May 5th, 2011This is a quick review of the scalper from today on the TF. It is best to only scalp trade in the direction of the bigger pattern and bigger time frame. We teach to trade trade but by default if you understand how to trend trade you will understand when to trade counter trend as well.
Counter trend is not a bad thing if you know you are trading counter trend. It is very important to really understand the difference between the two. Why does it matter? Because counter trend trades have higher odds of 1) getting stopped 2) not being a home run type trade. We trade less contracts when we trade counter trend.
Out of four counter trend trades only one will be a bigger trade. The problem most traders run into is they try to enter on the first counter trend trade thinking it will be a home run. Most of the time it is the third or fourth counter trend trade that actually gives the opportunity for real profits. If you try a few times and they are losers what are the odds of you taking the third or fourth counter trend trade? Odds are very low.
So how do you overcome this? Either you take every trade that comes along and you eventually catch the bigger move or you only stick to the trend direction.
Today if you took every trade no matter if it was with the trend or against the trend you would have had 9 trades.
2 Break even
2 losers for 7 ticks
5Winners for 24.1 points
There was actually one more long earlier in the day that is not shown that was a break even. There was a long that was a break even that had three points of profit in the trade. In reality it is best to scale out of the trade but for this article we are showing arrow to arrow. No thinking you just go with the arrows. In fact, the order is placed on the breakout after the bar that shows the arrow so this would be worse fill.
If you were just trading with the trend you would have banked 7.8 points on one trade.
If you are a new trader or a low confidence trade it would be best to only stick to the trend trades. You will have higher odds of success to build your confidence and your account. The process of skipping trades and the discipline to actually follow the process is what can take a good trader and turn them into a great trader.
Happy Trading,
www.eMiniSchool.com
PS. You can see how the 3 minute chart blue bars caught the high and low of the day. When we see blue bars that is another confirmation we use when we are scalping.
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