The Edge That Finally Made Me Profitable (Try it out!)
After years of trading and experimentation, I finally developed an edge that makes me profitable.
Beginners: Try it out.
Veterans: Help me refine it.
I scalp gold on M15 timeframe. I've trained my eyes to visualize what price is doing on a lower timeframe based on higher TF price action, allowing me to both see the "big picture" + scalp opportunities at the same time.
I don't do technical analysis or mental gymnastics. I trade directly on MT5 without indicators and trade solely based on price action, market structure and momentum. I don't believe in R:R, strict rules, or strategies. I don't use hard stops or set TP. I don't wait for candle closures or confirmations. I simply see and execute.
The risk management is quite dynamic and depends on market context, but helps me reduce risk while locking in profits frequently, and capitalizing on momentum. It also requires quick execution and focus, especially with how quickly gold moves. It requires adaptability, neutrality and practice.
I've experimented with so many variations of this risk management style and finally nailed it down to the key points below.
The mechanical part has become second nature at this point, where I simply execute quickly. It's quite discretionary, so I'll try to outline my process as coherently as possible below:
Entry criteria:
- Discretionary and intuitive-based. This is the least important part of the edge. Your entries can be anywhere. What matters is how you manage the trade once opened. The risk management can be applied to any strategy. That being said, I usually enter based on wicks around horizontal levels. I usually trade with the trend, but sometimes I'll do mean-reversion trades depending on where price is at. Reversal trading on gold can be tricky because reversal signals can be very misleading.
Once I enter a trade:
If price goes against me:
- I DCA at the next sign of reversal (or what I interpret as a sign of reversal): wick at the next key level.
- If momentum is aggressively going against me, I'll hedge + DCA.
- Depending on momentum, I'll scale-in on the hedge position until the profits cover the losing side, at which case, I will cut the losing side short, and let the winning hedge positions run, while trailing SL (more on my SL logic below).
- If mean-reversion is fully in play, I'll scalp my way out of drawdown.
- Depending on price action and momentum against me, I will close the loser short and flip my bias and open a position in the other direction immediately.
If price goes in my favor:
- I'll move SL to BE IMMEDIATELY + a few buffer points (to account for commissions/slippage/spread/etc).
- If BE SL gets hit, I'll simply wait for a better entry, and repeat. Especially around key levels, if I repeat this step enough times, I'll eventually capture momentum.
- If momentum goes in my favor, I'll trail SL at 50% point between entry and current price.
- Once SL is trailed, I'll scale-in and add 1-2 more positions and repeat SL logic.
- Once all positions are in profit, I'll "basket trail SL" all positions until SL is hit, and then wait for pullback before re-entering and repeat the process. With gold, I find 15-25% wick/pull-backs are best.
- Depending on the distance between initial entry and scale-ins, I'll keep the "anchor position's" SL a bit looser, while keeping the scale-in SL tighter, so if scale-in trailed SL gets hit, my anchor position stays opened in profit, in which case, I will continue to loosely trail its SL, and wait for another scale-in entry and repeat.
- If price begins to look over-extended and momentum slows down, I'll make the trailed SL tighter (around 25%). Once trailed SL are hit, I will re-enter and repeat the whole process.
I've been trading like this for the past couple of years, and it has allowed me to lock in profits frequently, protect profits, and compound small accounts quickly while reducing risk. As I gain more experience and insights, I'll continue to refine it.
This way of trading matches my personal philosophy behind the market, and it might not resonate with everyone. I won't disclose my philosophy here because it's controversial and will derail the topic, but if you're interested in knowing, I'll explain it in replies.
Would love to hear your thoughts. Anyone else here trade like this? For those who are more experienced, I'd love your input on how I can refine the risk management parameters.