Month: May 2019

GBPUSD SELL-1.29884
SL-1.30213
TP1-1.29658
TP2-1.29444

EURCAD SELL-1.50734
SL-1.51149
TP1-1.50539
TP2-1.50316

GBPCHF SELL-1.32241
SL-1.32746
TP1-1.31998
TP2-1.31692

CADJPY BUY -81.482
SL-81.090
TP1-81.684
TP2-81.915

USDCAD SELL-1.34736
SL-1.35050
TP1-1.34607
TP2-1.34488

NZDUSD SELL-0.65687
SL-0.66078
TP1-0.65527
TP2-0.65377

AUDCAD SELL-0.93935
SL-0.94555
TP1-0.93688
TP2-0.93457

GBPCAD SELL-1.74799
SL-1.76492
TP1-1.74419
TP2-1.73995

GBPAUD SELL-1.86057
SL-1.86861
TP1-1.85704
TP2-1.85244

EURUSD SELL-1.11860
SL-1.12061
TP1-1.11726
TP2-1.11588

USDJPY BUY -109.948
SL-108.948
TP1-110.334
TP2-110.655

Fast and furious price action for those not faint at heart!

Traditionally, forex scalping has been regarded as the practice of taking just a few pips of profit, i.e. scraping or scalping the market.

Very tight stops are employed, but they may represent several times the intended take profit.

For example, a scalper may enter a trade on the EURUSD with a 10 pip stop and take the trade off once it has moved 3 to 5 pips in profit, depending on any number of reasons such as:

price is approaching support or resistance level

price is approaching a pivot point

price is approaching Fibonacci level

price is approaching a Round Number

etc

Obviously for such a strategy to pay off the trader must be enjoying a very high win to loss ratio, combined with a good average win size to average loss size. Typically, forex scalpers enter and exit the market many times in a trading session.

This style of trading is attractive to those who like their forex trading action-packed. One top trader I know likes to recount the tale of sitting in with a scalper friend of his during a trading session. The scalping trader consumed a bottle of red wine and most of the contents of a packet of cigarettes during that session. And he was only marginally successful ?

A cautionary tale for those who would consider this style: that scalper is now apparently in poor shape…

However, for those undeterred, the benefits of successful scalping are:

Since many trades are taken in a typical session, the risk on any one trade can be very small. For example, whereas a day trader may risk anywhere from 0.5% to 2% of their account on a single trade, the scalper would most likely risk much less, say, anywhere from 0.1% to 1%.

These are just guidelines of course, the actual risk that any particular forex scalper employs will be tailored to their own risk profile principally, but also will be influenced by the prevailing market fundamentals, the actual session and currency pair traded etc.

Following on from the first point, if many trades are done in a session, the overall profit from that session can be quite high if the normal expected win to loss ratio and average win size to average loss size ratio operates. A day trader may risk 1% on a single position and walk away from a successful days trading with 2% profit. A scalper may risk 0.5% per trade, but trade perhaps 20 during the course of the day. If the scalper therefore averages a high win to loss ratio, say 70% wins and their average winner is equivalent to their average loser, they have in fact won 4% profit for that day/session – twice that of the day trader.

There is less need to monitor the market when you are scalping. Apart from preliminary scanning of the fundamentals prior to entering the session, your focus and concentration are limited to the duration of that session, perhaps 1 to 2 hours work. Longer term traders may need to constantly monitor the market for opportunities, as well as adjustments to open trades.

Obviously the down side of trading this methodology in an unsuccessful fashion is relatively rapid ruin!

There are a number of other things the forex scalper should consider:

Since you will only be making a small number of pips profit per trade, the spread you pay to your broker is of critical importance. It’s no use taking five pips profit and paying 2 to 3 pips in spread, the costs of doing business that way are ruinous. Your choice of forex broker therefore becomes a prime consideration.

