Pro Scalping, by Tommy Charles - page 5
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hole is back to -3 but if i reenter here it means hole is really -6...I think my experiment is over, Ill wait for others to comment, uh oh, its -6 again....LOL... well it was some sheap fun.
fyi, I just bailed out because I see where its headed. It was down 12, so net 10 point loss.
hole is back to -3 but if i reenter here it means hole is really -6...I think my experiment is over, Ill wait for others to comment, uh oh, its -6 again....LOL... well it was some sheap fun.
If you had reentered there you would have secured another pip in pocket and if you are using a spread of 3 you would have finished with -7 in the hole. It is irrelevant that the price went back to -6, since you didn't reenter. That does not reflect negatively on the method. Infact, that move would have gotten you on your way to getting that second pip in pocket. The hole is the negative trade that you end up with, whether long or short. This method takes advantage of the short term price oscillations that occur 70% of the time. Just watch your dealing rates for an hour and youll see what I mean. It doesn't matter whether the price goes up or down once you are locked in in either direction. Further, if you do hit a trend and you do have to make an emergency hedge to try to save the trade that doesn't mean that you automatically lose. You can still shrink the hole in subsequent trades.
Right now in AUD/USD I'm 10 in the pocket and 15 in the hole with only 2 trades.
Next I catch up, make my profit and get out.
Here is the pocket:
I'm having trouble attaching a photo , ill figure it out. In the meantime, it is interesting to note that at this point in my trade I don't even need to open another trade. I have 10 in the pocket and -15 in the hole right now. daily high for AUD/USD (since 5 PM) is 97, which is where we are now, and low is 74, which is where I need it to go. If it moves down ten I can get out for my 5 pips or I can hedge and lock in another 5 pips in the pocket.
Pocket pic take two:
That was the pocket, the accumulation of the single trades that I will use to overcome the hole....which is this:
Scott you think that the market moves in strong trends most of the time? Notice that the first trade was open for exactly 3 hours. That's three hours that the price fluctuated between 20 points. The second trade closed in thirty minutes. Notice also that I'm taking 5 pips at a time here. This is a method that may be more comfortable to some.
Notice that I am -2 here. I have 10 in the pocket and 12 in the hole. The trade has been fluctuating around -16 to -13 for the last hour, so if I really feel that it isn't going to turn around I can close for a small two pip loss and open a new play and try again. I'm not going to do that though.
This play hits break even:
One thing that I would not do here is cap this thing at break even. One would do that to try to increase the potential profit from 5 pips to 10. The cap would result in 15 in the pocket and -19 in the hole. Even though this does lessen the number of pips that the pair must move to break even, it is not worth it at that price. That is not at a discount.