Scalping Trading Style

Scalping is a trading style specializing in taking profits on small price changes, generally soon after a trade has been entered and has become profitable. It requires a trader to have a strict exit strategy because one large loss could eliminate the many small gains that the trader has worked to obtain. Having the right tools such as a live feed, a direct-access broker and the stamina to place many trades is required for this strategy to be successful.

Scalping is based on an assumption that most stocks will complete the first stage of a movement (a stock will move in the desired direction for a brief time but where it goes from there is uncertain); some of the stocks will cease to advance and others will continue. A scalper intends to take as many small profits as possible, not allowing them to evaporate. Such an approach is the opposite of the "let your profits run" mindset, which attempts to optimize positive trading results by increasing the size of winning trades while letting others reverse. Scalping achieves results by increasing the number of winners and sacrificing the size of the wins. It's not uncommon for a trader of a longer time frame to achieve positive results by winning only half or even less of his or her trades - it's just that the wins are much bigger than the losses. A successful scalper, however, will have a much higher ratio of winning trades versus losing ones while keeping profits roughly equal or slightly bigger than losses.

The main premises of scalping are:

* Lessened exposure limits risk - A brief exposure to the market diminishes the probability of running into an adverse event.
* Smaller moves are easier to obtain - A bigger imbalance of supply and demand is needed to warrant bigger price changes. It is easier for a stock to make a 10 cent move than it is to make a $1 move.
* Smaller moves are more frequent than larger ones - Even during relatively quiet markets there are many small movements that a scalper can exploit.

Scalping can be adopted as a primary or supplementary style of trading.

Primary Style
A pure scalper will make a number of trades a day, between five and 10 to hundreds. A scalper will mostly utilize one-minute charts since the time frame is small and he or she needs to see the setups as they shape up as close to real time as possible. Quote systems Nasdaq Level II, TotalView and/or Times and Sales are essential tools for this type of trading. Automatic instant execution of orders is crucial to a scalper, so a direct-access broker is the favored weapon of choice.

Supplementary Style
Traders of other time frames can use scalping as a supplementary approach in several ways. The most obvious way is to use it when the market is choppy or locked in a narrow range. When there are no trends in a longer time frame, going to a shorter time frame can reveal visible and exploitable trends, which can lead a trader to scalp.

Another way to add scalping to longer time-frame trades is through the so-called "umbrella" concept. This approach allows a trader to improve his or her cost basis and maximize a profit. Umbrella trades are done in the following way:

* A trader initiates a position for a longer time-frame trade.
* While the main trade develops, a trader identifies new setups in a shorter time frame in the direction of the main trade, entering and exiting them by the principles of scalping.

Practically any trading system, based on particular setups, can be used for the purposes of scalping. In this regard, scalping can be seen as a kind of method of risk management. Basically any trade can be turned into a scalp by taking a profit near the 1:1 risk/reward ratio. This means that the size of profit taken equals the size of a stop dictated by the setup. If, for instance, a trader enters his or her position for a scalp trade at $20 with an initial stop at $19.90, then the risk is 10 cents; this means a 1:1 risk/reward ratio will be reached at $20.10.

Scalp trades can be executed on both long and short sides. They can be done on breakouts or in range-bound trading. Many traditional chart formations, such as a cup and handle or triangle, can be used for scalping. The same can be said about technical indicators if a trader bases decisions on them.

Three Types of Scalping
The first type of scalping is referred as "market making", whereby a scalper tries to capitalize on the spread by simultaneously posting a bid and an offer for a specific stock. Obviously, this strategy can succeed only on mostly immobile stocks that trade big volume without any real price change. This kind of scalping is immensely hard to do successfully as a trader must compete with market makers for the shares on both bids and offers. Also, the profit is so small that any stock's movement against the trader's position warrants a loss exceeding his or her original profit target.

The other two styles are based on a more traditional approach and require a moving stock where prices change rapidly. These two styles also require a sound strategy and method of reading the movement.

The second type of scalping is done by purchasing a large number of shares that are sold for a gain on a very small price movement. A trader of this style will enter into positions for several thousand shares and wait for a small move, which is usually measured in cents. Such an approach requires highly liquid stock to allow for entering and exiting 3,000 to 10,000 shares easily.

The third type of scalping is the closest to traditional methods of trading. A trader enters an amount of shares on any setup or signal from his or her system, and closes the position as soon as the first exit signal is generated near the 1:1 risk/reward ratio, calculated as described earlier.