It is imperative to limit your potential loss by setting a stop at the same time as you enter the trade, or immediately thereafter. This of course is important for any trade, but even more so for scalp trades. Why? Since you will be most likely trading at a time of high volatility – as this is best for scalping small quick profits – this injects another element of risk into the equation in the event price does a rapid turnabout and heads in the opposite direction to your intended trade. In this scenario you could be facing a loss of 20 to 30 pips or more before you are able to close out the trade. Considering your average profit would be many times less than that, this is a disaster scenario! Some scalpers boast that they never set stops, but I honestly don’t know of any long-term successful scalper who doesn’t.

It will be difficult for you as a scalper to cover a number of pairs at the same time, therefore it is advisable to choose one pair in which to specialise and become expert. Generally it will be a pair that enjoys high liquidity during the session you intend to trade. For example, you might decide to trade the AUDUSD during Asia and the EURUSD during the London session.

Having said this, the best scalping strategy I ever encountered is one where the number of pairs covered is scalable, i.e. the more experienced trader may choose to cover several pairs while a less experienced trader would concentrate on one or two in the early stages of getting comfortable with the method. This strategy also stretches the definition of a scalp, as it typically aims for 10+ pips profit. More on this particular strategy below…

The profit limits that you set will normally be small and centred around such things as support/resistance, pivot points etc as mentioned above. The forex scalper is much less likely to set a distant take profit limit and attempt to trail the stop behind price. The market will be moving much too fast and the reactions of intervening significant levels, though small, will likely be sufficient to wipe out your profit if you try to do this.

Many scalping strategies are based on Price Action Trading. This is because in the heat of the moment it is much simpler to concentrate purely on what price is doing at any particular moment, without the distractions of monitoring indicator behaviour.

It is also possible to fundamentally scalp the market around news announcements, and there are a number of examples of FX trading software designed for news trading. However, scalping forex in this manner is generally a fraught endeavour best left to very experienced traders.

If you still fancy scalping as a way to trade I have two possibilities for you:

1)  check out our free forex trading strategies on the following page:

Free Forex Trading Strategies

The five strategies I present there can all be adapted to a scalping timeframe.

2) You could also consider the London Close Strategy, created by Shirley Hudson and refined with assistance from the legendary Vic Noble!

To find out more go to London Close Strategy

Great news for investors who lack the time or knowledge to trade their own account

Managed Forex Accounts – in which a money manager trades a forex account on your behalf and deducts a fee or fees for the service – represents the third option available to those wishing to pursue some form of hands off trading, the other two being a Forex Signal Service and using Automated Forex Trading Software.

It is undoubtedly the most advanced of such options, because once you have set up the managed forex account with the vendor it is basically set and forget. The account manager takes care of all the rest: market research, entering and exiting trades, risk and trade management, general account management etc.

You pay for this service by various methods, e.g. an upfront fee for joining, ongoing management fees, a percentage of the profits made etc.

Once more, it is imperative for anyone considering such a style of trading to do their own research with respect to these costs, not to mention the reputation and track record of the forex managed account team.

Managed Accounts are ideal for the following traders:

Those who do not have the time to do their own research with respect to prospective forex trades

Those who do not have the inclination to do the above

Those lacking experience or knowledge of the market, but who recognise the potential involved in proper forex trade management

Those who for some reason, perhaps temporary, lack the confidence to place their own trades

Aside from the above, one of the major attractions for trading some of your money in managed forex accounts is that the fund manager only gets paid when they make you a profit (assuming the miscellaneous costs referred to above are minor).

This is because the major source of their income generally comes from taking a cut of the money they make for you. For example, your account is $10,000. The firm trading your account makes 10% for you in a given billing period, i.e. $1000 profit.

If you had agreed to pay them 30%, their share of the profit would be $300. But if they had made you 20%, they would have been paid twice as much, i.e. $600.

This should be a powerful incentive for the forex account manager to trade your account diligently and successfully.

The major differences between managed forex accounts and automated forex trading software are:

With automated forex trading software you are responsible for the management of the actual system: set up, maintenance, monitoring etc. With a managed account this responsibility is taken off your shoulders and rests with the forex account manager.

