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Old 16-08-2012, 20:04
shovon shovon is offline
Level 1 Lasers Member
 
Join Date: Jul 2012
Location: Dhaka, Bangladesh
Posts: 1
Default Scalping with Candle Stick pattern, Fibo tools, EMAs & RSI Indicator

I've found few threads explaining various techniques of scalping with the aim of 3-5 pips gain. I also use to do scalp and my practice is bit different and also a little bit longer than others scalping methods. So, I think my experience can be shared with you guys and also a discussion can be made, and it might help me to develop my method further.

First of all, I should mention that I use to do scalping on 15 min chart. Before taking any trading decision, I've set up my charts in below ways:

1. Draw a Fibo Expansion on H4 chart as per recent swing either uptrend or downtrend (based on current market movement);
2. Set 1 EMA with 14 period and another EMA with 30 period;
3. Set RSI with default time period, which is 9;

--> Once Fibo Expansion is set in H4 chart, consider the various levels as the Support and Resistance point in the 15 min chart, specially focus on 38, 50 and 61 levels.

--> EMA's on H4 & H1 and also 15 min chart can provide the current trend of market movement.If 14 EMA cross over the 30 EMA, then its uptrend and the opposite is for downtrend.

--> Simple understanding of candle stick pattern on H4 chart and H1 chart can help to guess sudden movement of market during volatile time.


Trade Entry and Exit:


I use to target 10-15 pips while do my trades. Now let me explain how I use to open and close my trades.

On 15 min chart, when EMA shows down trend, I use to put a sell limit at the 14 EMA point with 10-15 pips TP, and set SL at 2 Fibo levels higher.

For example, when I put the pending order or open instant trade, I use to look my trade position on H4 chart. If it immediately down to fibo 50 levels, then I set the SL either on fibo 100 or at 61 level (based on strong market movement). If it is uptrend in H4 chart, then the SL would be set at 100 level. On the other hand, if it is down trend in H4 chart, then 61 level for setting SL is good enough.

Another thing I also do and that is, if my sell order TP is near to support level, then I also put and pending Buy order on the same point with 10 Pips TP.

This whole thing repeated in all day long trading. I experienced of gaining average 50-70 pips every day ;) even the market moves in total of same pips including both direction.

Important Note:

While doing my trade in this style, I've got few experience which needed to mention e.g. below:

--> Few trades like 1 or 2 trades may slip from my hand, but it either come back to hit the TP on next day or two.

If longer time frame chart analysis shows the trade is slipped for much longer time period, then do not wait for hitting the SL and close the trade when max possible market point comes to the trade's open position. Here, :confused: I've to use my common sense and analytical skill to minimize the loss.

The main objective of setting SL in such distance point is to prevent of having unbearable burden of losing trade on shoulder when market moves suddenly on opposite direction during extremely volatile situation;

--> Fixing a lot is very important in this trading style. I use to calculate the volume as, 25 cent lot for $500 balance, 50 Cent lot for $1000 balance, 75 Cent lot for $1500 balance etc.

Conclusion

As I said, I experienced of gaining average 50-70 pips each day if the market is relatively calm and more during volatile situation. Though during volatile market condition, I also experienced loss of many pips, :cool: but I use to recover them by instantly opening up a trade to the direction where market moves.

I also use to calculate my overall profit loss at the end of the week, and found around 35-40% of profit :rolleyes: after deducting the losing trade.

I know that, many expert and experienced trader will definitely not appreciate my trading style as they'll see a huge risk involve in this style. But, it's also true that you'll gain as per the risk you can take.:D So, I invite to my fellow friends who are interested in my trading style to practice it on Demo account and come up with your opinion and advice and findings.
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