Scalping can be very profitable for traders who decide to use it as a primary strategy or even those who use it to supplement other types of trading. Adhering to the strict exit strategy is the key to making small profits compound into large gains. The brief amount of market exposure and the frequency of small moves are key attributes that are the reasons why this strategy is popular among many types of traders.

MT4 Indicator (B-gen indicator)

I found this forex indicator from my friend, this indicator help u to find where the buy and sell level. My advice for using this indicator is buy or sell from buy/sell area with TP 20 pips and S/l 30 pips


Download here

MT4 indicator

Here is one of metatrader indicator that i use for forex trading. this indicator is very useful. it can automatically draw trend for u. so u don't have to draw manually and save ur time to analyze the market

Download here

Market Review fo Next week

After BOE increase their rate last thursday GU come down as market exepected. current price is 2.0104, drop from 2.0200. this condition is much affected by technical rather than fundamental, since i can see all indicator say it's already overbought. i'm expecting GU will Come down till 1.9900 area before it continue to move upward till 2.0300. There are some high impact news will be realesed from UK and US. from UK there are PPI Input on moday forcasted to be bad. and also released data fo Trade balance from UK and US. both data will affect the market. choppy market will be expected. next week will be interesting, every issue can ruin all the scenarion. happy trading :)

Forex Indicator

There are hundreds forex indicator in Forex. these indicator basically is a script or program writen using program language here are some good forex indicator :

Simple Moving Average (SMA) - The average price of a given time period, (5 minutes, 10 minutes, 1 day, etc.) where each of the chosen periods carries the same weight for the average. Example using the closing prices of the USD/JPY currency pair: Day 1 close = 124.00, Day 2 close = 126.00, Day 3 close = 124.00, Day 4 close = 126.00; The 4-day SMA is 125.00 (the average of the prior four closes).

Exponential Moving Average (EMA) - Here, the averages are calculated with the recent forex rates carrying more weight in the overall average; for example: In a 10-day exponential moving average, the last 5 days will have more effect on the average than the first 5 days. The idea is to use the most recent data as a better indication of trend direction.

Bollinger Bands - The basic interpretation of Bollinger Bands is that prices tend to stay within the upper and lower bands. The distinctive characteristic of Bollinger Bands is that the spacing between the bands varies based on the volatility of the prices. During periods of extreme currency price changes (i.e., high volatility), the bands widen to become more forgiving. During periods of low volatility, the bands narrow to contain currency prices. The bands are plotted two standard deviations above and below a simple moving average. They indicate a "sell" when above the moving average (or close to the upper band) and a "buy" when below it (or close to the lower band). The bands are used by some forex traders in conjunction with other analyses, including RSI, MACD, CCI, and Rate of Change.

Parabolic SAR - The Parabolic SAR (stop-and-reversal) is a time/price trend following system used to set trailing price stops. The Parabolic SAR provides excellent exit points. Forex traders using this technical indicator should close long positions when the price falls below the SAR and close short positions when the price rises above the SAR. If you are long (i.e., the price is above the SAR), the SAR will move up every day, regardless of the direction the price is moving. The amount the SAR moves up depends on the amount that currency rates move.

Rate of Change - The oldest closing price divided into the most recent one.

RSI (Relative Strength Index) - The RSI is a price-following oscillator that ranges between 0 and 100. A popular method of analyzing the RSI is to look for a divergence in which the currency price is making a new high, but the RSI is failing to surpass its previous high. This divergence is an indication of an impending reversal. When the RSI then turns down and falls below its most recent trough, it is said to have completed a "failure swing." The failure swing is considered a confirmation of the impending reversal in the price of the currency.

Stochastics - Stochastic studies are based on the premise that as prices rise, closing prices tend to be near the high value. Conversely, as prices fall, closing prices are near the low for the period. Stochastic studies are made of two lines, %D and %K, that move between a scale of 0 and 100. The %D line is the moving average over a specified period of time of the %K line. The %K line measures where the closing price of a currency is compared to the price range for a given number of periods.

Momentum - Designed to measure the rate of price change, not the actual price level. Consists of the net difference between the current closing price and the oldest closing price from a predetermined period. The Momentum indicator can be used as either a trend-following oscillator similar to the MACD or as a leading indicator.

