According to analysts, most of the time the Forex market does not have strong movements. Currency pairs are traded sideways or flat. Sometimes the price range is limited by small movements of several points. This is precisely where scalping can be applied – opening short-term buy trades at the bottom of the corridor with closing them in the upper part of the range, and opening sell trades at the top, followed by closing at the bottom of the corridor.
The majority of novice traders prefer this trading style. Scalping makes it possible to increase the profitability of trading operations by the means of frequently opening and closing positions on 1-minute, 5-minute and 15-minute timeframes. Although the profit from one transaction is insignificant (only a few points), but 30 (or even more) realised purchases and sales per day in total can lead to profit that is several times higher than the income from medium-term and long-term operations.
Nevertheless, scalping is one of the most difficult and aggressive trading styles. A lightning-fast entry into the market, holding an open position with short targets for several seconds is very, very difficult to implement in manual mode. And the constant monitoring of the price throughout the day, the tense psychological state of the trader entails many mistakes and loss of capital. Add to this missed trading signals and, as a result, unrealised opportunities for opening deals.
In this situation, the best solution is to purchase a ready-made Scalping EA. Some traders try to create it on their own. But independent development of a trading robot is possible only if you have programming skills, thorough knowledge of the technical capabilities of trading platforms. Seeking the services of professional programmers is the best way to turn your ideas into an Expert Advisor or Indicator, as well as automate a system that already exists.
The possibilities of specialists in this area are practically unlimited. In addition to the customer’s trading algorithm, experienced programmers will help expand it with new solutions that can be easily adapted in the future.
Such a solution is within the power of professional developers and programmers. Without systematised knowledge, independent development will easily lead an unprepared trader to a dead end and to a loss of time.
The high outcomes of the Scalping EA’s work significantly exceed the indicators of manual trading, since the opening and closing of orders is carried out automatically under a strictly defined algorithm.
Scalping EAs are suitable for short-term trades lasting a few minutes or seconds. Using indicators and patterns, they generate trading signals for a level breakout or rebound from it within a certain range. Working with a huge number of instruments, they will not miss a good trading signal to open a trade, with a high degree of probability. Scalping robots are tested and optimised on historical data of currency pairs. In comparison with manual testing, this significantly saves the trader’s time. Therefore, most scalpers prefer automated robots.
Specific Features of Scalping EAs
The reason for choosing scalping trading lies in the ability to automate various trading strategies.
Scalping EAs are characterised by certain criteria:
Work on small timeframes (M5-M15);
Small stop-loss size;
Profit size 1-10 points;
High intensity of opening deals;
The ability to adjust the frequency of opening deals and the extent of risk;
EAs can be multi-currency or customised to a specific currency pair;
The internal logic of the algorithm allows the use of tick volumes, indicators, in combination with plug patterns, etc. The algorithm can be built taking into account all of the above or include some of them in a unique design.
The main conditions for the successful implementation of the strategy used by Forex Scalping EAs:
The liquidity of the traded asset. The speed of execution of opening and closing trade orders depends on this;
Setting up the parameters of the robot for trading with the obligatory observance of the rules of money management;
Relatively low level of spread. Otherwise, its excessively large size will overlap all profits and scalping becomes meaningless;
Moderate volatility. Many EAs work great during a flat. Price movement in a small side corridor would be ideal;
The nature of the behaviour of the traded asset must correspond to the automated strategy inherent in the algorithm;
The broker’s commission for opening trading positions is minimal and does not exceed the profit from transactions;
Uninterrupted internet connection for timely tracking of quotes. Sometimes a VPS will be a great solution to the problem.
The broker chosen to implement automated strategies must provide a convenient and reliable trading terminal, through which a Scalping EA can be integrated without any issues. Server speed is at a high level. Requotes (slippage) during scalping are unacceptable.
