Building Automated Trading Strategies October 2018 | Page 39

Scalping, Technology, and Brokers
Forex EAs usually apply scalping techniques based on technical analysis.
Scalping is a trading strategy targeting profits of 4-10 pips. If you trade from
your own PC, keep in mind that the speed of execution is very crucial when
you use a scalping system. A fast VPS service can generate much better
results.
Furthermore, prefer to open trading accounts with ECN/STP brokers (NDD)
offering good conditions for scalping (tight spreads, and low slippage on order
execution). Avoid dealing-desk (DD) firms. Note that many dealing-desks
even forbid scalping.
Recommendations when Using Commercial EAs:
Here are some key points and general recommendations:
1. Check always who is behind the project
Check the programmer or the team behind the development of any
Expert Advisor.
2. Focus on Winning Pips and not on Winning Ratio
Some Expert Advisors are designed to trade using wide stop-loss and
narrow target-profit orders. That means that they win most of the time
but when they lose, they lose hard. Avoid these systems; the desired
Risk/Reward ratio must be above 1:1.
3. Don’t to take anything for granted
Double-check any information regarding the past performance of any
Expert Advisor. Never trust EAs that will not provide reliable data
regarding their past performance.
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