High Profit/High Probability Scalping

There have been so many questions on this subject that I decided to create an FAQ

What pairs are you trading? Strictly GBP/USD and EUR/USD? That 4 pip spread bugs me with the GBP/USD….especially for scalping.

I trade only EUR/USD and GBP/USD from 2 AM EST (6AM GMT) to 4PM EST (20:00GMT)

The spread IS the biggest problem here which is why I trade with 30 point stops and only at brokers that have GBP at 3 or less

So you’re trading ALL 00 and 50 setups (ie. without a fundamental driver -- not certain about your position)? But you’ll go lighter (one lot and smaller targets)?

The PERFECT setup for me to trade momentum at the 50 and 00 levels would include a massive fundamental surprise that is complimentary to the direction I am going in. So let’s say GBP/USD is trading at 1.6500 before UK Retail Sales which are expected to be up 1%. Instead they print at -1% and cable tumbles. As the pair approaches the 1.6450 level I will short 2 units. Let’s say I enter at 1.6459

On momentum trades the are two ways of trading ANTICIPATORY where you enter 20 points ahead of the round number in anticipation of the move to 50 or 00 or DIRECT where you hit the trade exactly at 50 or 00. I generally do a compromise and enter at about 10 ahead of the target hoping that combination of anticipation and momentum will carry me to my targets.

So I am in at 1.6459.

My stop is 1.6489.

My 1st target is 1.6444. If its hit I move to breakeven on the position

My ultimate target on the second unit is +60 or 1.6399.

As the trade moves +10 in my direction I trail the stop. So in this case as it moves to 1.6434 I move the stop to 1.6449 and so on until I get stopped or hit my T2

But that’s not all. If I am confident in my negative view I will wait for retraces of the downtrend and will short again. In this dynamic your are actually doing the anti-momentum setup. So let’s imagine cable has fallen to 1.6380 and now bounces to 1.6425 I will look to short it again about 20-30 points above the 00 level or 20-30 points above the 50 level for a retest of those barriers. So I will now short the move at .6427 with 1.6457 stop, 1.6412 T1 and the same trail strategy.

In essence the 00 setup comes down to whether you think the move is real in which case you trade it with momentum or whether you think the move is BS in which case you fade the move at 20-30 zone above the 00 and 50 levels in case of a short bias and buy it 20-30 below the 00 and 50 level in case of a long bias.

For me the easiest way to have the bias is with strong fundamental kicker to support my view. But many times the moves occur without any discernible reason. In those cases I always go with the trend but will only trade 1 unit with -30 stop +15 target

Hope this helps. Feel free to post any questions in the comment box.

Video

3 comments

  1. Eddie says:

    Liking your retrace strategy, and am profiting but also getting stopped out by not allowing full retrace. What indicators or strategy do you use to determine when retrace completed, ie, shorting at 30 but retrace completing at 70/80. Thanks.

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