visual glance). That is, I would scalp with a fixed PT of 2 points on very short TF charts. However, I would not put my SL at 1 or 2 points. That is a losing strategy for scalping. IMO. A thousand paper cuts! I believe that I have to have and maintain a high win rate as a scalper and I simply cannot do that using tight SLs. The trade doesn't have enough room to work out in a positive outcome for me even when scalping 1 or 2 points
1. When you trade ES, some times you exit the trade for 1, 2, 3, 4, 5, 6, 7 or 8 points based on price action and the way price is moving at the time you take the trade? Yes, I have no prior agenda upon entering a trade where I will take a profit. That profit depends on the pattern (triangle..wedge..etc)..the larger context, and the immediate momentum. 2. Are you stating you are never just fixed at 1 point for all trades for the entire rest of the year? No 3. Does any of your decision making to exit at 1, 2, 3, 4, 5, 6, 7 or 8 points have to do with your current drawdown or prior losses for the next upcoming scalps? Yes, to current drawdown. No to upcoming scalps.