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 lets 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 cant 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 lets 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. Ive 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 lets 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 countrys 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 markets 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 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 havent visited our main site www.yourforexmentor.com head over there and check out the other available resources. To your trading success, Cecil Robles

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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). 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Although each exchanges 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. 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