Day-Trading 2.0 for small traders
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"Execute the basics; master the basics,...When you master and execute the basics, the rest comes naturallyâ
The last two factors in the analysis are use just to improve the quality of a set of scalps.
1. Momentum. There are many momentum plays, however one that is simple, efficient and with high probabilities of becoming a great set of scalping opportunities will automatically appear if you have properly done your âhomeworkâ and have respected the order of analysis of the previous steps. If âmacroâ direction (240 WMA and Pivot Points) and current move direction (H lines, 6 WMA) are aligned and if you have established the direction of the next wave you will have THE TEXTBOOK DEFINION for a HIGH PROBABILITY SCALP.
2. TIMING. This is where the majority of struggling traders get stuck, confused, lose perspective, start plotting indicators, etc, etc, etc.
a. For me timing is the last factor a scalper should analyze. I am not saying that is not important (if you donât pull the trigger or you do it late you are out) but if you understand the basics of trading and you have follow consistently you analysis of the previous steps, establishing when to pull the trigger is just the final formality.
b. Timing is more important when you are trying to reduce whipsaws
c. If you base your scalping strategy only in this part of the analysis you will lose money. When u have a high probability trade it doesnât matter what do you use for timing ( LT Rainbow, Stoch, MACD, MA Crossovers, CCI, BB or any other) because the results are going to be +/- the same . (I will try to demonstrate this in my next postâ¦)
3. Same BP chart as before but a few minutes after.
a. After the stubborn scalp you decide to wait because the waves are making higher highs and higher lows. Until when do u wait? ⦠Obviously until the waves align with the macro direction.
b. +/- 9:36 The height of the waves are very short and barely perceivable until they fail to make higher highs (Blue Arrows and Green Square) which is an ALARM to get ready for a new set of scalps to begin, this time within a high probabilty scenario.
c. By +/- 9:39 a new wave starts pointing at your âmacroâ direction (1st green arrow). Everything is aligned now except that you are still waiting for the wave to make a new low. So either you wait until a close below the low for extra security, or a cross below the H line, or you can put a limit order 1 tick below the last low or you can be really conservative and wait until a next wave pointing at your macro direction starts (but this time already 100% that it has made lower lows and lower highs).
d. +/- 9:40 If you didnât choose the really conservative entry you get filled either at 2.0471, 2.0470 or 2.0468 (1st orange arrow). This time you trade 2 contracts because is a high probability setup. Both trades have a SL 1 tick above the last high (2.0477â¦notice is only 6 pips) or you will close the position as soon as you have a close above (a new wave against you) whatever come first. The first has a safeâ TP of 6. If hit the SL for the 2nd contract will be automatically trailed to a breakeven, from then on you are in a 0 risk free ride mode. Either you close your 2nd contract on a close above (a new wave) or a close above the last highâ¦.
e. 30 seconds after +/- 9:41. You 1st TP is fill for a 6 pips profit⦠you leave the rest of the position open â¦
f. +/- 9:44 A new wave is formed so you close the rest of the position for +/- 10 pips for a grand total of 16 pips in 5 minsâ¦
g. +/- 9:47 Everything is still aligned (notice that the next pivot S3 is still far away so you can have a long set of scalps to the short sideâ¦). A new wave in you direction is formed, same strategy as before â¦
h. The rest is self-explanatory ⦠JACKPOT (you can scalp more than 80 high probability pips in the next 20 mins) ⦠enjoy the ride!!!
4. Conclusion: Like people in Spanish say âUna imagen vale más que 100 palabrasâ âa picture is worth more than thousand wordsâ
jjrvat
âTrading is just a probability game based on pattern recognitionâ
The last two factors in the analysis are use just to improve the quality of a set of scalps.
1. Momentum. There are many momentum plays, however one that is simple, efficient and with high probabilities of becoming a great set of scalping opportunities will automatically appear if you have properly done your âhomeworkâ and have respected the order of analysis of the previous steps. If âmacroâ direction (240 WMA and Pivot Points) and current move direction (H lines, 6 WMA) are aligned and if you have established the direction of the next wave you will have THE TEXTBOOK DEFINION for a HIGH PROBABILITY SCALP.
