The Super Scalper Strategy by Cecil Robles www.yourforexmentor.com
Feel free to pass this report along to your friends!
The Super Scalper Strategy
You are going to love this strategy. Why? Because it works and it is super simple. So let’s get started. What is scalping? Well most trader would define scalping as entering and exiting the market very quickly for small price gains. I have a little bit different of a definition. Most of the strategies that I use don’t use targets. I let the market tell me where to get out. In other words I usually go big or I lose. It works out well for me. However I know a lot of traders can’t grasp this kind of trading right off of the bat. I am a risk taker and I know it. That is my personality. As such I don’t require knowing the outcome of a particular trade before I take it. But most traders are not this way. But the Super Scalper Strategy does use targets and it can be traded on the 189 tick chart and above. That means that you can use the 1 minute, 5 minute, even the 240 minute (4 hour) chart and make some quick profits. As you probably already know I’m not one to fluff it up so let’s get right to it.
The Indicators We are going to use three main indicators in this strategy. 1. Slow Stochastic with a setting of 8,3,3 applied to the High, Low, and Close price. The overbought is set to 80 and the oversold is set to 20. I’ve taken a screen shot so that you can see the exact setting.
2. 34 Period exponential moving average applied to the close price. Here is a screen shot:
3. 8 Period simple moving average applied to the close price. Here is a screen shot:
4. There is a fourth tool that we use. Fibonacci Retracement. I only use the 38.2%, 61.8%, 78.6%, 100%, 127.2%, and 161.8% fibs. You can make those the defaults if you like. Here is how mine look on the charts.
I am using the Think or Swim platform to demonstrate these examples, but you can use any platform you want. You will notice that I have made my moving average lines display as dots on the chart. Now let’s get into the actual strategy.
The Strategy The key premise behind this strategy is to trade only in the direction of the trend as we identify it. This is going to ensure that you only take the best trades and that you don’t get whipsawed back and forth. So first let’s talk about using this strategy on lower time frames. When you are trading this on anything below the 60 minute chart you need to trade it during the peak market hours. Since the Forex Market operates on a 24 hour time frame, it is important to understand the actual workings of a market day. This information is freely available on the internet, but we have compiled it here for your convenience. Since very little trading takes place over the weekend, and there is no start or end time for a Forex market day, it is best to break the trading day down into three sections: 1. The Australian Session, which includes Australia, New Zealand, and Tokyo; 2. The London Session; and, 3. The New York Session These sessions coincide with each respective country’s stock market sessions. The chart below gives you an idea of how the sessions relate to each other.
The first thing notice is that from the New Zealand open to the New York close, the entire 24hour day is covered. Moreover, you can see that the Australasian session has three stock markets open at the same time, with the last hour of the Australian and Tokyo sessions (3:00 to 4:00 AM EST) coinciding with the opening hour of the London session. Furthermore, the London and New York markets share the hours between 08:00 EST and 13:00 EST. In other words, from 19:00 EST to 04:00 EST, and from 08:00 EST to 13:00 EST, two or more markets overlap. In fact, the areas highlighted in yellow represent the Forex market’s busiest 14 hours. This is due to two or more markets sharing the same hours. Obviously, when that occurs, there are more traders to drive up the overall volume and volatility of the market.
So you need to use this strategy during the coinciding market times, trading the correct markets during that time. This is the first thing you need to make sure of. For the 60 minute chart and above this is not important. You can swing trade those time frames any time. Criteria For Buy Signal 1. The 34 Period EMA must be increasing from one candle to the next (this is visually easy to see when the line is represented as a dot. 2. The 8 Period SMA must be above the 34 Period EMA on the signal candle. 3. The Stochastic must crossover and begin increasing. 4. The crossover candle must be broken within four candles of the crossover (if the low of the crossover candle is broken first then you must delete the trade). 5. Your entry is placed above the high of the crossover candle (you need to make sure you add the spread plus 1-2 pips. Stop Loss Criteria for Buy Signal 1. Draw a fib retracement from the swing high to the swing low that created the pullback. There is a screen shot below demonstrating this.
2. If the entry is below the 78.6% but above the 50% then you will use the 23.6% fib as your stop loss. If it is below the 50% but above the 23.6% fib you will use the 0.00% as your stop loss. If it is below the 100% but above the 78.6% you will use the 50% fib as your stop. If it is above the 100% you will use the 61.8% as your stop. This sounds complicated but it is not.
Target Criteria for Buy Signals 1. You will take ½ of your profits at the 127.2% fib and move your stop to breakeven. You will take the second half of your profits at the 161.8% fib level. Example #1 Ok... so this is really simple but lets look at a couple of examples.
