There are many profitable robots now obtainable in the market that can be used for trading automatically. Many of these robots use scalping as their dominant trading strategy. Scalping can be done anytime. Now before we talk on how to make a scalping robot safe, we need to understand a little bit about what is scalping so that we know how to make the scalper robot safe! There are many trading strategies. One of the most popular trading strategies among the traders is scalping. Scalping can be done in almost all market like stocks, futures, commodities or Forex. It does not require any market examination or trend examination and can be done almost without using any indicator.
Scalping is especially popular among the money traders. As a Forex scalper, your aim is always to look for a few pips like 3-12 per trade. Now, each trade has a cost in the shape of a spread that you have to pay when you make an entry or exit. As most of the times, the spreads offered by the brokers is usually not more than 3 pips, you as a scalper need to make at the minimum 3 pips per trade in order to breakeven.
When you do scalping, you have to ignore risk and money management rules. Most of the time, scalpers’ trade without a stop loss or have a wide stop loss that can be as wide as 30-70 pips. Their aim is simply to get in and get out as quickly as possible making a few pips.
Now having such a huge stop loss is too risky. This is not trading, this is more like gambling. You are prepared to make a small profit at the expense of a huge loss. One loss and you have it! If your target was to make only 5 pips and your stop loss was 40 pips, you will have to make 8 winning trades in a row to just breakeven.
I average for making 3-12 pips, you are ready to lose almost 50-100 pips. So scalping demands a lot of experience! Is there a way to do scalping safely? There is one easy method that you can use to do scalping.
If you have been trading for sometime, you should by now have a good intraday trading system that you use daily to make money. Use that same intraday trading system with the usual tak profit target of suppose 100 pips with the usual stop loss of suppose 30 pips. Since, you use this system to trade and not gamble, you would most likely do some market examination and only go into a trade that you think is a high probability trade. Just add a trailing stop of say 10 pips to this system. So in case the market retraces, you get stopped out by the trailing stop and your profit is locked in. In case the market doesn’t trace, you end up making what you had intended in the first place.
Since scalping is one of the most popular trading strategies and many traders use it daily to make 30-70 pips each day. Many robot developers have also programmed their robots to do scalping in rapid series. Many profitable robots use this scalping strategy as their dominant strategy. Now the problem is this that these robots do scalping without using a stop loss. This makes these robots too risky. One big loss and you will take a long time to retrieve. So how to go about it. Simply change the default settings and place a small stop loss. Back test the robot! If it works and the performance is good, do forward testing on a demo account. In case, the forward testing is also satisfactory only then trade live with such a robot. If not, then simply avoid trading with such a scalper robot as it would be too risky for the capital in your trading account!