Apparent advantages of a Scalping EA:
Lack of a psychological component in making a trading decision;
Significant time saving for the trader himself. While the EA is working, the trader can study market trends or devote time to rest;
All trades are short-term. This means that the result will be known in a few minutes;
Many EAs have a configurable parameter for holding a trading position and move already profitable trades to a breakeven state;
Possibility of setting the time parameter. Open positions are closed after a certain time. These cycles are determined by testing the robot on the historical data of the asset;
Identifying, analysing and filtering strong price movements using the basic indicators programmed by the developers. They are filtered out in trading, because at this moment short-term algorithmic trading is ineffective;
Monitoring and analysing the results of a Scalping EA allows to reconfigure its parameters, increasing the profitability of trading.
The disadvantage of the Scalping EA is the impossibility of detecting unpredictable market events: a sharp update of extremes and pullbacks, the appearance of many conflicting candlestick formations. In the absence of trader control during this period, trading can become unprofitable.
How A Scalping EA Works
Professional trading systems are based on 2-3 indicators that filter signals, show a trend, implement market entry points and take profit.
Any trading robot accumulates at least 2 technical indicators, one of which confirms a buy (sell) signal detected by the other. But for a better understanding, let’s take a look at how a Scalping Expert Advisor works using the example of one Bollinger Bands indicator. This will be an example of the simplest scalping strategy.
Short-term trades with this indicator integrated into a trading robot are effective in Forex for pairs with tight spreads. The tool combines the functions of determining the trend movement, volatility and oscillator. Bollinger Bands is represented on the chart as 3 moving averages with different periods.
The indicator gives certain signals to enter and exit the market:
With a steadily directed trend, Bollinger determines the optimal point for opening deals after a price rollback;
Compression and expansion of bands. Changing volatility from low to high and vice versa. After squeezing, sometimes the price breaks out one of the extreme lines, which serves as a buy or sell signal;
Identification of technical analysis figures. Entering the market using these patterns.
A buy signal is considered as such when the price breaks up the lower Bollinger Bands and closes the plug inside this band. Profit can be taken when the price reaches the central moving average or the upper moving average. Additionally, a long position can be opened when the price breaks through the central moving average and closes the plug above it. Profit is fixed after the price reaches the upper moving average. The third buying option is the breaking of the plugs from the bottom of the upper moving average and closing the plug outside the bands.
A sell signal is considered as such when the price breaks the upper band from top to bottom and closes the plug within it. The next option is a price breakout from top to bottom of the central moving average with the plug closing below it. Profit-taking also occurs near the central moving average or lower moving average, depending on the situation.
Create Your Own Scalping EA (Expert Advisor)
Any strategy can be used in the Scalping Expert Advisor. Our company has many years of practical experience in the development, creation and testing of trading robots. We develop projects of any complexity. They have proven themselves perfectly with our customers.
Please note that the Scalping EA can be created based on your existing working trading strategy, taking into account your unique preferences and wishes. The advantages of custom development are always significant for traders because, among the variety of expert advisors already available on the market, you will never find what suits exactly you in detail.
If you need your own Scalping EA, tailored to your individual requirements, please request a free consultation with our team of professional developers of automated trading software, as well as find out the cost and timing of your project development. Our solutions are recognised for competent software architecture and high-quality coding. You will receive a product that simplifies technical analysis and increases the efficiency of your trading.
Trading contains substantial risk and is not for every investor. An investor could potentially lose all or more than the initial investment. Risk capital is money that can be lost without jeopardizing ones financial security or lifestyle. Only risk capital should be used for trading and only those with sufficient risk capital should consider trading. Past performance is not necessarily indicative of future results.
Hypothetical or Simulated performance results have certain limitations, unlike an actual performance record, simulated results do not represent actual trading. Also, since the trades have not been executed, the results may have under-or-over compensated for the impact, if any, of certain market factors, such as lack of liquidity. Simulated trading programs in general are also subject to the fact that they are designed with the benefit of hindsight. No representation is being made that any account will or is likely to achieve profit or losses similar to those shown.
Please note, that testimonials appearing on this website may not be representative of other clients or customers and is not a guarantee of future performance or success.
Nordman Algorithms is not liable for any risk that you face using a ready-made indicator from Nordman Algorithms indicators base. Please, use the software on your own responsibility. All the software pieces are coded in accordance with some common known trading concepts and Nordman Algorithms does not guarantee accuracy or performance of the software entry setups.