The basics #
In trading this word would gain ten times the weight in the mind of an individual that is looking to create profit from trading the markets.
Brutal scalps strategies #
There are different types of strategies that we can apply when using the Brutal Scalps indicator. We will be able to use stop loss strategies, take profit strategies and risk strategies as our main points in this document. Each of these should be first treated independently and then mixed with the other categories.
Understanding the Average True Range #
In Brutal Scalps the Stop Loss and Take Profits are displayed as a red line marked SL just after the close of the candle that received the buy or sell signal. The stop loss is being displayed using the Average True Range. The true range is taken as the greatest of the following: current high – the current low; the absolute value of the current high – the previous close; and the absolute value of the current low – the previous close. We then get a moving average that usually has a period of 14.
Stop Loss and Take Profit Multipliers #
These are the core setting that you should play with when backtesting or using the Brutal Scalps indicator in live trading. In order to simplify the explanation we just need to know that modifying the multipliers move the stop loss and the take profits in distance from the entry price. By default we have selected uneven multipliers that have performed well in our backtests, but bare in mind that our backtests have been executed over the top 10 cryptocurrencies, the major forex pairs and gold, then they were averaged down to produce an all in one solution. The current settings might be good for an asset but might not be the optimal ones for another.
Because Brutal Scalps is an indicator, not a tradingview strategy, the best way to optimize it is to visually check the last >=50 trades using the visual chart. And yes we know it is tedious, long and boring, but this is how you come up with your own uses for this indicator.
Wether you optimize your own indicator for a specific asset and timeframe or not , we will provide updated settings every month with our all rounder setups .
NOTE
Trading on too many assets at the same time and trying to chase every trade is proven to be sub-optimal. Ideally, please preffer trading on one or two timeframes and on less than 3 assets. This also reduces your attention requirement and simplifies your trading experience while increasing the chances of profitability.
Signal Confirmations #
Getting confirmations for a signal is crucial in the decision making process when trading. For this reason we have added a simple yet extremely effective layer to the indicator, the Trend TF panel.
The pannel acts as a checklist that can be set to any timefrime you want. It also has combinations that add to the triggers of buy and sell signals.
The trend panel should always be higher than the timeframe we are trending on.
Our preffered intraday timeframe is the 15m one, hands down. For this chart we are going to select 1h (60 1 minute candles in the TF panel) as confirmation. Using it this way we protect ourselves from choppy moves and get more precise entries on the 15m chart.
Optimizing the profit targets #
We built this indicator with one thing in mind. Get in, take profit, get out as soon as possible we want green even if it s not much but we want it often! For this reason we strongly suggest using the following take profit strategy :
- Take 50% on the first target. Meaning you immediately close 50% of your position once TP1 is hit.
- When TP1 is hit and you took your 50% profit you move your stop loss to the initial entry position.
- Divide TP2 and TP3 evenly 25% and 25%
- At TP2 you move your stop loss to TP1
Optimizing after TP3 #
More than often the price moves way beyond the third take profit that Brutal Scalps displays, and this is because of the increase in the momentum that happened after the buy or sell signal appeared.
Another strategy you can use in order to optimize the profit after TP3 is hit is using a trailing profit that is equal to the distance between TP2 and TP3. This way , you can keep the remaining 25% of the position and wait for the price to move beyond TP3.
The inconvenience here is that if we just wick to TP3 and back to TP2 you would not have taken profit on TP3 .
Stop loss adjustment #
As stated above, Stop losses are placed by ATR calculation, and sometimes we might have wicks that test that level even if it is uneven. In order to avoid getting stopped by a 1 minute candle that then came back down we can use something that is called Stop-Loss Timeout.
SL timeout is already available on bots like Cornix, 3Commas, ATAS , Hypertrader and other trading terminals. Note that this option is not available directly on all exchanges.
Risk management #
If you got to this point, you are motivated and have a lot of chances to succeeding. Believe it or not, poor risk management is the leading cause of capital loss and the aspect that gets the least attention among new traders.
Understand risk management by reading this article.
Calculate your risk fast:
Crypto: https://profitd.io/risk-calculator
Forex: https://www.forextime.com/eu/trading-tools/trading-calculator/pip-calculator
