Scalping the Index - Pointers Please

[Andy_aus]

Oh and did i mention u need heaps and heaps of screentime and hard work to master it.

No short cuts here

The creator of cyrox calls it modern day tape reading.

 

[Trembling Hand]

Good to see you back TH... you were gone missing for about a week... noticed you changed your avatar... is that you snowboarding?

Just wondering about your comment about CFD lagging futures... if that is so,.. then if you were watching the futures, won't that give you a heads up on the CFD trade?

yeah Korrupt been away for three weeks snowboarding in NZ & Hotham....V.nice.

The CFDs ARE linked tick for tick to the Futures not the indexes.

One Very Important thing to remember.

Only Trade in the Direction of the Moving Averages. If they are all pointing in the one direction. Trade that Direction. If they are not all Pointing in the one Direction you are just guessing...

The only time I would consider going against Trend is when there is MACD Divergence where Price is making a higher high or lower low where MACD is doing the opposite.

That is it.

Druss I trade all day long against the trend. Picking tops and bottoms off 1 min candle chats without indicators. I would do it hundreds of times per week, have for years.

Who's right?? you or me?

 

[druss]

Druss I trade all day long against the trend. Picking tops and bottoms off 1 min candle chats without indicators. I would do it hundreds of times per week, have for years.

Who's right?? you or me?

For someone who is starting out along the index trading path, would you recommend a 1 min chart and trade against the trend??

Tell me mate, how many trades do you execute in one trading day on the index? I'm presuming that by using no indicators you are just using swing highs and lows? Previous days lows/highs? Breakouts? Trading Ranges?

 

[korrupt_1]

druss,

I think TH is trying say that neither is wrong or right... we all have our own ways of doing things...

People like us, like to use technicals to justify an entry... Then there are people (like TH?) who just feels the market and knows the moves it (will) make...

Personally, I think the Australian index is almost reliably predictable. If you spend enough time just watching the price action, you'll won't need technicals... it plays out the same way time and time again...

On a heavily trending days, you can bet your knickers, that there will be a counter move towards the end of the day. A savvy trader would catch both the trend and the counter trend - do you need technicals to know that?

Scalping is not just technical, but a feely/touchy thing too...

 

[professor_frink]

For someone who is starting out along the index trading path, would you recommend a 1 min chart and trade against the trend??

TH(and quite a few others on this site) would probably agree with me when I say that a newbie should do some research before they start trading. If they have come to this conclusion via some analysis on historical static charts and proven it by executing it live on a sim, then yes, they should start off trading a 1 minute chart, and by trading against the dominant trend.

 

[Trembling Hand]

For someone who is starting out along the index trading path, would you recommend a 1 min chart and trade against the trend??

Like Professor & Korrupt have already stated it doesn't matter the set up its just what works for you. That was my point in the question who is right/wrong.

As a starting point for someone I would recommend looking at the non-conventional setups. After all most traders try the breakout/trend trades and it just so happens that most traders lose money. are they linked?
maybe not - maybe yes! Then again as you touched on with taking losses early and which is always my point, its probably got nothing to do with entry/chart set up.

I'm presuming that by using no indicators you are just using swing highs and lows? Previous days lows/highs? Breakouts? Trading Ranges?

No, not at all. DOM mostly.

Tell me mate, how many trades do you execute in one trading day on the index?

100 to 300 round trips.

 

[druss]

I've been reading some stuff on your Blog/Site TH, some really good stuff on there.

I've been into the Cash Index with IG for about 6months now. Like you say there are distinct patterns that are very obvious.

Times of the Day are something I consider to be very important. We cannot predict the market that is impossible.

We as Humans are creatures of habit however.

We always go to lunch at about the same time everyday. What happens when we go to lunch? We close our positions. What do you normally see happening at about lunch time?

Short or Long Covering.... Closing of positions. In my experiences 11.30am is a good pivot point and so is 9.30am.

What's your favourite Set Up TH?

 

[Trembling Hand]

What's your favourite Set Up TH?

