On my list of the best books I’ve read on forex trading, is Bob Volman’s ”Forex Price Action Scalping.” I’ve read it twice and am now beginning again for a third session. When I first read it, like many others I thought that this is the way I would like to trade. A couple of snags soon arose. The use of tick charts, charting and what broker and how to link them.
Bob Volman uses prorealtime charting but although gives advice on the things to look out for with a broker, he doesn’t say who, or how he links the broker with prorealtime charts. I’d seen a few blogs start up with the intention of trading this way but nothing ever seemed to last. I’ve seen people use mean renko charts ( I don’t really understand what they are, but they are a sort of hybrid tick candle chart) to try and trade and I’ve seen a lot of questions asked about the book and method but no concrete follow through.
I don’t know yet if I’ve found what I’m looking for, but I stumbled across traderAllen and his website wallstreet2easystreet.com and his newly opened forum, which I’ve been participating in to the neglect of my blog. So far I’ve had a few answers to questions and a few things that have opened up new questions. Not got there yet, but I have gained access to Bob Volman’s Dropbox and daily analysis charts.
Anyhow below is my most recent response to another forum participants question about brokers. In it I do mention Tim Luccarelli’s book which was recommended by traderAllen as an addition to Bob Volman’s book. Personally I don’t like a lot of what is in the book, I disagree strongly on several things and it is far too complex, however it does introduce the use of massive stops for scalping 3, 6 or 9 pips and this big stop principle has been the centre of attention of several blogs, podcasts and Rob Booker’s Trifecta 3 system which I have also purchased.
Here’s my forum post:
”Although I’m in the UK, I’m also interested in this question of brokers. Prior to now I’ve only ever traded live with Oanda whose spreads are around 1 pip on eur/usd, however the spreads can increase to 10 or 15 pips during announcements and they always widen around NY close and are larger than 1 in the quieter asian session. You can see a graphical representation of Oanda spreads the the past week or so on their website and can adjust for max or average spreads. The thing with Oanda is, who do you use as your charting platform for tick charts, as they only have their own platform fxtrade or mt4. Do we have to have one charting platform open like ninjatrader or Volman’s Prorealtime to plan trades and Oanda’s fxtrade open aswell to execute. Now this might be viable if the data feeds are the same on charts and with broker, but this for now this leaves me with more questions than answers.
I also have had demo’s with FXCM but their spread on the eur/usd is around 2.3 however you can use ninjatrader’s tick charts to trade and they do become free to use if you deposit $5000 and trade 500k volume each month. This for me is out of the question with only $3k capital and wanting to trade micro’s to learn this method of fpac. As you say though, Volman insists on 1 pip max spread, so fxcm is out. Spreads do reduce if you have a $25000 account, but by how much I don’t know.
The thing with these 2 brokers is, they are big strong entities, unlike some of the lesser known’s like MB. Who would you prefer to have your cash deposited with? Regulations help but we all know companies in distress can find ways to get around these. Still it is always prudent to deposit the minimum and leverage the max in the account to keep most of our capital in safer hands, guarding our margin of course.
Now this leads me to a question about caseyar’s term used that Volman uses in his book, that is ”full-turn around, into and out of the market.”With Oanda, you pay the spread once and nothing else. You pay it once, win or lose. If you are long, you enter on the Ask and the trade closes when the Bid hits either the stoploss or takeprofit. If you enter long with a 3 pip take profit and a 3 pip stoploss and there is a 2 pip spread and the spreads stays at 2 pips during the trade, then you will lose 3 pips if it goes 1 pip against you or gain 3 pips if it goes 5 pips for you. On pages 18/19 of Tim Lucarelli’s book, he states that you add the spread again on to take profit on exit, and states the market has to move 7 pips for you to take profit? Is this what is meant by a full execution into and out of the market, a full turn? I know Volman mentioned commissions added to reduced spreads but I didn’t know certain brokers charge for taking profit. Is this what MB does? Oanda definitely doesn’t, you pay the spread once per turn around.
One thing also that interests me is this level II order flow screen that traderAllen uses. Does it come with the broker MB or with ninjatrader, or does it have to be both. Do other brokers have it? I notice that cTrader is used by MB. cTrader now has tick charts, does it also have a level II screen and is it free to use with MB as opposed to leasing ninjatrader monthly?
If I can get this issue of broker and charting out of the way then I can concentrate on learning fpas. Until then I feel I’m being held back in the confusion of what to do next.”
Cheers. I’m outa here.