Scalping - a trading strategy

In this chapter we will talk about Scalping tactics - trading strategies for beginner traders. Why have we classified it as a strategy for beginners? Because it is very easy to use, and it can be mastered by any beginner with experience in MetaTrader 4 on a demo account. A little later, we will consider in detail one very profitable strategy based on scalpingbut first let's talk a little bit about the concept itself pips.

Marketplace: ;
Trading Indicators: Scalper_MA, Channel;
TimeframeM1, M30;
Strategy: scalping, pipsing;
Protective orders: StopLoss, TakeProfit.

Scalping (pipsing) - A strategy based on the principle of quickly opening and closing positions on 1-5 minute charts in order to make a profit that covers the spread. That is, as soon as the profit on the open position becomes positive and satisfies the trader, the order is closed. Based on this definition, traders have come up with an alternative name for scalping - piping (Pipsing, catching pips). If you come across the term "pipsing", you know that we are talking about scalping.

A characteristic feature of scalping is, in the first place, large number of transactions to be made. In 1 day a trader can make from 30 to 1,000 trades. In most cases, when pipsing charts are used M1 (1 minute) and M5 (5 minutes). A scalper needs a lot of leverage to trade successfully. The vast majority of scalpers use 1:200 to 1:500 leverage. For example, with 1:500 leverage it is possible to open a 1 lot position with only 200$ as collateral. A little later we will talk in detail about each rule underlying scalping.

Among professional traders scalping is not popular because many traders piping is associated with meaningless risk and a lack of a clear entry and exit strategy. This is partly true, but not quite (more on that later). Today there are a huge number of different strategies based on scalping for different currency pairs and timeframes (time periods). But as we wrote above, the main principle of his strategy is only 1 - "Get your profits in time".

In order for you to better understand the basics scalping strategiesLet's identify the main advantages and disadvantages of this trading strategy.

Advantages of scalping (pipsing) on :

- With successful trades, a good profit of 10-30% (depending on the level of risk) on the size of the deposit per day.
- There is no need to study technical and fundamental analysis. To trade with scalping it is only necessary to use the rules for opening and closing a position. We will discuss the basic rules of scalping a little later.
– Free entrance to the market. No need to wait for the trend to appear, because you can trade at any time of the day, on any type of trend.

The disadvantages of scalping (pipsing) on :

- Strong nervous tension when playing on a real account. Get ready to stock up on sedatives. You never know what the trend will have in store for you.

- With great leverage, piping A position at random can lose your deposit if the trend reverses sharply.
– Lack of free time when manual scalping. During manual trading, whether you like it or not, you will be constantly watching the open position. Of course you can leave for a couple of minutes for tea, but that rarely works out for anyone. Due to the nervous tension you cannot tear yourself away from the terminal, especially when profit becomes more than zero.
– In order for your profit to exceed the zero mark, the price must rise by the size of the spread. That is, initially the transaction will always be in deficit by the value of the spread.

- Some brokers, instead of spread, practice the use of withdrawal of interest on open trades, in other words, they will charge you the commissions. In such cases, it is necessary to cover the amount of commissions in transactions scalping.
– High risk with low profit. Risking all of their funds from each transaction, you will have 1-2$. With a large number of profitable trades you can, of course, have a solid profit of 10-30% per day (depending on the deposit and transaction volume). But, as we wrote above, any small movement can kill your deposit in a few seconds.
- Many brokers overestimate TakeProfit and StopLoss orders. With most brokers you will not be able to set a stop order closer than 5 points from the price. If you use only manual trading you will not have time to set stop orders. This point should only be considered by those who use a mechanical trading system based on scalping.

Before summarizing whether or not scalping is worthwhile when playing in a real account, let's list The rules behind scalping.

- Profit should cover the spread. If the spread is 2 points, the order can be closed when the rate rises by 3-5 points.
- Most scalpers operate with a value of 5 points.
- Use minute charts (M1). The minute chart is best for scalpingIt's the fastest way to display fluctuations in quotations.
- Use maximum leverage. With a small deposit, large leverage will greatly expand your options. For 1:500 leverage, 20$ is enough to open a 0.1 lot position.

With the right strategy, scalping turns into a very profitable trading system. The following is an example of a profitable trading system based on the rules scalping.

Profitable strategy based on scalping

This trading system, unlike analogues, is relatively new. It is based on the use of 2 indicators in combination with the classical rules of constructing a trading system based on scalping.

First, you need to install two indicators for scalping: Scalper_MA и Channel. To install, move the downloaded indicators to MetaTrader 4 in the folder - \experts\indicators. Then start (restart) the terminal MetaTrader 4. We will trade on the currency pair GBPUSD (you can work on any currency pair). Timeframeas recommended - M1 for Scalper_MA and M30 for Channel.

Opening trades by scalping strategy

The basis of the strategy is the M1 chart with the Scalper_MA indicator installed on it. In fact, it points us to open trades.

- Up Arrow - open a buy position (buy).
– Down arrow - open a sell position (sell).

The order opens only after the price changes more than 2 points in the direction in which the signal showed. Also, we wait for the appearance of 7 red or blue bars below.

That is, if the signal indicator Scalper_MA to buy, wait until the price increases by more than 2 points and passes 7 bars. Only then open a buy order, if the situation has not changed. Also, the Channel indicator signals on the timeframe M30 should be taken into account. It is necessary for smoothing of noises. The order open only if signal directions of both indicators coincide. That is, when the signal Scalper_MA on M1 appears on the bay, we switch to M30; the order opens only if the Channel indicator tunnel is directed upwards on M30. If the tunnel is directed downwards or it is horizontal, it is not recommended to open the order.

Exiting the scalping strategy

Close the order when you receive the desired profit. I advise to be limited by profit 1-3 points from one transaction (for the lot of 0.1, 1 point = 1$, for the lot of 1, 1 point = 10$). If at trade, you are going to use stop orders, we recommend to expose them as follows:

For a Dealer Center with 5 decimal places TakeProfit = 30, StopLoss = 100. For BC with 4 decimal places TakeProfit = 3, StopLoss = 10. But you can, of course, optimize your strategy as you see fit.

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