As you can all see an witness I'm doing bad lately. Let's put aside that all problems come from averaging and moving stops. The thing is that I'm mixing trading styles. If I look at my trading diary on this blog the best trades are small scalps. Small predefined risks usually 5-10 pips and fast exits 5-20 pips. Usually I get carried away with big moves that are happening all over the forex market and I want piece of that. But I'm not getting anything. No 50-100 pips wins for me but 100 pips losers. I'm just not good for that as much as I would like to be and think that it would be great to be.
So, I would appreciate comments about that. In particular about would it be good to just stick to scalping style for me? What do you think?
I'm pretty much biased to that idea, but I'm not sure. It seams that it's hard to decide to leave everything else in my head and in reality and stick to "small" trading whatever else is happening in the market.
Do you know any good scalpers that are doing just that and that they are satisfied with small winners? How do they ignore 10 times bigger moves than their profits that look like they are on the plate in front of them?
There is no much conversation on this blog, but now if you have anything to say please you are much welcomed to do so.
Friday, March 28, 2008
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8 comments:
Thanks for reading and opinion.
If scalping is working for you then stick with it. As you become better then just increase the leverage. If you want to capture the 100pip moves then spend some time developing and testing a system that will allow you to do that.
I enjoy your blog, I pass by daily.
Thanks for advice. It's pleasing to know that you enjoy my blog :)
I would agree with anon. in order to trade the big moves you need to find/develop a system that works for that. You might try scalping the small moves and paper trading the larger ones until you can find something that works.
Hi,
Well, I do agree with the 2 comments above and I've to say that I am more or less in the same situation as you.
I just came to realize that I'd better make 5/8 pips a day rather than "getting lucky" and make a 50 pip profit then have a 100 pip loser the following day.
Scalping is still nice as it also relies strongly on simple indicators usage (RSI, MACD, MAs etc). Not saying that it always works (otherwise I wouldn't have a day job:) ), but I think you probably (as it's all about probability) have more chance to make a consistent income with aiming at small winners with tight stop loss rather than big shots with 20 pip SL and losing it.
AND PLEASE, NEVER MOVE YOUR STOP LOSS :)
I tell you, you'd rather lose 10 pips even if the trend is reversing after and you could have made 100 pips than moving your SL thinking it's going to bounce back against the support and actually seeing yourself loose 50 pips by moving the SL (it also happened to me in the past... really painful:) especially after 2 or 3 hard earn scalping winners ).
I actually don't care to see afterwards that I could have made a 100 pips on a trade when I just made 8 or 10 pips following the trend.
By chasing the big fish you're always getting into the water, so aim at small winners first as 10 pips are still better than a maybe 100 pips ending with a 50 pip loser.
I also had this problem, like you do, to not follow the trend. I'd go long when it's going down, hit the SL, then finally wonder why the hell did I go long on a down trend. The most simplest is usually the most efficient, just follow the trend :)
Finally, I would not suggest to mix trading styles, because as I mentioned earlier, you're going to get too frustrated by losing in one trade what you've made in 2 days (maybe even weeks) scalping.
Just for info, I am not a professional trader, I just consider myself a beginner and what I just said is coming after some experiences I've had before and I'd also like more experienced traders to comment on what I've just wrote to let me know what they think as well.
My 2 cents :)
Thanks chartguy & twtrader for comments.
LOL, I will try to not move my stop loss.
On scalps I'm reasonably disciplined that's why it's working. Problem with trends is that usually at the time of recognizing it, it's to far away to enter it psychologically comfortably for trend trade. I wish I was at beginning and start thinking I will catch next one. So I go into mode of irrationally trying to get reversal trend. Why? Just because I want that big trend profit.
If I only look to get let's say 10 pips than I can squeeze it from developed trend. It's much easier to get me in the trade for such small move in the direction of the trend. But for that I have to aim only at such small target. If I don't and aim for more I would get back into that bad loop of looking for next trend in reversal direction.
That's my thinking for now.
Again, thanks to all for your comments and opinions.
I don't know any succesful scalpers simply because 1 loss can wipe out all your winning trades.
Those that do have a modicum of success with scalping normally load their lots and only use hit and run tactics. They are also ruthless when it comes to cutting losers.
The major problem with scalping is proper risk management which is infinitely more important than any trading strategy.
A 100 pip loss will mean you have to do 20 winning trades in order to make up the one loss when scalping 5 pips at a time.
My suggestion is test out some systems that produce bigger profits and offer better risk management.
You don't have to make 100 pips on a trade to make money trading forex.
Rather find one system that works and stick with it. Consistency is an important key to profitable trading.
Hi forexman, I was thinking lately on consistency and reliability. I'm trading not to big account now, but when I think of bigger account I can't trade it without reliability of my methods. My usual praxis of averaging and similar nonsense would drive me mad with bigger money amounts.
Thanks on comment
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