Okay so let me break this down for you. First, I notice that the 8 SMA is above the 34 EMA. This means I am only looking for buy signals. Next, I see that the Stochastic has crossed over and is now increasing. When this crossover happens I want to them look to see if the 34 EMA is increasing. If the answer is yes then I have a trade. In this case everything lines up so I do indeed have a trade. I place a buy signal above the crossover candle. You can see that I have drawn a red box around that candle and you can see that indeed this is the crossover candle. Now it is very important that you trade this on closed candles. So it is on the candle that crosses over and closes. I am trading the 1 minute chart so I place the entry about 0.5 to 1 pip above the high. I place the stop loss 0.5 to 1 pip below the 38.2% fib. I place the first target at the 127.2% fib retracement and the second target at the 161.8% retracement. Target #1 is achieved on the 5th candle (5 minutes later) and target. When that occurs I move my stop to breakeven. Target #2 is achieved on the 13th candle (13 minutes after the entry) and I am completely out of the trade.
Money Management There are a number of ways that you can handle the money management and if you want some more sophisticated ways to do it you can get my Advanced Money Management course. I am going to give you the basics here. The easiest way to do it is to take a percentage risk on each trade. If you are on the lower time frames (below 60 minutes) I would suggest never going above a 1% risk per trade. Remember you are going to have a higher number of trades with this strategy so if you have 3 losses in a row you could easily see yourself 3% down in one day. Even though this is a high winning strategy (over 70%) it is still possible based on simple probabilities to have three losing trades in a row. If you are using this strategy on the 60 minute time frame and above you can risk as much as 2% on any given trade. You will have far fewer trades and therefore this is okay. Short Trades I am not going to do another example on short trades in this white paper. You can watch the video that comes with this and see some short trades.
So that about wraps up the PDF version of this strategy. If you haven’t already received the video for it be on the lookout. If you haven’t visited our main site www.yourforexmentor.com head over there and check out the other available resources. To your trading success, Cecil Robles
EthosTraders, Inc. Disclaimers & Di sclosure s 1. AdventForex, FX S wing Trader, FX Swing Trader Pro, the Forex Alternative Advisor IB course, and the Hybrid IRA cours e , The Super Scalper Strategy are all educ ational products which, along with their related publications, and other services (collectively, the “Course”), is prepared and published by Ethos Traders, Inc., and offered to the general public on a paid basis through our various websites and affiliates. 2. EthosTraders, Inc. is strictly a research publishing firm and falls within the publisher’s exemption of the definition of an “investment advisor” and is of general and regular circulation. None of our trading or investing newsletters, services, interviews, educational programs or any other form of communicatio n provides individual customized investment advice. The information we provide and publish is based on our opinions plus our statistical and financial dat a and independent research. They do not re flect the views or opinions of any other newsletter. 3. We are strictly a financial publisher and do not provide personalized trading or investment advice. Again, we are a financial publisher. We may publish information regarding Forex, options, futures, commodities, currencies or any other asset class in which we believe our subscribers may be interested and our reports reflect our sincere opinions. However, the information in our publications is not intended to be personalized recommendations to buy, hold, or sell a particular security, currency pair or invest insecurities or any other asset class. As a financial publisher, we do not or cannot offer personalized trading or investment a dvice to our subscribers. If a subscriber chooses to engage in trading or investing that he or she does not fully understand, we ma y not advis e the subscriber on what to do to salvage a position gone wrong. Therefore, subscribers will need to depend on their own mastery of the details of trading and investing in order to handle problematic situations that may arise, including the cons ultation of their own brokers and financial advisers, account ants or attorneys they deem appropriat e. 4. Neither the Editor, the publisher, nor any of its employees or members is responsible for any errors or omissions in any of o ur newsletters or educational products. The commentary, analysis, opinions, advice and recommendations in the course represent the personal and subjective views of the Editor, and are subject to change at any time without notice. The information provided i n our Courses, website, e-books, informative documents or newsletters contain material which is obtained from sources which the Editor believes to be reliable. However, the Editor has not independently verified or otherwise investigat ed all such information. Neither the Editor, the publisher, nor any of their respective affiliates guarantees the accuracy or completeness of any such information. Our newsletters and Educational material are not a solicitation or offer to buy or sell any securities. The Course is not a solicitation or offer to buy or sell any securities. Further, the newsletter is in no way intended to be a solicitation for private money management services offered. You are responsible for undertaking your own due diligence and for seeking advice from your financial advisor, accountant or attorney before implementing any portion of the information you receive in our Cours es, off our websites, e-book, or ot her informative documents, materials or newsletters. 6. Past results are not indicative of future performance/results. 7. Investing involves substantial risk. Neither the Editor, the publisher, nor any of their respective affiliates make any guara nt ee or other promise as to any results that may be obtained from using the Course. Past performance should not be conside red indicative of future performance. No subscriber should make any investment decision without first consulting his or her own pers onal fin ancial advis or and conducting his or her own research and due diligence, including carefully reviewing the prospectu s and other public filings of the issuer. To the maximum extent permitted by law, the Editor, the publisher and their respective affiliates disc laim any and all liability in the event any information, commentary, analysis, opinions, advice and/or recommend ations in the Course prove to be inaccurate, incomplete or unreliable, or result in any investment or other losses. 