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Scalpers - How to determine the best instruments for scalping?

  • #1
  • First Post: Edited 1:29am May 12, 2019 1:14am | Edited 1:29am
Hi everyone,

I'm a new trader and curious about how the profitable scalpers here on ForexFactory determine the best instruments / currency pairs for scalping.
I want to share some thoughts I've had:

1. Spread
Scalpers are interested in the spread of an instrument, since it can really make or break a trade.
E.g. if your setup finds a trade on the 1M/5M charts and your SL is 6 pips, your R/R target is 1:1 --- if the spread is 2 pips, that's 2 out of 6 => already 33% of your profit (6 pips) is eaten away by the spread (2 pips).

2. Volatility
High volatility within a short amount of time is fundamentally good for scalpers. Because, say, even if the spread is 2 pips, if your setup finds a trading opportunity on the 1M/5M charts and the SL is 16 pips, and the R/R target you go for is 1:1 --- if the spread is 2 pips, that's 2 out of 16 => only 12.5% of the profit (16 pips) is eaten away by the spread (2 pips).

3. Measuring volatility
I've searched through Google and a few threads on ForexFactory and found these 3 websites + 1 Indicator + 1 US Dollar Index method which can help getting an idea for high volatility instruments:

 

  1. Mataf.net: https://www.mataf.net/en/forex/tools/volatility
  2. Investing.com Volatility Calculator: https://www.investing.com/tools/fore...ity-calculator
  3. MyFXBook Volatility Filter: https://www.myfxbook.com/en/forex-market/volatility
  4. Hanover's "Display Info All Pairs" indicator:


https://www.forexfactory.com/showthread.php?t=245064

by default displays

- an ADR average of 30 days

- current spread

- the percentage value of [current spread]/ADR(30days)

  1. US Dollar Index method: plot US Dollar Index and all instruments/currencies you want to trade on the same chart. Then trade those instruments with high positive and negative USD Index correlations WHICH at the same time also exaggerate the moves of the US Dollar Index.

6. My conclusion
So basically I could just trade the pairs with a low spread / high volatility ratio. The end.

==> But I would like to know what the profitable scalpers here on FF think.

- Am I missing anything? Is ATR better? Should I use ADR on a lower TF (eg. 4H) to determine pairs with a high 4H range? Or go even lower and use ADR (or ATR) on the 1H timeframe?
- How do YOU determine the best instruments for scalping?

  • #2
  • May 12, 2019 6:39am May 12, 2019 6:39am
Quoting dkrock
First of all, scalping does not mean you trade low time frames. Generally, I think it means you are trading like a scared rat because you do not have an exit strategy. Also, I would suggest getting out of the mindset that in order to "scalp", you must trade 1M/5M charts. I can see that you are already seeing the fallacy of that attempt, though it might not have fully reached your soul yet, lol. If you want to be profitable, you have to enough range between signals to overcome the spread. Simple. Use the time frame that does that. That is not all...
hey dk rock how do u look after ranges? don't they seem obvious after they happened?
  • #3
  • May 12, 2019 12:16pm May 12, 2019 12:16pm
With time based charts they all move the same regardless of the "timeframe" they are fractal by nature; the only thing "different" its the size of the spread/comision (you can easily check it by displaying both bid/ask lines) thats it.. oh and that you need to think/react faster

again, by nature, low "time frames" require experience and a very specific personality/mindset to use them in a effective way, the old saying that only longer time frames are profitable its bullshit


NOW my personal aproach its just 2 filters: a low spread (0.2 in average for me) on a major cross during an active session for that pair and thats it.. the rest its wait my conditions and pull the trigger; try to keep it simple and dont overthink; you dont have too much time for that "scalping"
  • #4
  • May 12, 2019 7:12pm May 12, 2019 7:12pm
Quoting havo
With time based charts they all move the same regardless of the "timeframe" they are fractal by nature; the only thing "different" its the size of the spread/comision (you can easily check it by displaying both bid/ask lines) thats it.. oh and that you need to think/react faster again, by nature, low "time frames" require experience and a very specific personality/mindset to use them in a effective way, the old saying that only longer time frames are profitable its bullshit NOW my personal aproach its just 2 filters: a low spread (0.2 in average...
Whats your conditions
  • #5
  • May 13, 2019 3:54am May 13, 2019 3:54am
Quoting havo
With time based charts they all move the same regardless of the "timeframe" they are fractal by nature; the only thing "different" its the size of the spread/comision (you can easily check it by displaying both bid/ask lines) thats it.. oh and that you need to think/react faster again, by nature, low "time frames" require experience and a very specific personality/mindset to use them in a effective way, the old saying that only longer time frames are profitable its bullshit NOW my personal aproach its just 2 filters: a low spread (0.2 in average...
does your broker offer .2 spread with or without commission, I currently have .5 and despite being profitable it eats away a significant amount of the profit due to the size of my tp and sl.
  • #6
  • May 13, 2019 10:34am May 13, 2019 10:34am
Quoting AmmaBoss
{quote} does your broker offer .2 spread with or without commission, I currently have .5 and despite being profitable it eats away a significant amount of the profit due to the size of my tp and sl.
My broker its 0.2 with comission in average except when news are coming (it gets to around 1 pip) but i dont trade in those conditions anyway.. in your software options turn on show bid AND ask price so you can see the "size" of the spread and try to find the "threshold" or the lowest time frame you can go without the spread being to big

Use a custom timeframe generator script (included in MT4 by default), dont be afraid of trying new things like 8 minutes time frame or 45 minutes (you get the idea), always put the conditions in your favor, specially the way the data its shown to you in a chart !!
  • #7
  • Edited 10:52am May 13, 2019 10:37am | Edited 10:52am
Quoting Emerald2112
{quote} Whats your conditions
The conditions that, when they show, are telling me to place a trade because there its a huge probability that the price will move in the expected direction

What people like to call "rules" that they expect to give you an "edge" with a degree of certainty better than a random result =)

EDIT: i dont want to sound like an ass but my rules are well defined and i talked a little about them in the past; if you want you can read about it but i dont want to derail this thread
  • #8
  • May 15, 2019 10:25am May 15, 2019 10:25am
Thank you dkrock and havo for your valuable input!

In my case, 5m would be the higher timeframe which I use to determine the general direction. And 1m would be my entry timeframe to which I apply setups.
  • #9
  • Last Post: May 30, 2019 12:36am May 30, 2019 12:36am
This is how i do it folks,

I WOULD SUGGEST YOU OPEN A PRACTICE ACCOUNT FOR AWHILE, AND GET THE FEEL FOR IT ALL,

the charts should be 5 or 15 min only

Attached File(s)
File Type: ex4 Fibo_D_W_M_Y_v1.1.ex4   37 KB | 324 downloads

Stochastic's
14/5/3 buy sell triggers,
85/1/1 is the direction/bullish/bearish ??
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