Baggerlord's Method For Scalping the YM

B

baggerlord

This is a method I have been trading a little, doing pretty well at. It is based on a method in The Compleat Daytrader, by Bernstein.

Chart setup:

1 Minute chart.
34 EMA
10 SMA of highs.
8 SMA of lows.

I call it scalping, you might not, but it does produce a lot of trades. Works nice on the YM, probably good on other indexes, but haven't looked.

Trades:

Pullbacks. Wait for two consecutive bars completely below the LMA. Wait for a higher low, and go short on the next lower low.

Range trades. Wait for a bar completely above the HMA. Short when the low of this bar is taken out. The MA's should be fairly flat. Never do this against a strong trend.

Stops, I use the last high, but if the last high is only 2-3 pts above my entry I will give it a little wiggle room(only a few points). Once 10 pts in the profit, I use a trailing stop of the high of the last three bars. You can go long or short with this system. So far it has had a nice win rate(60%+) and the R/Reward ratio is very high, like 2:1 minimum. If I don't like the R/Reward for a trade I don't take it because there will be another one a few minutes later. I don't have set targets, but losses are, and I usually won't take a trade with risk more than 7 Ym points($35 a contract). Let me know what you think, and if there are any backtesting wizards around maybe you could give it a whirl.

I posted a pic with three trades from today, two ranges and a pullback. First two are the ranges. I didn't post exits. Go long above green line and short below red.

I try and only trade during decent volume periods.

Remember this is a very short term system, so don't expect too many big winners, although you will have some. It does hit a lot of singles, though.

The times on my chart are PST, three hours behind NY time.

There, I posted a method. :)

I'll be gone for a while so if you have any Q's I won't see them for a few hours.
 
yes... "band trading" is a workable system.... personally i do not have the energy nor devotion to stare at the monitor constantly anymore... but again i can say that you got something good to work with.... good trading
 
Quote from baggerlord:

If I don't like the R/Reward for a trade I don't take it because there will be another one a few minutes later. I don't have set targets, but losses are, and I usually won't take a trade with risk more than 7 Ym points($35 a contract). Let me know what you think, and if there are any backtesting wizards around maybe you could give it a whirl.

More...

In order to know the RR ratio you need to know both the risk and reward. Your risk is predetermined. How about the reward? Do you set some targets too? How?
 
I received a PM asking how I obtain the MA of the highs and lows. I use nextrend and under MA parameteres you can select the data type, I select the H or L. Nextrend is pretty bare bones so I am sure and respectable software can do this.

You are right about not knowing the reward for each trade. The idea is that the stops are so tight that the potential should be at least 2x what you are risking. This is especially true for the pullback trade. Some days I only make pullback trades because the can have super high R/R. I haven't figured it out yet, but so far I would estimate based on average win and loss the R/R on pullbacks is around 5:1, with around 70% winrate. The range trades are the ones that aren't so hot, but sometimes boredome gets the better of me. Like I said, stops are up to you. I use the pivot high unless it is a big bar and therefore a big stop, but in this case I usually won't take the trade. After I am in the money I trail a stop.

I haven't tried it on anything but YM. I prefer the YM because of the smaller $ per tic value. IMO more scalp friendly. If you are a big time trader you would probably want to trade the ES or NQ.

Hopefully this chart works this time.

Only 4 votes, what gives?
 

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