Only resume trading when you see that the market is resuming its upward trend catching a nice petit uptrend. Reverse everything I just said for down trends If the market is moving within a range such as a consolidation or within a triangle then you may trade both the up petit trends and the down petit trends discussed further later in this eBook. Often as a trend begins to pick up momentum the steepness of the trend changes and you need to add more trend lines steeper ones to follow the steepness of your trend as it gets steeper and steeper.

Below is an example of a fanned trendline. FYI — this chart is the continuation of the previous chart that proves that it did continue going up like I said.

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Trend Reversal Patterns — Generally speaking, when a trend breaks so does your trade you get out quick. I am mentioning the following because it is sometime interesting, and sometimes useful for scalping purposes. These are useful because they can show you when a market is retracing or turning around, but most importantly because it can also act as a signal for you to consider entering a trade if it is a reversal of a brief reversal that is now resuming the overall trend, or if in a trading range to switch directions.

It is important to keep in mind that ALL trends end from small trends to the largest ones. Only the scalper ever witnesses what can be considered a true sideways movement — no change of price at all during a 60 second period. Such periods of no change of price happen occasionally and on a chart it simply looks like a flat line, like a minus sign -. Regardless of which of these candles formed they all pretty much mean the same thing — during that minute the market was undecided whether to go up or down.

This is why you get consolidation patters. Sometimes you also get a sideways movement before a Fundamental Announcement while everyone is waiting for the news to be released. Sideways movement is also regarded as indecision in the market. Take a look at the following chart.

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There are a few specific things that I want for you to see on this one chart. The first thing I want for you to notice is the series of capital letter Ts there are 5 in a row of them that happened at That signifies stagnation in the market that is much like a consolidation. You already know that whenever you have a consolidation that sooner or later will inevitably be a break out. From our consolidation it went up about 13 pips, so you could have easily captured at least 5 pips from that move.

You see another example of this between and Another thing I want for you to pay attention to is the wave that happened between and Now look at the top of the next wave that happened between and Again you see another stagnation there at the top. Now here is a question for you. Look at the right side of the chart. See the top there that happened ?

What do you do now? Well the answer is it depends on what happens next. This is quite common and you have to wait to see what happens next. The following chart shows you what happened next.

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Notice it went down the following minute. At that point you want to take even a small profit even a few pips is better than zero pips or even a loss. Sure enough in this case you would have been right to do so, but if it would have quickly turned around you could have re-entered if things looked right. So to summarize, a stagnation a short one or a longer one often shows that a petit trend has lost steam and may potentially end, turning around good to exit an existing trade or to potentially enter a new one.

Stagnation also often precedes a market movement much like a consolidation often precedes a market movement. Notice the peak of this petit uptrend.

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There are a couple of interesting things about this example. First of all notice the top candle. That single candle sends you a strong signal warning you of a potential reversal. The candle should be somewhat larger than normal, and the bigger it is the more significant it is. It would have been even more significant if it were a red candle. Notice that it has a LONG wick the thin part above it. This is one good indication that you should now closely pay attention to what happens next.

A minute later it dropped to our trend line having dropped 10 pips from the top. It might be worth talking here about that petit down trend shown. It also broke a trendline not shown but you can imagine it before it made a dramatic turn around something you could have been anticipating due to the above mentioned reasons plus the fact that the larger trend was currently upwards that led upwards along a gorgeous uptrend lasting 50 pips that would have been easy to scalp all the way up.

There are other things on this chart that are worth looking at, but all I want to discuss here is that peak near the very top of the chart. Notice that along this overall uptrend that there are some down red candles, but generally the market quickly resumed. At that top you had a few minutes that it kept going down plus if you were to draw a fanned trendline you would have seen it being broken , so you would have exited your trade as a scalper you want to prevent loosing as few pips as possible — had it immediately resumed the uptrend then you could have always jumped back on if appropriate.

Notice on the right side of the chart you see a pair of candles blue then red that formed a top. First of all notice the consolidation on most of the left side of the chart.

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This happened because the market was waiting for some fundamental announcements shown FA calendar under the chart to be released. The range of that consolidation was about 10 pips which was certainly scalpable. At the top of that upwards petit trend notice you see something very interesting which is why I decided to show you this chart. In general, a reversal can happen quickly and with little warning. It is better to exit with whatever profits you can rather than crossing your fingers for a hopeful continuation meanwhile loosing more of your profits. I strongly URGE you to go look at some charts to see many other examples to condition your eyes to recognize how to spot a sharp reversal.

Typically you see some long candles and a series of them. Take a look at these charts to see what I mean. Notice that often these dramatic moves are temporarily paused with a stagnation, and as on the chart on the left the stagnation can be a good time to exit joyfully taking your profits. Notice that it starts rounding off loosing steam near the top. 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.

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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. 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.