Category Archives: scalping

Lower time frame swing breaks

It surprises me sometimes how fast live trading and accelerate the learning process.

Profit potential for breakouts
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Results look fairly well, first 10-15 trades look as expected. Note to self to not trading during the news when scalping though. It’s a good way to lose all your gains and then some. Oops.

Currently working on 5m extended swings and just trading the break. Fixing waves to be 3 or 5 leg moves kind of works in some situations, but it detracts slightly from letting price tell the story. By requiring price to break out of one of the ends of the swing I think one can improve this story telling aspect, at least by a little. As long as it’s an improvement on the current model, then I think it’s worth it. The extra benefit is that the extended swings always contain the basic waves within them.

The other thing I like about it is that when I use extended swings, the average length of the wave increases. Using more time while maintaining swing points is essentially unlocking a higher time frame from within a smaller time frame. That is, I can more easily see the individual bars and lower frame fractals, while still acting within the “minimum” limits of swing sizes that are generally much larger than 5m swings will allow (by minimum I mean the size at which PA at that level is no longer considered noise. I am looking at the “real” moves). Of course embedded within all these swing sizes, time frames, fractal locations, etc are a lot of assumptions about what is truly correct or taken into account when making moves, but results are results.

When the model is more likely to be correct, then one can more confidently engage in active pattern seeking and what I call strategy patching. Something that a lot of new traders do is they find some strategy, and trade it. It wins and loses. Then the trader looks at the losses and tries to explain them. After a while of searching, they discover a few signs that the losses share in common. A pinbar tipping them off, S/R level, etc. So they up their criteria to take a trade, hoping to increase the quality. They patch it. However after resuming trading, the process loops and results don’t improve much. This is not a bad way to go about trading per say, but to do it correctly is a very difficult indeed, and in my opinion the effectiveness relies heavily on how strong the model (or strategy) is to begin with.

Loser notes and potential patches
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Having the numbers to really know how many issues you solve with a particular patch helps as well.

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