2. TIMING. This is where the majority of struggling traders get stuck, confused, lose perspective, start plotting indicators, etc, etc, etc.
a. For me timing is the last factor a scalper should analyze. I am not saying that is not important (if you donât pull the trigger or you do it late you are out) but if you understand the basics of trading and you have follow consistently you analysis of the previous steps, establishing when to pull the trigger is just the final formality.
b. Timing is more important when you are trying to reduce whipsaws
c. If you base your scalping strategy only in this part of the analysis you will lose money. When u have a high probability trade it doesnât matter what do you use for timing ( LT Rainbow, Stoch, MACD, MA Crossovers, CCI, BB or any other) because the results are going to be +/- the same . (I will try to demonstrate this in my next postâ¦)
3. Same BP chart as before but a few minutes after.
a. After the stubborn scalp you decide to wait because the waves are making higher highs and higher lows. Until when do u wait? ⦠Obviously until the waves align with the macro direction.
b. +/- 9:36 The height of the waves are very short and barely perceivable until they fail to make higher highs (Blue Arrows and Green Square) which is an ALARM to get ready for a new set of scalps to begin, this time within a high probabilty scenario.
c. By +/- 9:39 a new wave starts pointing at your âmacroâ direction (1st green arrow). Everything is aligned now except that you are still waiting for the wave to make a new low. So either you wait until a close below the low for extra security, or a cross below the H line, or you can put a limit order 1 tick below the last low or you can be really conservative and wait until a next wave pointing at your macro direction starts (but this time already 100% that it has made lower lows and lower highs).
d. +/- 9:40 If you didnât choose the really conservative entry you get filled either at 2.0471, 2.0470 or 2.0468 (1st orange arrow). This time you trade 2 contracts because is a high probability setup. Both trades have a SL 1 tick above the last high (2.0477â¦notice is only 6 pips) or you will close the position as soon as you have a close above (a new wave against you) whatever come first. The first has a safeâ TP of 6. If hit the SL for the 2nd contract will be automatically trailed to a breakeven, from then on you are in a 0 risk free ride mode. Either you close your 2nd contract on a close above (a new wave) or a close above the last highâ¦.
e. 30 seconds after +/- 9:41. You 1st TP is fill for a 6 pips profit⦠you leave the rest of the position open â¦
f. +/- 9:44 A new wave is formed so you close the rest of the position for +/- 10 pips for a grand total of 16 pips in 5 minsâ¦
g. +/- 9:47 Everything is still aligned (notice that the next pivot S3 is still far away so you can have a long set of scalps to the short sideâ¦). A new wave in you direction is formed, same strategy as before â¦
h. The rest is self-explanatory ⦠JACKPOT (you can scalp more than 80 high probability pips in the next 20 mins) ⦠enjoy the ride!!!
4. Conclusion: Like people in Spanish say âUna imagen vale más que 100 palabrasâ âa picture is worth more than thousand wordsâ
jjrvat
âTrading is just a probability game based on pattern recognitionâ
When you have a high probability trade it doesnât matter what u are using for pulling the trigger. I can post at least 101 different ways (in the charts below: classical rainbow, Stochastic crossover, MA crossover, CCI crossing and MACD crosses) in which indicators or any other method would have appeared to be the âholy grailâ in trades like the one I post before.
However, if you try to scalp based only in their signals youâll end up losing money because you canât exactly recognize which are high probability setups â¦
jjrvat
However, if you try to scalp based only in their signals youâll end up losing money because you canât exactly recognize which are high probability setups â¦
jjrvat
jjrvat:
What is the indicator you are using on the first picture? It's incredible how the "waves" are displayed visually.
What is the indicator you are using on the first picture? It's incredible how the "waves" are displayed visually.
prince-in-jail,
I am not sure which one are u referring:
1. The charts with trade explanations are with a 6 WMA
2. The 1st chart in the last post is the rainbow 10 to 240 WMA (Every 10)
3. If you want to see smooth waves but not necessarily tradable you can plot a LSMA or Hulls MA.
4. In all cases if you use tick or volume (constant vol bars are probably the best) you will make the waves really smooth.
