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Good afternoon everyone. I'm seeking any suggestions or tips on scalping in a trading range. I followed Al's tips by scaling in with a wide stop, buying 2nd entry near the bottom, and buying at prior lows. I have marked where I bought (green boxes) and where I exited (blue boxes).
The first trade was a 2nd entry buy near the bottom. I exited after a breakout bar closed outside the TTR.
The second trade was a buy of the bottom of the range for a scalp. I exited after a breakout bar closed below the support level. I knew there was strong selling pressure, but I took my chances that we would get profit-taking at that level. I poorly exited this trade because I was not in the right mindset after losing the first scalp.
Any guidance or tips on dealing with these situations would be helpful!
I actually took the short exactly where you went long, because i saw it as more a short personally. you went long into that downtrend resistance line, and you're under the moving average. those two factors didn't help with your probability. to me it also looks like a very bearish day with strong selling. that bull breakout of the wedge got reversed pretty hard. i'd take that as a sign to only be looking short because the bears are going to look for a new low, even if the new low is a very tiny amount. after that takes place you can start looking for a reversal or bottom.
lets say there is a strong downtrend and that downtrendline gets broken to the upside, you usually get just a correction or a full on reversal. when it's a correction the bears are going to try and make one more new extreme which is basically a new low. all signs point to you getting a new low which makes going long not to appealing.
i might not be explaining it correctly but i'm pretty sure its how price action in trendlines work.
it's why the market always tend to do that lightning bolt looking pattern. up, pullback, up again. but in the case of your day it was the opposite.
If you absolutely wanted to scalp a long i would have waited for you to get over the moving average a break and possible retest of that little downtrend channel that you were in.
Disclaimer: Please take what im saying with a grain of salt because i'm still not that experienced so i could be completely wrong, i dont really think i am, but i could be.
Anyways, keep working hard brother you got this.
This post was modified 2 years ago by Chris Vedral
one thing i'd like to reiterate is really keep an eye on those moving averages because they can act as pretty significant support and resistance. for instance i could have a long set up that i think looks good on the 3 or 5 minute chart but i'll fail to recognize that we're still under the 15 minute moving average and it might get smacked down hard it i fail to recognize that it's running right into the 15 minute. If it's a strong enough breakout it won't matter, but a lot of times it will. It's good to be conscious of where youre at in relation to the different time frame moving averages.
Good afternoon everyone. I'm seeking any suggestions or tips on scalping in a trading range. I followed Al's tips by scaling in with a wide stop, buying 2nd entry near the bottom, and buying at prior lows. I have marked where I bought (green boxes) and where I exited (blue boxes).
The first trade was a 2nd entry buy near the bottom. I exited after a breakout bar closed outside the TTR.
The second trade was a buy of the bottom of the range for a scalp. I exited after a breakout bar closed below the support level. I knew there was strong selling pressure, but I took my chances that we would get profit-taking at that level. I poorly exited this trade because I was not in the right mindset after losing the first scalp.
Any guidance or tips on dealing with these situations would be helpful!
My first comment is to check your risk tolerance. One of the difficult things with scalping in a trading range is that traders typically need to trade the "I don't care size," which Al refers to, much smaller than what they think. I ask the above because you said, "I was not in the right mindset after losing the first scalp" to me, this implies you are risking more than the "I don't care size."
You should trade the same size as you would on any other trade. This causes traders trading one contract to start scaling into traders with 2-3 contracts; however, they were never mentally prepared to lose what they risk. So first, I would check position size and ensure you are genuinely comfortable.
The next part is a bit more challenging to explain, and I like to think of it as experience is sometimes the best teacher. Your 2nd trade is a typical situation where the market goes just below the day's low by a couple of points only to turn back up and go right back to your first entry.
The other difficulty with scalping/wide stops in a trading range is that it can be easy to exit at the wrong place. Al calls this a "skunk stop." For example, your second trade you got out of was right at the low of the day when buyers would likely come back in.
Think about it like this pretend you are only looking to trade with trend breakouts for a moment. So let's assume you were looking to the short right at your 2nd entry (2nd blue box). Would you be willing to sell on a stop one tick below the day's low? My point is sometimes it helps to think about what the opposite traders are doing.
Generally, one should not buy high or sell low in a trading range. This means do not look to sell short or out of longs at the bottom of the content. If anything, traders should buy more at the low of the day. This is difficult to ask most traders to do because it can be so subjective, and the risk can become much more significant than one thinks, which is why traders need to trade small. Al often says that when he is scalping using wide stops, he will often place his visit a little wider just in case.
Remember, trading ranges always go further than what traders think they will, so traders have to use a much wider stop than they think they should.
Thank you for reiterating the trading range mentality for me. The perspective of traders on the other side will be a very helpful tool for me in the future.
I'm already trading at a 1 contract position size, but 15 dollars is a fortune to any high schooler like me haha. WIth Al's setups, I'll grit my teeth and hold through until the chart says otherwise.
Thanks for giving me some insight into what a trader on the other side was thinking. Looking back, there are many big bear bars with body gaps. It was improbable to get a retracement up and it was more likely for a move sideways or down. I appreciate the time you took to reply!
If $15 feels like a lot to lose (no big deal if it is), I would highly consider looking at trading forex markets on a 30-minute chart. Since you are in high school, you have plenty of time to study and learn. Also, trading forex would allow you to control your risk and trade with minimum risk, which is critical to learning. No need to stress over losing money, especially when learning. Consider trading forex for a few years and continue studying. It is tough to progress when stressed over risk.
The most important thing you can do right now is to learn as much as possible and get good at one or two setups. After you get consistently profitable with those one or two setups on something like forex, you can begin to trade larger position sizes.
Your goal right now is learn and minimize mistakes, not to make money.
Al talks about a trader's progression, first minimize mistakes and learn, then work on becoming consistently profitable, then work on increasing size, etc.
Your goal right now is learn and minimize mistakes, not to make money.
How long did that take for you? Just curious because I am currently in that stage right now where I make mistakes left and right and realize it a bar or two later 😆 .
While Forex trading does sound very attractive, I stopped because I didn't enjoy trading it very much. I traded it for two years before switching over to futures a half a year ago. The Forex market doesn't have the same long trends like the futures market. Additionally, I didn't buy the forex course nor do I have the money to afford it haha.
On a different topic, I wouldn't say 15 dollars is all that detrimental to my account (it is less than 1%). I just don't want to continue to bleed out money taking the wrong setups in trading ranges.
