Simple Scalping Strategy - Morning Breakouts

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Permalink Reply by Karim on January 6, 2011 at 6:31am

Hi PJ

 

Yes I have been toying with this strategy of lately. How many pips above/below the price trend do you set your trade? Also how many pips back from the trade do you set your stop loss

 

Thanks

Karim

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Permalink Reply by PJ Shimkonis on January 6, 2011 at 11:50am

Karim,

A good rule of thumb is start with a 20 pip limit order/20 pip stop loss (1 :1 ) on a mini-account of less than $500 and a 30 pip limit order/30 pip stop loss (still 1 : 1 ) with an account of $1000 or more. You can set your platform to automatically enter at these levels each time you trade. A 30 pip limit with a 20 pip stop would have a ratio of 1.5 : 1, which you adjust as your trade progresses.

 

You can enter one market order about 3 - 5 pips above the current price your're considering, and another market order 3 - 5 pips below the current price before you take a trade. Only one of these two market orders will be triggered when the current price moves in either direction. Cancel the remaining market order once your trade starts moving in the right direction. To more accurately answer your question, Karim, you can set an accurate stop about 10 pips + 1 pip above the previous candle's high when selling, or 10 pips + 1 pip below the previous candle's low when buying.

 

A good general long-term strategy is to place your trades only and exactly at 5 PM when the New York market closes. This is known as position trading, a longer-term strategy which is held anywhere from a few days to a week or so. Everyday at the exact same time, 5 PM, you adjust your trade by moving your stops closer to the price you entered the market at the beginning of your trade. Trading at 12:00 AM means the Tokyo and Sydney markets are open at 7:00 PM and 5:00 PM respectively, the New York market closed at 5:00 PM, and the London market will open at 3:00 AM.

 

Always use a well-thought out trading plan, and stick to it, before you decide to place your trade. You can get an excellent idea of some trading plans, including position trading at 5:00 PM, by reading Mr. James Dicks book, Forex Trading Secrets. It is one of the best books on the Forex market I've found and contains everything you need to start trading Forex. Hope this answered your question, Karim, have a great day trading!

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