Features of a Scalping System
Ideal Features of a Scalping System
- High winning rate (Greater than 80%)
- Profit Factor Must be High (Greater than 1.5)
- Average profit/average loss (very low)
- Average Consecutive wins (At least 5-10 x more than Average Consecutive Lost)
- Maximal Draw-down ( less than 20%)
- Small Take profit
- Huge stop loss
- Trades is usually intraday or very short period of time ( few mins to hours)
Limitations
1. Huge Stop Loss
The high winning rate for the system compensates for the huge stop loss. Another indicator is average consecutive wins must be at least 5 times more than the average consecutive lost. This ensures that 1 big loss can be recovered by 5-10 winning trades. 2. Spread Dependent
Due to the small take profit level, a broker that provides very small spread is crucial to making profits with this system. This strategy will only work with certain good brokers. Scam brokers will manipulate spread during the scalping hours to prevent you from making money.
Warren Seah
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Warren examines commercial trading systems and has since started researching and analysing systems to uncover good systems which bring in consistent profits. By publishing all the research papers and detailed analysis online, he seeks to educate potential investors and traders on the world of trading the forex market with automated systems.
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