With automated forex trading software you retain full profits, if any, from the effects of trading the software on your PC or VPS (recommended). With managed accounts you are paid the profits from trading after fees have been deducted. In this case you will potentially be earning less than if you had run a robot yourself, although it could also be argued that a manager will do a better job.

Account Managers are conservative by nature compared to automated forex trading robots. Whereas the average forex robot could easily suffer a drawdown exceeding 10% this would be considerably less likely with the managed account.

Following on from the last point is the converse of the risk to reward ratio: the percentage of profits you will make in any given period will be less with the conservative managed forex account than you could expect with automated forex day trading.

Things you should check for when doing your research on forex account management firms are:

What are the total costs involved in setting up an account?

What are the ongoing costs involved in having the account open?

What percentage of profits does the account manager retain from your account trading?

Are there any other hidden costs involved, e.g. is margin added to spreads to increase the profit that the fund manager makes from trading your account?

Are there other administration fees, e.g. annual administration fee? This is a very common fee, but some forex account managers do not charge it.

Is there an exit fee charged if you close the account?

Is there complete visibility of the account’s trading activity, i.e. what trades were taken when and what results were realised?

Are your funds segregated, or pooled? The better account managers keep your money in a dedicated segregated bank account with a reputable bank, overseen by regulatory bodies such as NFA (USA), ASIC (Australia) etc.

Above all, verify the performance of the funds management firm through a third party independent source such as Myfxbook

Anyone investigating auto forex trading eventually encounters the exciting concept of having their favourite system or strategy coded up for them into a forex robot…

When it comes time to have that favourite strategy coded up, don’t think you have to do it all yourself…

There are several issues to be considered before you go ahead and have your favourite forex trading strategy made into an automated forex robot.You will have to consider your budget to begin with. Good forex coders can be found who are prepared to do the job for a reasonable price, and I give some examples below.On the other hand there are some pretty awful coders out there who charge exorbitant fees for buggy code, so ensure you do your homework before selecting a coder, as some will attempt to inflate the agreed price as work proceeds.Get everything in writing at the start!You will also want to consider the fact that it’s not just a simple matter of throwing an idea at a coder. More often than not the coder will require very specific and detailed instructions with regards to what you require.Let’s face it, all of us get great ideas from time to time, but not everyone can translate those ideas into clear, concise requirements.Lastly, unless it is a very simple piece of software, you will need to be prepared to engage in a series of software testing runs in order to debug and enhance the software program until it performs in an acceptable manner.So, got a great idea for an automated forex trading system of your own, but don’t know how to go about getting it automated? I have used the following service extensively. I have always found Jamey’s work to be of a very high standard, Jamey communicates continually and effectively throughout the project and has an excellent grasp of coding expert advisors and indicators:Advanced AnalyticsI also highly recommend Steve Norman at:for-exe.com N.B. I have no business affiliation with the above resources, they are mentioned for information purposes only.You can also use one of the online services such as Freelancer I have used them extensively in the past. There is a deal more work to be done posting a project on these sites and selecting a suitable coder, but you may wish to consider them for more options.Another approach to automation of your trading that you may wish to consider is Forex Managed Accounts.

When it comes to choosing forex robots to trade, getting feedback from current users can be a crucial step in the right direction…

Measuring Forex Robot Performance

When considering forex robots, don’t just buy what looks good, do a little digging and research to ensure what you choose is a good fit for your trading.

The following list of automated forex trading robots may help if you are looking to assemble a stable of such programs.

You should try to select a variety of robots based on the fact that each one adds something unique to the mix.

For example, it’s no good having three Asian scalping forex robots that all trade the AUDUSD, unless each robot adopts a unique approach to trading that pair in the Asian time session.

So what would constitute a good mix of robots? I suppose something like the following:

a trend following program that trades breakouts

a trend following program that trades retracements of breakouts

a scalper that trades the Asian session

a scalper that trades the European session

or any variation on the above.

