I remember I looked through that book once. You probably already know that scalping is very focused on risk management, psychology, technology and some TA. I have been expanding my reading to include more TA lately to learn to scalp on a longer time frame. I'm very good at what I do and am lucky to have very small setbacks relative to my gains so far. I think the market is well positioned for a longer time frame though. It would be nice to have a reason to put on good size and to maintain a core position while continuing to scalp rather than scaling completely in and completely out on every pull back all the time. I realize it is never neatly bundled, but I would rather get a recommendation from you than to go out and pick up any old book. Have you read Beyond Technical Analysis, Martin Pring on Price Patterns, or The Logical Trader? Do you use Market Profile? What are your feelings on it?
Ok, a market is a market, but the reality is the underlying index nor any of its components did not get within 130 points of those trades and this BULL**** YM future bounced back 100 points in seconds! there was just no market....you have to be nuts to trade that thing with any size! And they pulled the same stunt today!!!! The irony is the two spikes told you where the market was going....so I'll shut up and love it!
[I think the market is well positioned for a longer time frame though. ] I totally disagree, equity indexes have been mired in a 7-10% range for over 18 months. So far this year the SP500 has been in an average range of approximately 5% THAT SUCKS for longer time frames such as daily, weekly forget it. I was being nice when I used the SP the DOW&Nasdaq longer term moving averages 200 day have been flat for quite some time.
Longer time frame for me means longer than the last 5 ticks. I am thinking more along the lines of intraday swing setups where one can put on a core position and scalp around it. This may just be a pipe-dream. I am simply looking to expand my knowledge and possibly to learn something I can apply to my personal and corporate investment portfolios (these would definitely be daily/weekly time frames).
Try a 1000 tick chart with a 100-200 day moving average, trade in the direction of the slope of the averages. Use a shorter time frame to time your entries. Watch out for divergences in the longer time frame, they can eat up your profits in a hurry.
FuturesTrader - I will try an address the issues here for the sake of others but if you want to just pm me and I will give you more specific help. It's MY OPINION (just so you understand that) That a successful trader Scalper, Swing or other needs to have a complete and in depth knowledge of everything involved with trading. This should include : Indicators Price Action Price Structure Fibs, Elliott, Dow Candles Volume volatility etc, etc ... You name it the whole kit and caboodle Then you need an organized way of bringing all this knowledge together into a WORKABLE process that can be applied to any and all markets on a repeatable basis. After a trader has this then they still need lots of screen time to develop the intuitive nature and experience to trade with confidence. Psychology is not a big issue if you have a deep understanding of market behavior because it's one thing to be a fly bouncing off a window due to lack of knowledge it's another to be the same fly and know where the open door is. I understand these are vague concepts but this is the best I can offer in the context of this kind of forum with these limitations. The bottom line is that your competitors know all the tools out there and has the skill and knowledge to use them against you !!! So your task is to become as knowledgeable as them if you ever want to compete successfully. pm me if you like if this is not enough and I will see if I can help.
I'm obviously being facetious about the tick thing. A while back, I investigated the use of MAXO's, MACD, Stochs, etc. They always seemed to give very delay confirmations (on longer periods) or cause a lot of choppiness (on shorter periods). In your example, you can see that the x-over happened when price was so much lower (obviously). I'm not sure how you use this to trade, but I know others who try to anticipate it by taking the position when the turn occurs in the MA (or any other indicator). Lefty has a pretty good method for which these indicators work well. I ended up dumping those ideas for the study of price and volume. Generally, I use price structure to determine trend in a 30 min and 3 min and then try to trade from that side. Do you combine the MA's with anything else to make your decisions? What timeframes do you use on your trades? What is the duration of an average trade?
I appreciate your reply. I guess I should first figure out what I want to learn prior to asking. A bit of background: When I was learning to trade a while back, I spent a lot of time studying all those you listed and others. I never backtested or further investigated many of these to come up with a setup with defined probabilities, etc. Instead, I learned from an experienced trader how to use the tape/DOM/Fibs and S/R zones to make money. I am very successful using this knowledge still today. It is what I teach traders who I back. As time goes on, I recognize that I will not want to scalp as heavily as I do. Also, I want to take charge of my investment portfolios instead of handing them over to 2 or 3 hedge funds. I find that the size I trade makes up for not getting in at the bottom and out near the top. However, I would love to not be get out of my entire position by retracements and then have to get back in as the move continues. I trade in both directions all the time and will push more size on the trend side. With a predefined setup, it would take more to get shaken out. The way I am seeing it, a scalper maintains a very low risk and can participate in very move. However, scalpers also often have the weakest hand. This means that scalpers are the first to get shaken out on retracements or fake opposing size in the book. I don't mind this so much now and this is the reason why I trade so much throughout the day. It is just a different style. I am curious to explore other methods though, so I appreciate your input. I think the main areas I still have not studied are patterns and candlesticks beyond the basics. When you entered that dow position? What was your stop and where did you anticipate the target to be? Also, how often do you find your stop has been triggered versus exit hit?
I agree with you. It's not worth it scalping against the trend, for me causes too much slippage and lost mental energy. I find it difficult to predict if a day will be a range day or a trend day. Personally I trade the next daily bar with a system based on if the prior day was range/trend. How do you do it?
FuturesTrader - First let me say that this is a very difficult way to express a complex method but I will try my best. Stops are always a minimum of 2:1 ratios. I trade across all timeframes but usually stick to the 10 min for triggers. After doing a lot of due dilegence last night and eliminating one side of the market (until proven wrong) Shorts where the order of the day. If you look at pre open right after the 8:30 news release I simply short the 8:40 candle 10445 with a stop above it 10461. I let candle structure on the 10 min, take me out of half the postion on the 10:00 candle locking in 23 ticks profit at 10422. Then I simply moved my stop to break even and followed candle structure and the 20 ema as resistance all the way down as well all the indicators as well as volume and volitility where confirming so I let the trade run. Seems easy but trust me it was well planned and monitored closely. I exited a little too soon on candle structure at 14:20 and could have retentered on the test of the 20 ema short into the close but I was on the phone with some personal things and just let the trade go. Here is a NAKED chart (I do not share my platform set up) nothing personal. http://charts.dacharts.com/2005-06-24/Samfox43.png