This one is certainly a nice rounded top. It is certainly a pleasant feeling to have made a few hundred. The following candle then proceeded to shoot up 20 pips in less than 60 seconds! Earlier in this eBook I mentioned that it is a good idea to have a laptop computer dedicated to trading so you can monitor the charts , and this is one of those times that proves having such a computer is a good idea as.

Perhaps these moves happen due to the market makers wanting the market to move because they profit from people trading, and they are encouraged to do so when the market is moving rather than stagnant. Often times other than around expected FA or unexpected news like a terrorist bombing — I lost a trade recently due to market surprise resulting from the London bombings there seems to be no reason for the strong moves, but regardless of what the actual reason for them is you only care that they happen because you can profit from them.

There is a very simple solution to this scenario. With the surf entry technique set as your insurance then continue waiting for your opportunity to happen. Oh well, here it is now. When you see something like this you might be wondering in what direction the market will eventually break out in. FYI, the early stages of a triangle in formation look like this too, but it might simply be a brief period of market indecision. So now you are faced with a dilemma — in which direction do you attempt to trade? What I do is I, in such scenarios, might place two entry orders on both sides of the double wave.

The theory is that if it breaks out in one direction that it should often continue for however far in that direction. Once one of your two entry orders gets activated as a trade then simply cancel the other entry order. As a general rule of thumb use this method primarily during market overlap times when the market is likely to resume some kind of a trend rather than just be consolidated as often happens outside of market overlap times.

Again, after getting entered be watchful to scalp an exit as a precaution it is always better to exit with even a couple of pips than to suffer a potential loss, whenever possible. You should also note that when you see something like this it may potentially be the start of a consolidation or even rarer a triangle. Later in this eBook I explain how to deal with those situations should what you are seeing develop into either a consolidation or triangle.

What if you have a petit trend and say the bottom of that wave is just 4 pips away? Should you still use a 10 pip stop? Well you could, and most often you would but you could shave off a couple of pips in times like these. Simply subtract in an uptrend, add in a downtrend the pip spread plus 1 pip from the base of the wave and use that as your stop.

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This is key to watch for as when you see what appears to be a reversal in the petit trend near the key retracement levels then that is an excellent place to attempt to enter into a trade. Furthermore, once the market has extended beyond the peak of the wave that retracement low is then the appropriate location to replace your stop to. You find immense value in using this concept when you are scalping. To start off let me be very clear hear that you will not be using standard Fibonacci theory directly as a trading methodology for scalping.

What I will describe here are some observations about the behavior of the markets from a scalping perspective that some concepts of Fibonacci theory helps to support. In an uptrend just reverse everything I say for a down trend the market typically moves in waves making progressively higher highs and higher lows. Simply, the third zones help you to gage visually the relative strength of a trend that you are seeing.

Imagine that this phenomena is somewhat like a bouncing rubber ball that with each successive bounce loses energy. This is because in such small waves the difference between the Fibonacci percentages might only be a couple of pips, and so it could be easy for the market to overshoot a percentage level creating a false impression for your. Furthermore when the market has dipped down into the retracement and before it turns around into an extension there is often some kind of a stagnation lasting briefly or for a while and the stagnation often ranges a few pips, thus not being completely clear at what percentage level is best to consider it I know, I know, of course it is the deepest price that determines this, but I like to think of it a bit differently.

Furthermore, if you get a stagnation area in your retracement you usually pay attention to which third zone that most of the stagnation is contained within, but if a. When the market retraces to within this zone and you get a good reversal for an extension to enter onto then you are generally pretty happy. When the light is green you keep driving, but when the light turns yellow you step on the gas.

Here is an additional point to make regarding scalpable swings that has nothing to do with the above-mentioned zones.

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This is about your stop levels. Most petit trends and their swing size typically range in size from about 10 pips to about 30 pips sure, there are occasional larger ones , but if you asked. The idea is that if the market retraces all the way to the bottom of the swing then chances are you are seeing a reversal and so the principle of the Fibonacci swing extending for profit is thus proven to be wrong in this instance.

Think about it. So all I wanted to point out here is that often your 10 pip stop order will be at more or less the correct price without thinking too much about it simply because of how everything works. Lines, what they are and how to use them. On your one-minute candle chart set your S. Take a look at the following chart with the S.

On the left of this chart you see a nice tight consolidation. The S. Notice also the time when the breakout occurred — EST at the open of the European market overlapping the Asian market. Now notice the first two waves made 3 lows including the base of the first swing , which I drew a trendline on hard to see but look for the straight dotted line.

Also notice how they bounced the 15 S. It also bounced the 15 S. It also gets close to our trend line. Also frequently during a trend the first time it penetrates the 30 S. Then the market had some caffeine because it moved up strongly seventh wave , which you would have entered in on. It peak into a stagnation 15 S. It started moving up slowly eighth wave but you probably would not have traded.

