Different traders use different methods of intraday scalping. It can be 10-20 trades with several points per day, 3-4 trades with a dozen of points or something average. There is only one right answer: no matter what best scalping robot a trader uses, it must be compatible with his risk tolerance. Simply stated, if a trader has not enough patience to let his trade to develop a motion of several dozens and even hundreds points, which may take the whole day (and maybe more), he shouldn’t use forex scalping methods with the corresponding approach.
On the other hand, if a trader wants to avoid excessive trading and tries to concentrate on more qualitative trades, there is no sense in using fast scalping forex strategies to trade multiple times per day with small profit.
So, knowing yourself as a trader and understanding your risk tolerance both in terms of money (i.e. how far you can place stop) and psychology (i.e. how long you are ready to hold on a trade before accepting losses) has a determining value at choice of a forex scalping method or a forex trading system.
There are different methods of intraday forex scalping, which are based on trader’s risk tolerance and the amount of trades he’d want to perform during one trading day. Trading settings and time parameters can be changed to adjust them for a definite style or preferences of a trader. The offered scalping forex method implies use of 2 basic instruments that can be followed easily by intuition as well as by means of graphic programs.
Tools for Scalping
Using a statistical technique, the so-called least-squares method, linear regression builds a line that ideally corresponds to the series of data points with the least deviation. Linear regression tries to predict future prices using continuation of this line. Then the regression channel can be built by means of placing lines above and below the central line with the use of standard deviation. Fortunately, modern traders do not have to be experts of statistic analysis to do this operation, because the majority of graphic programs can build lines and channels of linear regression automatically. In the given article we will use a channel of linear regression as the basic trend scalping forex indicator.
Tick is a market indicator that shows the last price and, thereby, shows interaction between demand and supply on the market. In the given article we will use tick as our main forex scalping indicator of market mood.
Then we use stochastic as the impulse scalping forex indicator. However we will substitute tick for price in calculations. While tick is a very valuable measurement of an instant buying against selling, observation of bare values is a difficult task, and even building it on 1-minute and 5-minute charts sometimes makes it difficult for reading because of fast movement of values in a spiral between extremes. Using Stochastic based on tick allows us to understand market mood as an impulse is increasing or decreasing. We will use Stochastic based on tick to approve that the impulse is moving towards us when we enter the market.
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