Search result for:  minimum scalp

You shouldn't be scalping. In the long run you will loose money taking scalp trades. So this is all theoretical discussion. Plus, the L2 you took as a scalp is a bad scalp to begin with. You are shorting below a bull trend bar closing on its high. You just got lucky in this trade. Using wide stops when scalping WITHOUT being able to scale in is a loosing strategy. You use wide stops for scalps only if you can scale in and by doing so increase your probability of success.

Each trade has to be looked at in terms of probability of that trade being a win. One's general win rate has nothing to do with the traders equation.   Reward is the distance to your profit target and risk is the distance to your stop loss. But there is another component and that is the probability. To use the traders equation you have to assign the probability of success (your best guess of the chances of price hitting your profit target before it would hit your stop loss) and you have to assign the probability of failure to each individual trade (the probability of price hitting your stop loss before would hit your profit target). It has little to do win one's general in rate. You may have a general win rate of 75% but let's say a particular trade has a probability of 60% of being successful within the context of which it is found. Therefore you have to use the assigned probability in the equation not your general win rate. Each trade is different in terms of assigned probability and to arrive at the probability figure you have to look at context which includes last 3 bars...along with price patterns (such as trends, flags, triangles)...and finally the larger context i.e. the market cycle. In addition look at "how" price is acting i.e. volatility (fast and big slow and grinding) and momentum (especially for scalpers) to determine if a particular setup has a good enough likelihood of the trade being a winner.   So the traders equation is: Probability of success x the potential reward (>needs to be greater) than the probability of failure x the risk. If it is then you have a positive traders equation. In high probability trades the profit target needs to be smaller. Why?because much of the move has already been made. So not much is left before a probe in the opposite direction or a strong reversal. The market is constantly probing in both bullish and bearish directions. A scalper wants to capture a portion of the probe. So let's look at your trade. From the context looking at the previous move down (top left of your chart to your L2 short. I would assign a 70% PROVISIONAL probability of a successful scalp being likely. How much depends on if I can structure a positive traders equation. Let's pretend your chart is the ES. Let's plug in the figures into the traders equation. Your initial PT and SL is you are going to risk 9 points to gain 3 points. So:   70x3=210 and 30X9=270 (note 30: is the probability of failure) 210 is less than 270 so not a positive traders equation. So what do you do? you have four options. 1) Reduce the risk (use a tighter SL) 2) reduce the reward (smaller PT) 3) Reduce both reward and risk to render a positive traders equation. 4) increase the probability of success and decrease the probability of failure and in this case I would do neither as I think bask upon context there exists a 70% chance for a successful scalp.   Since your SL is 3 times your reward I would adjust the risk first. Reduce SL to 6 points since probability is fairly high for a successful scalp. So: (70X3=210) (30x6=180) 210 is > 180 so now a positive traders equation,. Therefore even though it is an upside down R:R of 3:6 (3 being the reward and 6 being the risk} you can still maintain a positive traders equation to take the trade. Now before taking the trade I ask myself does price have a better chance of hitting my PT BEFORE it would hit my SL and in this case I would answer YES and take the trade. In the first calculation I would likely answer NO because it is not a positive traders equation and R:R is way upside down. You could reduce your reward and increase probability and reduce risk some too if going for a small quick scalp. and doing so would make the positive traders equation go up even more thus increasing the likelihood of a quick and successful scalp.   (90X1 point) > (10X5 points) 90 is greater than 50. R:R is 1:5 upside down but still positive traders equation. Quick locked in scalp. However if you assign higher probability of a successful trade you have to accept smaller reward. Many traders understand this right backwards. They think higher probability means bigger rewards but it is right the opposite. Maybe this will help?              

... is either AIL or AIS, and yes a market is either in a trend or a TR. The thing is though, everything, including the AI direction, trends and TRs, depends on the TF. So, back to my previous example. If you are in a broad bull channel, by definition it means that the channel lines are far enough apart for scalps in both directions. Your AI direction is obviously long because the market is making higher highs and higher lows. All good... but all of a sudden you get a big bear bar closing near its low and it gets strong follow-through, let's say a couple of be ...

Depends on where you bought for the first trade. If you took the first trade at A, then you're buying at the bottom of a TR, so potentially an OK scalp, although I wouldn't buy so soon after seeing that massive bear bar. But let's say you bought at A, it's still a profitable scalp if you get out at B. Similarly, if you sell at C for a scalp, it's a valid trade. Buying at B however is buying in the middle of the TR. You could still get out either breakever or with a small profit even as you see price stalling. The main thing is, all these trade were scalps, because you're in a TR. You cannot hold through PB here. Attachment : 1721-image.png

... swing trades that we should be taking (the ones that he later marks with a blue rectangle for beginners). I understand and accept why this happens but this is nonetheless quite frustrating when learning. The trades highlighted in green and red are swing trades, tho some of them are high or low in a TR so you actually better scalp them. Also, when you are in a TR day, you don't rely on your stops (this is trending behavior), you better exit on strength at magnets. With this in mind, let's see the trades you pointed out. I copy below the chart with bar numbe ...

