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Post by traderAllen on Aug 13, 2014 9:39:47 GMT -5
This is why swing trading and other short term trading methods fail. forex volatility changes FAST!!! this 70 pip spike slapped shorts out then reversed and slapped those that went long on the spike. So in less your short position had more than a 70 pips stop for your long position had more than a 40 pips stop your now sitting at your desk with your head in your hands wondering how the heck this just happened. It is my belief, maybe not yours but my belief that there is only two ways to consistently pull pips from the market, one is scalping, the other is position trading.  |
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Post by topfueltrader on Aug 15, 2014 23:30:23 GMT -5
This one should be in the trade school archive. It's a perfect example !
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Post by ddtrader on Feb 23, 2015 12:58:48 GMT -5
Although this is an old thread, the title is relevant!
A good question from the chatroom that I think deserves a discussion:
Austin0001: I guess where run into problems...is what does "giving a trade room to breathe" mean for scalping?...vs being overly active with using the ejection seat when you hit minor turbulence?
I'm only trading live for three months so take my answer for what it is worth...That being said, this seems to be a delicate matter that a trader gets better and better at as he gets more screen time. I know Allen encourages the newbie not to lose money. This means don't worry about exiting and leaving pips on the table and it also means minimize your losses and dont hold for a bigger loss that will be harder to make up. As you get better at recognizing where the buyers and sellers are, you will be able to stay in position longer because you'll have more of a feel for the market.
You definitely must give breathing room to the trade. Thats what Allen is trying to drive home with the stop out of volatility. This also means that you need to let the trade build up and its normal for almost all trades to be in the red. That being said you also need to minimize losses. So as a new trader you might need to exit earlier than the seasoned trader who can stomach the pullback.
food for thought...
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Post by traderAllen on Feb 25, 2015 23:45:45 GMT -5
Austin0001: I guess where run into problems...is what does "giving a trade room to breathe" mean for scalping?...vs being overly active with using the ejection seat when you hit minor turbulence?
This is probably one of the most complex questions to try to answer. To begin with the answer for an aspiring trader is different than for an experienced trader. And aspiring trader typically does not have a time-tested method or experience with a method that is profitable. Therefore, the aspiring trader needs to first focus on not losing money and proper trade execution. Once the aspiring trader has entered the market he or she needs to focus on the current price action looking for any sign that the market may be starting to turn.
Following the tipping points according to FPAS is fine a trending market. But you also have to be aware of the current price action, a sudden movement in the price that triggers stops being hit, coming into a round number area, or other support and resistance area, the price getting to the extreme distance from the moving average. All these things need to be taken into consideration. But the primary focus is don't lose money. If you jumped into a trade and exited with three pips or six pips and the move went on to make another 10 so be it. You only know that hindsight. The important thing is entering the trade correctly when you have an edge and taking some profit. The more experience you have the better you will become at catching more and more of the moves.
And experience trader can allow little bit more leeway in his stops. He knows he has a profitable plan. He knows how to trade it correctly. And he's already banked one or two hundred pips for the month. So he can allow for a little more room to allow a trade to work out.
There are so many variables it would be impossible to cover them all. Focus on not losing money I don't care if it's only two pips per trade name on my average number of trades per month that's 80 to 100 pips per month. That's more than most aspiring traders get.
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