ONE BAR REVERSAL FLOW METHOD FOR SCALPING
Putting down a short term scalping method…..if you trade it on 5 or 10 min bars,it becomes a scalping or daytrade method,if you trade on 30 min or hourly bars,it becomes a swing trading method…..
Too simple to call it a method….borrowed lot of concepts from Saint
The concept : While studying pivots I have observed that once a PL is made…market has a tendency to reverse the flow from down to up…or in some cases it will immediately fail. So built a method around this observation.
Time Frame : 5 min bar or candlestick charts.
Initial Entry : first 5 min bar as we do in miniflow… if top broken,buy with bar low as SAR and vice versa
Filter : NIL but I round off to next number ie PL is 4224.6 I will consider it as a valid break if 4224 is taken out…..
Type: It is a SAR method,so long trade is closed and short opened immediately on short signal.
Signal and Reversals : First trade is always first 5 min bar breakout…Reversals I will explain with help of charts…we go to NF chart and see the trades…
We go to 25-5-09 NF chart 5 min TF . First 5 min bar low rounded off to 4236…broken on downside in 10:15 bar….we go short and initial SAR the breakout bar or the earlier bar whichever is high…..SAR to trail down only if new low is made then trail down to higher of that breakdown bar or earlier bar whichever is high…
And it continues…..if both bars are too tiny and having same high then SAR at one bar still earlier H in downmove
Sideways pivot of 3-4 bars and above considered for reversal….Pivots have veto power for reversalsexcept tiny one bar up/one bar down kind of pivots
After 10 :15 bar we have 2 up bars…SAR remains at H of 10:10 bar…not to be moved till we get a new low….
Then at 10:45 bar we make a new low…SAR trailed down to 10:40 H which is taken out in 11:00 bar….so we go long…SAR 10:55 bar low….each bar making a high higher than the earlier ba…SAR shifts one bar up….so on so forth.
ADDS: Only one add…after initial entry,the moment initial SAR is shfted in our favour,we add at the close of that bar
I will list trades taken on 25-05-2009 : The trades are without adds…with adds profits are more….
Trade No Short/Long Bought Sold Profit (Loss)
In points
1 S 4233 4236 3
2 L 4233 4264 31
3 S 4265 4264 (1)
4 B 4265 4260 (5)
5 S 4230 4260 27
6 B 4238 4246 8
7 S 4233 4246 13
At EOD
---
TOTAL + 87 nifty
Points without adds,we will take adds after practicing basic method for one week….adds make it really sweet….
20-5-2009 was a bad day for most systems…this method made 43 points profit with 7 trades….
It is basically a chandelier method…it latches on the moment market turns….I pay Rs 2.25 as round turn brokerage and charges,STT,stamp duty etc so about Rs 18-20 are eaten away by brokerage….
Advantages of this method are
1) Totally mechanical…no thinking,no micromanaging ,no interpretation, any one can trade…..one can even have a BPO or KPO set up to trade this method
2) It makes some money when other TFs are nontrending….losses never large
Disadvantages :
1) Too many trades….4to 8 in a day….
2) Too intense…you are glued to the screen
We will post 1st June trades EOD with bar to bar explanation. It is a very fast method and it is not be possible to take trades,post realtime,answer questions,post charts etc….Real traders will understand …
Smart_trade