In any case with screen time you dont need them... they are just nice visual aids.
jjrvat
I am not sure which one are u referring:
1. The charts with trade explanations are with a 6 WMA
2. The 1st chart in the last post is the rainbow 10 to 240 WMA (Every 10)
3. If you want to see smooth waves but not necessarily tradable you can plot a LSMA or Hulls MA.
4. In all cases if you use tick or volume (constant vol bars are probably the best) you will make the waves really smooth.
In any case with screen time you dont need them... they are just nice visual aids.
jjrvat
Momentum II
In my opinion, the importance of MOMENTUM (not its concept!!!) varies according what kind of trade you are looking for. For example, if I am scalping the importance of a momentum play is because I âknowâ that I will have more probabilities to âstealâ my 3 or 6 pips in that particular moment not because how many pips the market will move.
Of course if you are for example swing trading using a longer timeframe the importance of momentum is given by the fact that you are expecting to ride a long set of waves.
If the price stalled around your entry point for maybe a few minutes and then went in your direction would you say that you had good momentum but not so good timing? I am just trying to understand the difference between the two, and how can this help in actual trading. (fxtrdr)
Yes. The theoretical difference is that timing is when exactly you pull the trigger and momentum is how big will be the height of the next wave. In practice and in my opinion identifying momentum plays (any) is more important than how to pull the trigger.
I'm asking because I had the impression that "momentum plays" in the way that you wrote might be like a sort of a setup. (fxtrdr)
Yes it maybe a kind of automatic setup at least when you are scalping (3 to 6 pips) in the meaning that if you do your homework in order you have a lot of probabilities to have a momentum play (at least in scalping terms)
These are two good examples to show how momentum plays usually appear when you follow the right order of analysis.
1. The first is swing intraday chart of the FDAX +/-$12300 with only 2 contracts (***Donât try this at home if you donât know what you are doing and if you donât have a big account!!! itâs just an example) in which the importance of momentum for the trade is given by the potential height of the next wave. (Black arrows Highs and Lows)
2. The second is normal set of scalps for the E-Mini Russell 2000 (ER2Z7) (8 ticks chart) in which a momentum play is only used to increase the probabilities of taking 5 ticks. (Black arrows entries and exists) *** This is faster than 5 secs charts so a predefined TP and SL is required (15 pips in 1 min = almost imposible to manually take all of them)
In both everything is aligned (macro direction with PP and 240 WMA and current move direction Higher Highs and Higher Lows). What I am trying to show you is that this particular momentum play usually appears regardless of the timeframe. However, what it change is the âtimingâ to pull the trigger (1st is a 12 WMA the 2nd is a Hulls 25 MA) and more important the approach you are taking for that particular trade (scalping or swing trade), therefore and to be consistent you should understand momentum accordingly.
I hope it helps
jjrvat
In my opinion, the importance of MOMENTUM (not its concept!!!) varies according what kind of trade you are looking for. For example, if I am scalping the importance of a momentum play is because I âknowâ that I will have more probabilities to âstealâ my 3 or 6 pips in that particular moment not because how many pips the market will move.
Of course if you are for example swing trading using a longer timeframe the importance of momentum is given by the fact that you are expecting to ride a long set of waves.
If the price stalled around your entry point for maybe a few minutes and then went in your direction would you say that you had good momentum but not so good timing? I am just trying to understand the difference between the two, and how can this help in actual trading. (fxtrdr)
Yes. The theoretical difference is that timing is when exactly you pull the trigger and momentum is how big will be the height of the next wave. In practice and in my opinion identifying momentum plays (any) is more important than how to pull the trigger.
I'm asking because I had the impression that "momentum plays" in the way that you wrote might be like a sort of a setup. (fxtrdr)
Yes it maybe a kind of automatic setup at least when you are scalping (3 to 6 pips) in the meaning that if you do your homework in order you have a lot of probabilities to have a momentum play (at least in scalping terms)
These are two good examples to show how momentum plays usually appear when you follow the right order of analysis.