8. Don’t enter any trade without fully understanding the worst-case scenarios of that trade. Trading Currencies (Forex), options, or futures can be extremely complicated, so make sure you understand these trades before entering into them. For example, aggressive positions in options have a greater probability of losing, while less aggressive positions are less likely to yiel d substantial profits. Similarly, far out-of-the-money options are unlikely to finish in the money, and options purchas ed close to their expiration dates are very high-risk and, thus, likely to win big or lose big very quickly. Don’t enter any trade without fully understanding the worst-case scenarios of that trade. 9. Profits can be lost if they are not taken at the right time. Subscribers are advised to take profits at whatever point they d eem optimal, regardless of the profit target set in any given recommendation. Publications and courses, such as those we offer provide recommendations. Subscribers are free to follow the recommendation, follow it in part, or ignore it altogether. If a subscrib er believes a given profit is at risk, the subscriber should take the profit. S imilarly, if a subscriber feels a position is likely to lose value, or a losing position is likely to fall further, the subscriber can choos e to exit at any time to preserve capital. The final decision as to when to take profits remains in the sole discretion of the subscriber, keeping in mind that profits can be lost if they are not taken at the right time. GENERAL RIS KS OF TRADING AND INV ESTING
We believe it is vitally important that you read and fully understand the following risks of trading and investi ng:
SPECIFIC RISKS OF FUTURES OPTIONS TRADING An option on a commodity futures contract is a legally binding agreement bet ween two parties which gives the buyer, who pays a market determined price known as a “premium,” the right (but not the obligation), within a specific time period, to exercise the opt ion. Buying or selling futures options is not suitable for many people, and you should not trade futures options unless you fully understand the risks, rights, and obligations of commodities options trading. 1. The futures option, if exercised, will result in the establishment of a futures position. Both the purchaser and grantor of a n option on a futures contract should realize that the option, if exercised, will result in the establishment of a futures position, subject to all the risks such contracts carry (see above). The buyer of a call option will be assigned a long position in the underlying futures if exercised, while the buyer of a put option will be assigned a short position in the underlying fut ures if exercised. The purchaser of an option should be aware that some option contracts provide for only a limited period of time during which an option may be exe rcised. 2. You may be unable to liquidat e your position because of lack of liquidity in the futures or options market. Exchange trading mechanics are designed to provide for competitive execution and to make available to buyers and to sellers a continuous marke t in which an option once purchased can lat er be sold; and in which an option, once grant ed, can later be liquidated by an offsetting purchase. Although each exchange’s trading system is designed to provide market liquidity for the options traded on that exch ange, there can be no assurance that a liquid offset market on the exchange will exist for any particular option, or at any particular time, and for some options, no offset market on that exchange may exist at all. In such an event, it may not be possible to effect offsetting transactions in particular options. Thus, to realize any profit, a holder will have to exercise their option and have to assu me all risks and to comply with margin requirements for the underlying futures contracts or, in the event of an option on a physical commodity, incur the costs and risks of holding the physical good. A grantor could not terminate its obligation until the option expired or the grantor was assigned an exercise notice. You may exercise your option but be unable to liquidate yo ur resulting futures position because of daily price limits or lack of liquidity in the futures market. 3. Lack of pricing limits on some options. The trader should be aware that an option may not be subject to daily price fluctuati on limits even if the underlying futures position has such limits and, as a result, normal pricing relationships between options and the underlying futures may not exist. Also, futures positions assigned as a res ult of an expiring option may not be capable of be ing offset if the underlying futures contract is at a price limit. 4. Additional risks of writing or granting fut ures options. The grant or of a call option who does not have a long position in th e underlying futures contract (i.e. a “naked” sale or short) is subject to risk of loss should the price of the underlying futures be higher than the strike price of the option, and this loss may exceed the premium received for the initial sale of the call option. T he grantor of a call option who has a long position in the underlying fut ures (i.e. a “covered” sale or short ) is subject to the risk of decline in price of the underlying futures, less the premium rec eived for granting the call option. In exchange for the premium received, the call option grantor gives up all of the potential gain resulting from an increase in the price of the underlying futures above the strike price of the option. The grantor of a put option who does not have a short position in the underlying futures contract (i.e. a “nak ed” sale or short) is subject to risk of loss should the price of the underlying futures be below the strike price of the option, and this loss may exceed the premium received for the initial sale of the put option. The grantor of a put option who has a short position in t he underlying futures (i.e. a “covered” sale or short) is subject to the risk of a rise in price of the underlying futures, less the premiu m received for granting the put option. In exchange for the premium received, the put option grantor gives up all of the potent ial gain resulting from a decrease in the price of the underlying futures below the strike price of the option. Conclusion: Once again, we stress the import ance of understanding all of the risks of any form of trading or investing that y ou choose to do. One should fully understand the worst-case scenario prior to trading or investing real dollars. Past performance is not necessarily indicative of future results. You take full responsibility for all trading actions, and should make every effort to understand the risks involved.
