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Is this a sensible way to enter a scalp trade?


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Is this a sensible way to enter a scalp trade?

  #1 (permalink)
NoWick
Toronto Canada
 
Posts: 14 since May 2020
Thanks Given: 11
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I've been experimenting with different approaches to trading (paper for now), including scalping. One thing I noticed pretty quickly was the frequency with which I was getting stopped out. It was brutal -- I would see what looked like a nice strong candle making a hard move, and then all of a sudden it does the moon walk in the other direction and takes out my stop -- only to then advance back up and blow past my target price. Talk about frustrating!

I'm wondering what the high-percentage solution to this problem is (assuming there is one). Through trial and error I sort of landed (tentatively) on this approach: I see what looks like a strong candle chug along two to three ticks, then it pulls back one tick, goes forward again and sits idle for a second, and at that point I hit the 'buy bid' button, which puts the fill line a little underneath the top of the candle (assuming a green candle). Then when the candle falls back a tick, it trips the order and I get filled.

There is the risk of not getting filled if the candle doesn't fall back that little bit, but my thinking is this approach seems to give me more 'space' to work with if the candle ends up falling back significantly before it shoots back up, giving me a little more room to work with before my stop gets triggered.

Is this a sensible approach to scalping? Maybe the case could be made that I shouldn't be trading a candle that falls back like that, but again these candles do seem very strong before they do the hard fallback routine.

From the Youtube scalper videos I've watched, it seems like most people are actually doing the opposite of what I'm suggesting -- they are placing their limit order above the top of the candle. I don't understand how this can be effective in a scalping situation with a fairly tight stop, because it reduces the buffer underneath if the candle retreats to, or close to, it's open. And one thing I've noticed on the ES is that even really juicy three-candle moves in one direction can have a fair bit of 'intra-candle' fluctuation.

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  #2 (permalink)
lamp
phoenix az usa
 
Posts: 1 since Sep 2017
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Basing a trading decision on a single candles action is too narrow in focus, in my opinion. Research methods that will help you gain a better understanding of that candle's action within a larger context. Then set definite parameter that constitute a "set-up" within that context. Do this consistently with discipline, and you will be trading with mathematical probability on your side which is all any good trader can hope for.

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  #3 (permalink)
 
FuturesBen's Avatar
 FuturesBen 
Edmonton ,Alberta, Canada
 
Experience: Beginner
Platform: Ninjatrader, IB
Trading: Emini ES Stocks
Posts: 11 since May 2020
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NoWick View Post
I've been experimenting with different approaches to trading (paper for now), including scalping. One thing I noticed pretty quickly was the frequency with which I was getting stopped out. It was brutal -- I would see what looked like a nice strong candle making a hard move, and then all of a sudden it does the moon walk in the other direction and takes out my stop -- only to then advance back up and blow past my target price. Talk about frustrating!

I'm wondering what the high-percentage solution to this problem is (assuming there is one). Through trial and error I sort of landed (tentatively) on this approach: I see what looks like a strong candle chug along two to three ticks, then it pulls back one tick, goes forward again and sits idle for a second, and at that point I hit the 'buy bid' button, which puts the fill line a little underneath the top of the candle (assuming a green candle). Then when the candle falls back a tick, it trips the order and I get filled.

There is the risk of not getting filled if the candle doesn't fall back that little bit, but my thinking is this approach seems to give me more 'space' to work with if the candle ends up falling back significantly before it shoots back up, giving me a little more room to work with before my stop gets triggered.

Is this a sensible approach to scalping? Maybe the case could be made that I shouldn't be trading a candle that falls back like that, but again these candles do seem very strong before they do the hard fallback routine.

From the Youtube scalper videos I've watched, it seems like most people are actually doing the opposite of what I'm suggesting -- they are placing their limit order above the top of the candle. I don't understand how this can be effective in a scalping situation with a fairly tight stop, because it reduces the buffer underneath if the candle retreats to, or close to, it's open. And one thing I've noticed on the ES is that even really juicy three-candle moves in one direction can have a fair bit of 'intra-candle' fluctuation.

Placing a limit order at the top of a red candle is ment to squeeze the shorts. You get a one point (4ticks) move up. Even stronger on a 2nd red candle. Works better if the trend is up for the day.

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  #4 (permalink)
 adaprague 
Prague
 
Experience: Beginner
Platform: TradeStation
Trading: Emini ES, SPX, US options, forex
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lamp View Post
Basing a trading decision on a single candles action is too narrow in focus, in my opinion. Research methods that will help you gain a better understanding of that candle's action within a larger context. Then set definite parameter that constitute a "set-up" within that context. Do this consistently with discipline, and you will be trading with mathematical probability on your side which is all any good trader can hope for.

Thank you lamp, this is nicely put.

There are many many variations of scalping. Some would scalp 1 or 2 ticks while others would prefer to enter an intraday swing based on an actual chart pattern visible on the 1min chart.

Lately I have seen someone scalping using volume profile for scalping.
Watch recent videos of the account below:


You must try to find objective reason to enter a scalp. What works for you. I like fading spikes which ran stops.

There's a world of scalping methods. I also watched a YT guy scalping 1 ES pt with stop buy order. I tried it. i just can't figure it out.
It depends on you.

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  #5 (permalink)
NoWick
Toronto Canada
 
Posts: 14 since May 2020
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FuturesBen View Post
Placing a limit order at the top of a red candle is ment to squeeze the shorts. You get a one point (4ticks) move up. Even stronger on a 2nd red candle. Works better if the trend is up for the day.

Cool, understood, though I was thinking more of a situation where the general trend is, e.g., up for the day, and then after a series of red/pullback candles it turns green again. You get an initial green 'confirmation' candle that the trend is back on, and then enter a trade to catch the continued upward movement.

But I will pull up some market replay data on Ninjatrader and play around with the approach you suggested. Sounds good.

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Last Updated on May 31, 2020


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