It is not 10% from the entry, it's not 20%. It is more so a fixed amount of ticks than the percentage from the entry. The price quickly moves a few ticks before reversing movement a lot of the time. It's better to have a minimum risk of more than a few ticks. "Too small" actual risk to some traders is the risk such that the low of the candle is not reached before the stop-loss is reached. Different traders have different definitions. The best definition is the minimal scalp size, I think.

... a lot and not happening that much. I have read some previous forum post on minimum scalps on forex and Al brooks target of 10pips for minimum scalp is lot and rarely achieved on the 5min timeframe since the average day's range has also decreased a lot and is about 60 pips a day in EURUSD. So, can we change the stop entries a little bit? like 10% of the total scalp to be the entry?(if 2pips is take profit, then entry above 0.2 pips from signal bar's high) or should I trade a timeframe where 10 pip is half the size of an average bar?(for EURUSD its 4 hour) ...

Dear Colton, Please consider my opinion on this: if actual risk level is reached there might be some PB there. If two times actual risk is reached chance for PB is slightly higher. If that level is less than minimum scalp I don't take profit there, but I'm conscious of it. If it is at the level on minimum scalp I watch closely what is going to happen next... So it might be potential early exit. In regard to SL, I understood that traders hardly allow it to be hit. So risk is not really initial SL. With kind regards. IN

@ludopuig, are you sure about a 10 point 1:1 trade being a scalp? Al scalps all day long and his scalps are NOT 1:1 trades. He has said himself that he will usually use the "appropriate" stop, which he calls catastrophic stop, that never gets hit because he will exit/reverse before that. As far as I remember he scalps for a minimum of 1 point but that depends on volatility. These days he may scalp for 2 or 3 points. Maybe just a play on words but I do think it's important to clarify this.

From the Glossary: scalpA trade that is exited with a small profit, usually before there are any pullbacks. In the Emini, when the average range is about 10 to 15 points, a scalp trade is usually any trade where the goal is less than four points. For the SPY or stocks, it might be 10 to 30 cents. For more expensive stocks, it can be $1 to $2. Since the profit is often smaller than the risk, a trader has to win at least 70 percent of the time, which is an unrealistic goal for most traders. Traders should take trades only where the potential reward is at least as great as the risk unless they are extremely skilled. PS. For current wide ranging Emini market Al has often quoted an Emini scalp size of 5 points with swings 10 points.

There are other references about how to know what is a proper scalp size. For example, if the average bar on the timeframe you are trading is "x", your goal is to go for at least half of that "x". If the AVERAGE bar is $10, then scalp $5.. Another target could be 10% of average timeframe 100/200 bar range. For day trading, some traders use the 1 ATR target for their scalps (Or .10 DAILY ATR). It is all very relative, I animate you to practice it and get experience on a demo account until you feel comfortable knowing which is the proper target. If you look at the charts day after day and month after month, the size of the scalp will become obvious to you because you will be in rhythm with the market. By the way, I do not know any crypto broker where you can day trade and scalp without gigantic spreads or abusive commissions. I hope you consider this before scalping, and also, consider not scalping, as Al encourage and recommends to his disciples. Please revisit all the scalping videos, all you need to know about scalp targets it is in there. However, I hope you found this helpful. Josep.

There is a difference between the two situations. On the second question, we have to decide a scalp size as per our own choices of percentage and recent number of bars, because that scalp size is then (often) used to set protective stops. So there is a need to be exact. On the first question there is no such need. If you eyeball the bars so far, and a breakout bar looks big to you, then it's big. If you want you can use some kind of average bar size, but there's really no need.

... in a tight channel, even if the bear case is good, I would wait for at least a 2nd entry (not here). I would certainly not sell below a huge bear bar (high risk + low probability = perfect trap). Market on the above chart is in a broad bull channel or you could argue in a TR (which I don't think is the case as it still didn't have a strong break of a major HL). So, some bears might sell above the previous buy climax high willing to scale in higher (at least 2-3 times the size of a minimum scalp) and hope that they will be able to get out breakeven on their ...

Am I correct to assume that when switching to AR you would need to have a PT of at least AR2? What I'm wondering is how taking AR2 wins repeatedly with the occassional IR1 full stop affects the PnL? If your average AR2 wins are much less in size than the IR1 full stop losses, the result would likely be a negative PnL over time, no?