What is interesting is that this wave and a few following this wave do a pretty neat thing. Sometimes when the price breaks through a supporting trendline a trendline that provided support in an uptrend — flip what I say upside down for downtrends the trendline then acts as resistance as the trend continues in the same direction, and here we see that phenomena.

You likely would have entered the ninth wave as it appeared to pick up steam the last two waves were rather stagnant which you now interpret as just a pause in the market and your S. For your information, which you might like to know, on this chart the market broke out of the consolidation at EST at about 1.

Now compare that to the hourly salary of a lawyer or doctor! What all this means to you is that if I can find perfect examples for my book to show you everyday then you too should. Want to see what happened next???

The following chart shows you the continuation of the above chart. The previous chart ended right at EST and this chart starts at EST, so you have about 30 minutes of overlap. What you should be aware of is that now each price increment shown on the chart is 10 pips. As you can see, there was a Fundamental being released at EST, and at EST a candle shot up 22 pips, then the market continued on upwards. The 15 and the 30 S. I wanted to show you this chart for a couple of reasons. Also notice the behavior of the S.

The peak height on this chart happened at EST, about 1. It is common for the market to abruptly change directions early in an overlap time. Lines also indicating a new trend. It is also worth noticing how when the market came down to meet that previous support price level the stagnant area before moving up to the peak that the market did a little bounce up from that level, reacting to that previous support, before resuming its down trend. Later it repeats the support price level bounce as it reached another previous support level off the left side of this chart; not fully shown here, just the tail end of it is shown on the extreme left side of this chart picture , and then after it recovered from the support bounce it shot down.

Here is the same chart viewed a little wider with those support lines drawn for you to clearly see. During a retracement in your petit trend the S. Use the S. Often during a strong movement the market will bounce the 15 period pair. As it slows it may even penetrate the 30 period pair, but usually when you see a 60 period pair being penetrated then you are definitely seeing a retracement or potentially a reversal. When your micro trend reverses you will of course see a trendline break, your top wave retraced past the bottom of the wave, and then potentially there will be a new micro trend.

Watching the behavior of the S. Or if the lines are bunched then you have a little consolidation after your previous trendline breach , and the direction is yet uncertain — could go up or down more often resuming the original micro trend , and once the market breaks out of this stagnant consolidation pattern then you can engage into trading in the breakout direction of course. When viewing a tight consolidation say 10 to 15 pips then the S. Slight oscillations in the tight range will cause the lines to open then quickly rebunch.

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This is not a. When viewing larger consolidation say 30 pips but preferably way more then the S. When you see a reversal of a petit trend regardless of direction then you look for opportunities to enter in the opposite direction or for a potential continuation.

Of course you would normally only enter during a prevailing trend in the direction of the trend entering the reverse of the pullbacks , but in a range you can play both sides. On the left you see a consolidation pattern that usually precedes a market movement. After it broke out the bottom of the consolidation with a candle that formed completely outside the consolidation range you jump in on a trade going short meaning going down after the market broke out of the brief two candle stagnation. The trade continues moving down, but then you exit once the trendline of your petit down trend gets broken.

A new, but shallow, petit uptrend gets established. Sure enough going long entering a trade going up was the right call. Sure enough, as soon as that candle broke down from your stagnant zone plus your steep trend line broke you decide to exit your trade. Well a stagnation develops, and once again a breakout occurs from the stagnation, and since the breakout occurred going up you quickly jump in on a trade again.

It continues moving up then a couple minutes later had a little down movement. You might have gotten faked out by this causing you to exit your trade which you still would have caught at least a few pips or you might have remained in the trade or jumped back in. For sure you get out at this point having secured at least 5 pips from that previous stagnation.

Do you think that in the past 24 hours you might have been able to scalp this for some serious profits??? Start from the left side of the chart, moving towards the right, and simulate for yourself what you would have done based on all the things you. Then watch the real time movement of the charts looking for petit trends that you could possibly trade and just pretend you are trading or actually trade in your demo account. The more time you spend watching your real time charts the more you condition your eyes to recognize the good opportunities and develop the cognition of how to react based on what the market is doing.

This does pose a bit more risk, but pulled off successfully can mean a much bigger pay off for you. For example, this is just hypothetical numbers , on a trend that lasts say pips you might be able to extract the equivalent of or even pips! The concept is simple. You simply use more relaxed exit rules and add more trades for each successive wave. Done properly the worst that can happen is that the most recently added trade will lose a few pips, but all the previously added trades will have varying profits.

You need a nice micro trend to scalp along first of all. This technique can only work on a nice trend. You enter into your first scalp in the normal way. Once the market has moved up enough for you to replace your stop order securing at least a 5-pip profit, and assuming that it was a large enough wave to not stop you out then you could employ the compounded gains technique. So now you have a trade with your stop placed to secure at least a 5 pip profit.