A long entry on the Bid and a short entry on the Ask. Something you cannot do with CFDs. :

 

[The_Snowman]

dazers,
some absolutely great advice given so far in the replies, here are some pictures to help you out - always trade with the trend, be patient, wait for your setup and confirmation, get out quick if it doesn't behave

 

[Trembling Hand]

dazers,
- always trade with the trend, be patient, wait for your setup and confirmation, get out quick if it doesn't behave

Snowman you take these trades today?

If you are trading with the trend (whatever that is) why wait for confirmation?

today is the perfect example. A reasonable guess that the day is a down day so you look for shorts on confirmation of new lows?? but whenever it made new lows it then bounced back to the middle of the range. so what is this confirmation you talk of.

that 1st trade you have pointed out as an entry was not confirmation of new lows for the day yet. So what is your confirmation signal.

And the second signal where was the confirmation you are saying that you waited patiently for. As the price you indicated you traded at was still in the first bar .

 

[Trembling Hand]

In fact lets look at that 1st trade. because to me the risk to reward looks very bad. even after the fact. especially with a CFD trade giving away 2 points on every entry & exit.

So you enter on the break of 4895 lets say 4893. Which really is not yet confirmation as the bar has not yet completed, but lets take that as your entry.

Where is your stop. The logical place is above the last high? the last high was 4903. So say 2 ticks above that 4905 + the spread of 2 points that would make your stop 14 points! You would need a 30 point move in your favour to make this a good 1:2 R:R trade. (remember that chart is a bid chart you will get the ask price which is 2 points higher)

So you tighten your stop to 5 points. With CFDs that is actually only 3 points because you are paying 2 points on your crappy CFD "free" trade.

just cannot see how you could trade this way in real time without a hugely favourable win:loss ratio or unless they are done in hindsight. Trying for 10 points with CFDs I would like to see it done over 50 trades. Because I know you have to be very lucky playing break out/downs with a stop loss less than 10 CFD points.

 

[The_Snowman]

you mean like this? hey, I'm just showing the guy how to grab a few points, not teaching trading here.......

 

[mazzatelli1000]

you mean like this? hey, I'm just showing the guy how to grab a few points, not teaching trading here.......

Mate,

Some people would frown on that and say insufficient evidence........

Also to grab a few points, he needs to learn about trading

 

[Trembling Hand]

you mean like this? hey, I'm just showing the guy how to grab a few points, not teaching trading here.......

So where was your stop dude?

If you want to spew out the cliches "always trade with the trend, be patient, wait for your setup and confirmation" at least put them with good R:R examples.

By the way how did you get 4881 buy on that close?? your chart shows 4880 as the lowest tick on that leg down (if its a bid chart?). Which means that the ABSOLUTE low for that leg down you could of got was 4882

 

[James Austin]

 

[druss]

Using your chart snowman this is the kind of thing I'm looking at when I trade.

How can you possibly apply Risk vs Reward when Trading Small time frames TH?

 

[Trembling Hand]

How can you possibly apply Risk vs Reward when Trading Small time frames TH?

How can you not?

What does the time frame have to do with risking more than you can win?

If your stop is larger than you target I'm pretty sure your trading career will be a short one.

 

[mazzatelli1000]

Using your chart snowman this is the kind of thing I'm looking at when I trade.

How can you possibly apply Risk vs Reward when Trading Small time frames TH?

So you trade with no stops on smaller time frames???

 

[lesm]

How can you not?

What does the time frame have to do with risking more than you can win?

If your stop is larger than you target I'm pretty sure your trading career will be a short one.

A very short one, even if you snag a few good trades, you will eventually bleed your account dry.

 

[druss]

How can you not?

What does the time frame have to do with risking more than you can win?

If your stop is larger than you target I'm pretty sure your trading career will be a short one.

Applying Risk vs Reward implies you have some sort of Target in mind. Unless you can see the future how do you know what your target is?

I know all the chart patterns and I know how to calculate the targets. It is the exits that count not the entries.

A 1:1 Risk vs Reward is quite acceptable if you have a high win ratio. If you have 50% winners and 50% losers you are lost.

Risk has little to do with Exits when Trading intraday on the index. It's all about percentage of winners vs losers.

The best time to exit is when you identify the trade is not going the way you anticipate.

Setting stops and Risk vs Reward is more relevant when deciding position sizing for FPO/Equities. 2% Rule is paramount.