Scalping Crosses...

[forextrades]

Hi,

I'm just curious if anyone has ever had any success in developing a system to scalp crosses like eur/chf or eur/gbp. Price always seems to regress to the mean on the those pairs, which can create quite a few opportunities for profits by using a contra-system. There's a eur/chf MQLII script on the Yahoo MT Group for use on the 5 min, but it targets 20 pips per trade so I don't really consider it scalping. It is profitable though.

Anyway, here's my real source of inspiration: http://www.moneytec.com/forums/attac...chmentid=15667

Don't know if those trades are real or not, but looking at charts it appears that they easily could have been. There are way too many trades for me to believe that it was luck.

[scorpion]

Scalping is possible. EURUSD moves up or down 10-30 pips hourly on average. GBPUSD moves even more, but the problem is many scalping systems are tend make positions against the trend. When there's a breakout, huge loss from 30-200 pips can occour. In other words, it is possible to make profit by scalping in short-term, but once in a blue moon, a single striking loss will blow out the scalping account. Another main of problem of scalping systems is how far SL should be set. 30 pips SL is many times more than the targeted PL (6 times of 5 pips PL), so that means the scalping system must have at least 6 winners in order backup a single hit of SL! What if 30 pips SL hit 3 to 10 times in a row?

[scorpion]

What I want to say here is that, scalping systems are good as long as the market is in trading range, and scalping alone won't make your account grows. In my 2 years experience, I think one need to combine scalping and trendfollowing with switching systems. Have you heard of switching system before?

[forextrades]

The idea of switching systems based on the what the market is doing would work well. Using an indicator like ADX to tell you when to scalp and when the market is trending might work. The only problem is that I find the ADX too lagging.

Lately, I've been more interested in taking unprofitable systems and switching some of the parameters in order to make them profitable. There are a lot of systems out that give horrible entry prices. If you buy rather than sell or sell rather than buy when you get a signal, you could make a bundle. Just stop and reverse when price goes against you X number of pips.

[scorpion]

My switching system enforce various rules to make a switch. One, the switching system acts on time pattern. There're certain patterns on chart showing when market is most likely in range, in trend or in breakout, so statistically this switch method is around 80% accurate. Rule #2 is based on support and resistance levels on various timeframes. Support and resistance levels mostly indicate how far can price moves in trading range and when the market breaks out and create a new trend, so we can exploit this to make a switch too. Rule #3 is related to major economic events in economic calendar. It's 90% probability that market breaks out anytime around a major event.

[gazuz]

Originally Posted by forextrades

The idea of switching systems based on the what the market is doing would work well. Using an indicator like ADX to tell you when to scalp and when the market is trending might work. The only problem is that I find the ADX too lagging.

Lately, I've been more interested in taking unprofitable systems and switching some of the parameters in order to make them profitable. There are a lot of systems out that give horrible entry prices. If you buy rather than sell or sell rather than buy when you get a signal, you could make a bundle. Just stop and reverse when price goes against you X number of pips.

I have to say that I was in that same position probably not too long ago, the problem with finding bad systems is that alot of them actually lose because they do too many trades in a small period of time and die because of the spread. Scorpion has made the remark before that spread has killed many systems, too many even. Many trades can be made making about 5 pips, substracting the spread will give a profit of maybe 2 pips, now thats the gain, the loss would be spread + loss. So say the trade was closed with a 5 pip loss, 5 pips +3 commission results in an 8 pip loss, the profit with the same number of pips was made 2 pips. What this means is that you would need to win 4 consecutive trades to even out the balance. i have been aroun that corner one too many times and I tell you I am thankful that it wasnt a live account. So this leads me to my main point, money managment is key, if it has to be a win, make it worth it and not little 2 pip wins against 8 pip losses.

thats all I have to say