The important thing is not to be buying and implementing automated forex trading software programs simply because you’ve read a bit about them and they appear to be successful. You need to be aware of the fact that each is different, but also that many are copied from other forex robots for example, so that you would just be running the risk of doubling up if you do not do your research first.

Which brings us to the subject of forex robot review sites generally. Apart from the individual robot reviews you will find on this site, there are many review sites for forex robots out there. The one that I personally like is:

Birts EA Review Site

The site owner – Birt – is the genuine article. I have corresponded with him several times and he has been honest and helpful in every regard. Birt runs his own independent Myfxbook accounts on many forex robots, and the results often differ to that shown in the robot developers official Myfxbook accounts, or their other means of verifying results. This of course may indicate that the manufacturers’ claims are bogus, but could also be due to a number of things such as choice of broker and individual settings used etc. Just something to note when looking at the actual reviews.

I have also extensively used Birt’s Tick Data Suite for backtesting. It is the best approach for Metatrader backtesting that I have come across.

So without further ado here is a list of the automated forex trading software programs, a.k.a. forex robots that you could consider for inclusion in your auto trading arsenal:

n.b.: Kangaroo EA is no longer available to the public. It is included here as an example of a truly excellent forex robot, to show what can be done when good coders produce something unique:

Kangaroo EA

The following two robots have had a rather patchy record of late, but they fall into the camp of “shouldn’t blow your account with a bit of luck” EA’s. They have been quite consistent performers over the long term and are worth considering:

Hyper EAHyper EAForex Real Profit EA

These two forex robots are from the same creator, with Forex Growth Bot being the first release and Forex Invest Bot its apparent successor. I am currently running Forex Growth Bot and considering adding Forex Invest Bot to my own stable of robots. Note that both  can be quite volatile and have large drawdowns if you are not careful with your risk settings.:

Forex Growth Bot

Forex Invest Bot

Apparently modelled on Forex Growth Bot but with supposedly safer risk parameters, Forex Robin VOL is comparatively highly regarded amongst traders, although as always results vary considerably depending on your choice of broker.

Forex Robin Vol

I will be adding more to the list as I discover robots that are suitable. If you have any personal favourites that you would like to see reviewed or added feel free to provide feedback in the form at the bottom of this page.

Another approach to automation of your trading that you may wish to consider is Forex Managed Accounts

Automated Trading Software – otherwise known as Expert Advisors or Robots – can mean trading without emotion or hassles…

This is the second of three methods of hands off trading that the forex trader may consider, the others being Forex Managed Accounts and Forex Signal Service.

Forex trading software doesn’t have to be automated; many successful traders only ever trade manually. But I am assuming that you have an interest in automation if you are reading this section.

So, just exactly what do people mean by automated trading software? Simply put, a trading robot is a software program that executes a trading strategy automatically, with no need for ongoing input from an external source (i.e. the trader). They are also sometimes referred to as Expert Advisors or EA’s .

Some years ago I was speaking to a broker about EA’s and said something like “we all know they don’t work”. In the next 5 min that broker managed to persuade me to take another look at forex robots.

Of course, I was thinking “hey, you’re a broker, you get paid every time the software trades. And we all know they trade a lot, a nice little earner for you!”

Nonetheless, my curiosity had been roused so I went and did some research. What I discovered completely changed my mind.

Since then I’ve taken an active interest in the subject. While not claiming to be an expert in the technicalities, I have observed the results of auto trading systems enough to convince me that there are a handful of robots that actually can be trusted with your money.

I don’t say put all your faith in any one forex ea; of course the usual risk management and diversification issues apply. However, I now devote a portion of my own personal trading account to forex robots.

Why?

There are many reasons for adopting a hands off approach to your forex trading. These mainly centre around the following issues:

The benefits of absentee trading. Being able to walk away from your computer knowing that a piece of software is doing the job for you frees you up to live your life any way you like.