1. The first is swing intraday chart of the FDAX +/-$12300 with only 2 contracts (***Donât try this at home if you donât know what you are doing and if you donât have a big account!!! itâs just an example) in which the importance of momentum for the trade is given by the potential height of the next wave. (Black arrows Highs and Lows)
2. The second is normal set of scalps for the E-Mini Russell 2000 (ER2Z7) (8 ticks chart) in which a momentum play is only used to increase the probabilities of taking 5 ticks. (Black arrows entries and exists) *** This is faster than 5 secs charts so a predefined TP and SL is required (15 pips in 1 min = almost imposible to manually take all of them)
In both everything is aligned (macro direction with PP and 240 WMA and current move direction Higher Highs and Higher Lows). What I am trying to show you is that this particular momentum play usually appears regardless of the timeframe. However, what it change is the âtimingâ to pull the trigger (1st is a 12 WMA the 2nd is a Hulls 25 MA) and more important the approach you are taking for that particular trade (scalping or swing trade), therefore and to be consistent you should understand momentum accordingly.
I hope it helps
jjrvat
Can you tell us if you trade the news? In case you trade the news, have you made a list of the tradeable news reports?
Trade the news? What is trade the news? â¦You are going further back to the basics.
From a strictly academic point of view I would recommend you to read some macroeconomic books to understand the basic interrelation between the major variables. For a âclassicâ approach (model) on how economic actors adjust their expectation to events you should at least review Robert Lucas Theory on Rational Expectations and for a more contemporary approach you should review the Theory of Adaptive Expectationsâ¦.
When you understand this you will see a weekly or daily chart everything will be clear and explainable. 'The âfundamentalistâ (long term trades) are right. Market moves because of fundamentals not because a double top, triangle, S/R line broken, Fib Lines, Spine breaking a V line, etc, etc, etc. Of course this doesnât mean than is easy to make money trading a long term approach (is definitively âeasierâ) but sadly I donât have the capital to play that gameâ¦.
Iâm an economist and I must confess that scalping or even day trading goes against everything I know. You just have to see the EUR/US weekly chart for the last years. Every single piece of good or bad economic news is reflected in that chart !!!.
Maybe thatâs the reason I have an âobsessionâ with probabilities for at least try to create pseudo ârationalâ framework to justify how scalping can be profitable ... so far I still donât rationally understand why scalping work â¦but heck it seems to be workingâ¦
I prefer smoother instruments, times and markets, thatâs why I use tick charts. News can move price 100 pips in 2 minutes, major trends may appear, you can hit the jackpot, you can go bankrupt, etc. Nevertheless in my opinion a good advice for a mini scalper would be to try to âfishâ his pips in calm waters (not death of course).
jjrvat
Trade the news? What is trade the news? â¦You are going further back to the basics.
From a strictly academic point of view I would recommend you to read some macroeconomic books to understand the basic interrelation between the major variables. For a âclassicâ approach (model) on how economic actors adjust their expectation to events you should at least review Robert Lucas Theory on Rational Expectations and for a more contemporary approach you should review the Theory of Adaptive Expectationsâ¦.
When you understand this you will see a weekly or daily chart everything will be clear and explainable. 'The âfundamentalistâ (long term trades) are right. Market moves because of fundamentals not because a double top, triangle, S/R line broken, Fib Lines, Spine breaking a V line, etc, etc, etc. Of course this doesnât mean than is easy to make money trading a long term approach (is definitively âeasierâ) but sadly I donât have the capital to play that gameâ¦.
Iâm an economist and I must confess that scalping or even day trading goes against everything I know. You just have to see the EUR/US weekly chart for the last years. Every single piece of good or bad economic news is reflected in that chart !!!.
Maybe thatâs the reason I have an âobsessionâ with probabilities for at least try to create pseudo ârationalâ framework to justify how scalping can be profitable ... so far I still donât rationally understand why scalping work â¦but heck it seems to be workingâ¦
I prefer smoother instruments, times and markets, thatâs why I use tick charts. News can move price 100 pips in 2 minutes, major trends may appear, you can hit the jackpot, you can go bankrupt, etc. Nevertheless in my opinion a good advice for a mini scalper would be to try to âfishâ his pips in calm waters (not death of course).
jjrvat
Quote from jjrvat:
[/B]
Ahh, so now I realize what I was missing ... a thousand Ma's! I going to add more because it will help me trade better.
Quote from twofacedjoker:
Ahh, so now I realize what I was missing ... a thousand Ma's! I going to add more because it will help me trade better.
lol
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