Scalping Strategy

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Scalping Strategy

Postby Dave » Mon Jul 20, 2009 10:00 pm

Hello All,

I just registered as a member and would like some help developing a potential scalping strategy. I don't know if this idea has been discussed already; if so, my apologies. (It's new to me either way.)

ENTRY: Wait for a candle to close outside - partially is ok - of one of the outer STARC (10,15,1.33) bands and another candle to close in the reverse direction. Once the 14 EMA crosses the STARC mid line in the same direction of the reversal candle, then enter in the direction of the 14 EMA on next closed candle.

EXIT: 7 pip stop loss (7.9 with spread), 16 pip limit.

So far it's just been back-tested for the EUR/USD on a 5 min. chart. It's weak point is during ranging markets. Any and all help, comments, ribbing is greatly appreciated.

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Dave
 
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Re: Scalping Strategy

Postby Edward Revy » Tue Jul 21, 2009 8:32 pm

How about this:

Drop 14 EMA. Leave everything else in place.

Once a candle closes outside STARC bands, split this candle length in half and set a pending order in the opposite direction. E.g. if a green candle closes above and outside STARC bands, we look to sell. So, if this green candlestick is 10 pips wide (including shadows), we'll be selling 5 pips lower.
Exits as initially advised.

Regards,
Edward
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Re: Scalping Strategy

Postby Dave » Wed Jul 22, 2009 8:59 am

Thank you for the quick, helpful response. I'll test it this week.

Dave
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Re: Scalping Strategy

Postby Dave » Wed Jul 22, 2009 4:30 pm

The new strategy (so far today) has yielded 1 win, 3 losses. Without additional indicators, there is a real problem with whipsaws. However, today's 15 min. chart appeared to follow these rules more consistently.

Could waiting for two candles to close in the opposite direction signal a stronger trend?

With the larger time frame, stops and gains will need adjusting. Perhaps a 40 pip gain/20 pip loss, with stops moved to break-even, would work. I'd like to keep a 1:2 risk:reward ratio, if possible. Thoughts?

Thanks,
Dave
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Re: Scalping Strategy

Postby Dave » Thu Jul 23, 2009 11:05 am

Continuing previous post:

I looked at EUR/USD and GBP/USD 15 min. charts and there appears to be a pattern. Around an hour after NY open (using STARC as the only indicator) wait for two candles to close in the opposite direction of the previous trend. Immediately after the close of that second candle, set 20 pip stop and 40 pip gain, moving stops to break-even as trade progresses. Entry signals should appear within an hour or two, typically sooner than later.
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Re: Scalping Strategy

Postby Edward Revy » Thu Jul 23, 2009 9:19 pm

Agree that waiting for 2 opposite direction candles is a stronger confirmation. Risk:reward is good too, although I believe 40 pips might be too much to target on 15 min (at the same time it is the measure to allow 20 pips SL, as I understood). In this case stops set to breakeven play a crucial part.
I'd be interested to hear updates on your tests.

Regards,
Edward
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Re: Scalping Strategy

Postby Dave » Fri Jul 24, 2009 7:16 am

Yesterday's trading (half day) on the 15 min. GBP/USD chart using the STARC 2 candle-reversal system yielded 2 wins, 0 losses, for 80 pip profit.

I am also worried the 40 pip gain is too ambitious for consistent wins. Perhaps a 1:1.5 risk:reward would be a more feasible expectation, as I believe the 20 pip stop is necessary to cover the retracements of such a volatile pair.

Thanks very much for your help.

Dave
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