As a human being, it is impossible for you to trade 24/7. Robots do this without complaint ? You’ll never miss a trade again…

Emotional issues in trading. Automated trading software is totally unemotional. You can set it up to trade the way you would like to trade (as an ice cool trader, presumably) and entrust the job to it. The robot will do exactly as you had planned, without any of the distractions of niggling thoughts, doubts etc entering into the decision. It’s a good option for dealing with the trader demons of fear and greed.

Entry cost. The market for robots is extremely competitive and this has driven the price down over time. Considering the performance of some of the better robots, the money you pay upfront can soon be recouped if you trade it on a reasonably sized account. (Disclaimer: always trial the forex ea in a demo account first until you are comfortable with its performance)

Research edge: you pay a small amount of money upfront for a piece of software which has been thoroughly researched and tested, with a proven performance track record. No need to spend months or years developing your own system.

Proven performance. You simply do your own research on the available offerings, and select the robot that both suits you and has a proven track record. Again, a big timesaver, if you get it right!

Automated trading software can be a great way for beginners to observe how a professional trader approaches the market.This gets back to emotional issues, the plague of all forex currency trading beginners. If you select wisely, and only place the robot on a demo account or small live account, you can sit back and “see how it should be done” at your leisure.

This was one of the first things that struck me when I started using robots. I would be watching the behaviour of the EA during a trade and contrasting the way it managed to trade to the way I would be tempted to manage the trade. The robot usually did a much better job than me ? It’s like having a mentor do your trading for you while you stand behind them observing and learning.

Many vendors of forex robots offer a money back guarantee, enabling you to get a refund inside a certain trial period. This can be anything from one to three months, as a rule. This should be seen as a bonus when considering selection of an EA, not a dealbreaker. It may be that one robot is excellent, but gives no money back guarantee, while another robot that is absolute rubbish cheerfully refunds your money if you’re not satisfied. The reasoning is obvious: the vendor of the rubbish robot knows that a certain percentage of customers will for one reason or another (laziness, didn’t know about the guarantee etc) fail to redeem their money.

Last but not least, and taking into account all the above, you may prefer spending time with family and friends than watching charts!

But what about the downsides to using automated forex trading software?

You will most likely want to have a VPS service on which to run the forex robot. This is an extra ongoing, albeit small cost. See VPS services

The very utility of having a robot trade for you without your input can be a source of constant low-level tension for some people. You may find yourself worrying “What is it doing now? God I hope it hasn’t lost me any money!” There are some people who just have to CONTROL every aspect of their trading. Automated trading software is probably not a good fit for these people.

There can be a difficulty in locating a robot that trades the way you want it to, while meeting your other requirements with regards to cost etc. For example, a great many robots scalp the market, and are not suitable for someone whose vision is longer term.

The performance of forex robots generally degrades over time as market conditions change and the code for the robot is “cracked” i.e. stolen and mass distributed. It’s important to monitor performance against your initial expectations, and be prepared to stop trading at the first sign that the robot is no longer doing its job. This can be temporary while you continue to run the EA in a demo account, or permanent in the event that the software shows no recovery in its performance over time.

Last but most definitely not least, anyone thinking of using auto trading software must understand the risks involved. There is a good reason why most robots return a very high win to loss rate (often above 80%, sometimes even 90%). That reason is that simply having such a high win rate means that when you do suffer a loss, that loss is substantial. You must be able to psychologically absorb the occasional such loss in the face of a streak of much smaller wins. It is simple mathematical probability that an automated system that wins 90% of the time has wins that are much smaller than its losses.

If you have lasted this far I guess you are still interested in the possibility of using forex robots. In that case, you may wish to consider the list below under the link to Automated Forex Trading Software. Please note that the usual disclaimer applies to these recommendations: Do Your Own Research and remember that past performance is no guarantee of future results:

Click the following link to go to Automated Forex Trading Software

Got an idea for something you’d like coded into a robot?

Click the following link to go to Expert Advisor Coding

The second approach to automation of your trading covered is Forex Managed Accounts.