Correct scalping automation

Correct scalping automation

The scalping technique does not lose its popularity among novice traders. Everyone wants to make money quickly without deep market analysis.

But simplicity is deceiving, so watch our video, from which you will learn:

  • what scalping is and its main types
  • features of short-term deals on M1-M15 timeframes;
  • why scalping automation would be the best solution;
  • recommendations for using advisors.

Automated trading, if used correctly, can generate stable income, but do not forget about manual trading, which can be just as profitable. The main thing is to use reliable graphical and technical patterns that give at least 70-80% of profitable trades. To achieve this result, we strongly recommend that you familiarize yourself with the top 5 best advisors on the Internet. 

 

Defining scalping

In general, this term refers to short-term deals on lower, most often minute, timeframes. There are two approaches to what counts as “short-term”:

  1. By timeQuite rare, but still found in some advisors, the option, when deals have a fixed duration of a maximum of 3-5 minutes, then closes, regardless of the current profit / loss. Perhaps, in the stock market, with its low volatility and long-term trends, this method can be profitable, but in the rapidly changing Forex it is not the best solution.
  2. By profit. A small level of 3-5 points is taken, upon reaching which the transaction is closed until the next signal. Works well with any scalping option

Combined options can be used, for example, if a deal is opened and a strong movement has begun in the desired direction, there is no point in closing quickly. You can wait or enable trailing stop for maximum profit.

Scalping problems

Scalping problems

The situations described in the previous paragraph are rare on lower timeframes, most of the time the trader has to withdraw profit in small portions. This means that you need to open a large number of transactions within the day with accurate entry and exit. At peak moments, the number of positions can go up to 100 and this is extremely difficult psychologically and physically.

The optimal solution would be to use automatic advisors, which enable the trader to focus on analyzing the results and setting parameters for the current situation and trading asset. 

Expert advisors have been developed that are optimized for specific currency pairs, trading sessions, fundamental news releases, etc. Backtesting on historical data only for the last 2-3 months. Longer periods don’t make sense as we are trading short-term trends that are constantly changing!

Analyzing the results

In the case of scalping, the results of testing or real trading represent hundreds of transactions, which are impossible to understand without the use of special tools. The capabilities of the MetaTrader terminal are clearly not enough: you can only see an increase or decrease in profitability for a selected period and several basic calculations of efficiency, such as the Sharpe ratioю

Using third-party programs, for example Strategy Quant EA Analyzer, allows you to see hidden trends and patterns of the work of advisors: at what time is the largest percentage of winning and losing trades, where you can increase the average profit, etc.

Summing up, we can say that scalping can generate income, but you shouldn’t make maximum bets on it. If the market starts to behave differently as the robot’s algorithm, profit can quickly be replaced by losses. So we constantly withdraw the earned money and do not forget about manual trading, intraday and medium-term transactions.