Aggressive scalping and tight stoploss
Abstract: In this article I will try to explain my methodology of trading, the tools I am using and techniques involved. The main stress will be put on the stoploss, how to us it better and how to continue after being hit. Some basics on the scalping will be explained and how to avoid over trading and overconfidence. Other important factors like forming of channels, wedges and bottoms and tops from patterns will be also given.
Basics:
Scalping is method for trading in which your target are just several pips, if we are talking about numbers let’s say not more than 10 pips (EUR/USD) or between 2 to 5 pips. This method is widely used because traders hate to stay for a long time in a position and being under stress. Usually in volatile periods this method gives us exit at about seconds to 5-10 minutes maximum.
Stoploss is the most discussable factor in trading. All the books tell you that it is very important and you should always put it in your trade. I am sure everybody knows what it is. In 2 words this is the level at which you are prepared to take loss (usually traders put it very, very far from this level and this is the reason everybody are suffering)
Some information about patterns: Patterns are forming during different periods. They form triangles, rectangles, bottoms, tops, channels and wedges. This are the most widely used, maybe there are more but I will be talking only about this type of patterns.
Results and discussion:

On the figure is shown an example of 1 live trade I made during July (rather old but is a good example). To use the method of scalping it is very important to have enough patience to wait for the volatile time to come. Usually it is between 10 to 12 o’clock in the morning (UTC time) and between 4 to 6 pm. On this example the volatility is not enough so I had to wait more than hour as you can see for only 4 pips profit but here it is very nice to explain all the patterns and the stoploss level. As you can see the entry point is after a big drop in the pair. It is used as a reversing point. We are not looking on the long term (which obviously is down) we are looking for a fast scalping so here is very important to place your stoploss close enough if the trend continues not to be caught in a drawdown. Usually I am putting my stoploss at 3 to 5 times the profit target. If I am targeting 3 pips the stop is 15 pips. During the period of being in position I am watching carefully the price action. Here we have formed 1 triple bottom and 1 bigger double bottom. Also you can see the forming of the triple top which made me move the stoploss closer as I was prepared for negative trade. When the buyers come at 12 o’clock I had confidence of the TP level when the double bottom formed again. Important things here are the time period and the forming patterns. During the time of the position I was watching the smaller time frames 5 seconds and 15, 30 secs. It is interesting to mention that my observation show that when are forming descending triangles (which means that the price will go down) usually the bears are exhausted and the bulls take control and vice versa which is opposite to the standard psychology when you expect that the descending triangle will lead to channel down.
As final thoughts I will say that scalping is not always winning and you must avoid over trading and becoming over confident which means that 3 wins are not necessary giving you fourth win and if you have 3 loses this does not mean that the 4th trade will be winner. You must also not be tired while trading it is like driving if you drive long time you become sleepy and there is a big possibility for a crash.
And as ending
There is always tomorrow it maybe better than today relax, take a break and never give up!
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