MACD - Moving Average Convergence/Divergence - Consists of two exponential moving averages that are plotted against the zero line. The zero line represents the times the values of the two moving averages are identical. The MACD is calculated by subtracting a 26-day moving average of a currency's price from a 12-day moving average of its price. The result is an indicator that oscillates above and below zero. When the MACD is above zero, it means the 12-day moving average is higher than the 26-day moving average. This is bullish as it shows that current expectations (i.e., the 12-day moving average) are more bullish than previous expectations (i.e., the 26-day average). This implies a bullish, or upward, shift in the forex rate. When the MACD falls below zero, it means that the 12-day moving average is less than the 26-day moving average, implying a bearish shift in the currency.

ADX - Measures the strength of a prevailing currency trend and whether or not there is direction in the currency market. Plotted from zero on up, usually a reading above 25 can be considered directional.

William's %R - A momentum indicator that measures overbought/oversold levels in the price of a currency. The interpretation of Williams' %R is very similar to that of the Stochastic Oscillator, except that %R is plotted upside-down and the Stochastic Oscillator has internal smoothing. Readings in the range of 80 to 100% indicate oversold, while readings in the 0 to 20% range suggest overbought.

Volatility - Measures the overall volatility of a currency in a given time period.

Thomas Demark Indicator

The DeMarker indicator is an attempt to overcome the shortcomings of classical overbought / oversold indicators. In Forex The DeMarker Indicator identifies potential price bottoms and tops. It accomplishes this by making price comparisons from one bar to the next and measuring the level of price demand

here is the formula

highm = IIF( H > Ref( H, -1 ), H - Ref( H, - 1), 0 );
lowm = IIF( L < Ref( L, -1 ), Ref( L, - 1 ) - L, 0 );

Tom D = 100 *  Sum( highm, 13 )/( Sum( lowm, 13 ) + Sum( highm, 13 ) );

Holy Grail in Forex, is it really exist?

The Holy Grail is often referred to in trading circles as the perfect trading system; the perfect conditions or indicator that will guarantee success in every trade you enter. All traders at some stage undertake the search for the Holy Grail whether it is consciously or subconsciously.

The reality of trading is that there is no such trading system in existence. It never has existed and never will. The fact that some software packages label an indicator the ‘Holy Grail’ only serves to whet the appetite of some people further and arouse their suspicion of what it could be and how they will find it.

It is also widely accepted that your own psychology or mindset is the largest single determinant of your trading success followed by your ability to manage risk. The small remainder of the ingredients to your trading success is your system which includes your entry signal.

When most traders start trading, they spend most of their time on developing their entry conditions. They will learn about various technical indicators, trends and chart patterns, and how they can be interpreted and applied to their trading.

In his book ‘Market Wizards’, Jack Schwager interviews numerous profitable traders in the United States. There is an interesting observation to be made about most of them. Often Schwager asked if they were to start trading again, what would they do differently.

Many answered that they would not have wasted as much time initially on their entry signals and they would have rather spent that time concentrating and developing their risk management rules and working on their own mindset or psychology.

When trading does not go well for most traders though, they begin to wonder what part of their entry conditions is failing them. Thoughts like is it the data they are using, the software, should they use different moving averages like weighted or exponential, or look at hourly data.

It is obvious that entry conditions are a necessary part of any trading plan but their importance is often overrated. Numerous texts have been written about various entry signals yet not enough focus on what is really important to trading.

This may not help the beginner who naturally assumes that their entry signal is the most important part of their trading plan and therefore they shall spend most of their time developing that.

Unfortunately some traders who have looked for the Holy Grail try to lay the blame for their lack of success on external factors. It might be the software they are using or the new entry signal they acquired from reading a book, but at the end of the day they should look no further than themselves.

Successful traders have numerous personal traits in common. They are focussed, disciplined, passionate, and are totally committed to their trading. They are humble and always prepared to learn from their mistakes. The Holy Grail of trading has never existed and never will.

Elliott wave

The Elliott wave principle (1871–1948), a professional , or wave principle, is a form of technical analysis that investors use to forecast trends in the financial markets and other collective activities. Ralph Nelson Elliottaccountant, developed the concept in the 1930s, proposing that market prices unfold in specific patterns, which practitioners today call Elliott waves, or simply waves. He published his views of market behavior in the book The Wave Principle (1938), in a series of articles in Financial World magazine in 1939, and most fully in his final major work, Nature’s Laws – The Secret of the Universe (1946). Elliott said that "because man is subject to rhythmical procedure, calculations having to do with his activities can be projected far into the future with a justification and certainty heretofore unattainable."

lliott Wave analysts (or "Elliotticians") say that they may not even need to look at a price chart to determine where a market lies in its wave pattern. Each wave has its own "signature," which often reflects the psychology of the moment. Understanding how and why the waves develop is the key to applying the Wave Principle; that understanding includes recognizing the characteristics described below.

These wave characteristics assume a bull market in equities. The characteristics apply in reverse in bear markets.

• Wave 1: First waves are rarely recognized at their inception. When the first wave of a new bull market begins, the fundamental news is just about universally negative. The previous trend is considered still strongly in force. Fundamental analysts continue to revise their earnings estimates lower; most likely, the economy does not look strong either. Sentiment surveys are decidedly bearish, put options are in vogue, and implied volatility in the options market is high. Volume might increase a bit as prices rise, but not by enough to alert many technical analysts.

• Wave 2: Wave two corrects wave one, but can never extend beyond the starting point of wave one. Typically, the news is still bad. As the markets retest the prior low, bearish sentiment quickly builds, and "the crowd" haughtily reminds all that the bear market is still deeply ensconced. Still, some positive signs appear for those who are looking: volume should be lower during wave two than during wave one, prices usually do not retrace more than 61.8% (see Fibonacci section below) of the wave one gains, and prices should fall in a three wave pattern.

• Wave 3: Wave three is usually the largest and most powerful wave in a trend (although some research suggests that in commodity markets, wave five is the largest). The news is now positive and fundamental analysts start to raise earnings estimates. Prices rise quickly, and corrects are short-lived and shallow. Anybody looking to "get in on a pull-back" is likely going to miss the boat. As wave three starts, news is probably still bearish, and most market players remain negative. But, by the midpoint of wave three, "the crowd" will often now be on board with the new bullish trend. Wave three often extends wave one by a ratio of 1.618 : 1.

• Wave 4: Fourth waves are typically clearly corrective. Prices may meander in a sideways pattern for an extended period, with wave four typically retracing less than 38.2% of wave three. Volume is well below than that of wave three. This is a good place to buy a pull back, if you understand the potential for wave 5 ahead. However, possibly the single most distinguishing feature of fourth waves is that they are often very difficult to count.

• Wave 5: The fifth wave is the final leg of a five wave move. The news is now almost universally positive and everybody is bullish. Unfortunately, this is the point when many "average investors" finally buy in, right before the top. Volume is lower in wave five than in wave three, and many technical momentum indicators will start showing divergences (prices reach a new high, the indicator does not reach a new peak). At the end of a major bull market, bears may very well be ridiculed (recall how those calling for a top in the stock market during 2000 were received).

• Wave A: Corrections are typically harder to identify than impulse moves. During wave A of a bear market, the fundamental news is usually still positive. Most analysts see the drop as a correction in a still-active bull market. Some technical indicators that suggest a wave A include increased volume, rising implied volatility in the options markets and possibly a turn higher in open interest in related futures markets.

• Wave B: Prices move back higher, and is seen as a resumption of the now long gone bull market by many. For those familiar with classical technical analysis, the peak would be the right shoulder of a head and shoulders reversal pattern. Volume during a wave B should be lower than seen in wave A. By this point, fundamentals are probably no longer improving, but they most likely have not yet turned negative.

• Wave C: Prices move impulsively lower in five waves. Volume picks up, and by the third leg of wave C, almost everybody realizes that a bear market is firmly entrenched. Wave C is typically at least as large as wave A and often extends to 1.618 times wave A or larger.

Trading Advice (G/J)

244.50 cannot hold Gj yesterday, so i open another buy position on 244.40. as i said before if it break that level G/J will continue to rise, probably until 250. my advice is keep buy dips when u see small correction on this pair. do not sell unless u got very positif signal for shorting this beast. stay aware with major correction, don't forget to put ur stop loss. Happy Trading :)

Daily Pivot Points for June 15 2007

EUR-USD

Open = 1.3310
High = 1.3386
Low = 1.3305
Close = 1.3378

Pivot = 1.3356
Support and resistance for june 18 2007
R1 = 1.3408
R2 = 1.3437
R3 = 1.3489
S1 = 1.3327
S2 = 1.3275
S3 = 1.3246

GBP-USD

Open = 1.9693
High = 1.9779
Low = 1.9688
Close = 1.9752

Pivot = 1.9740
Support and resistance for june 18 2007
R1 = 1.9791
R2 = 1.9831
R3 = 1.9882
S1 = 1.9700
S2 = 1.9649
S3 = 1.9609