Scalping Reality - Can 5Pip TP Work In Real World

I have been doing a lot of work on an EA to scalp the EU with a TP of 5 pips with an anticipated spread 2 pips giving me a net 3 pips per trade. SL is 7 pips.

I have never traded live, I am a professional programmer, and have an undying belief that the right EA strategy can win with a win/BE rate of 75-80%.

My test results are positive in a perfect world. But before going live, I would like to validate that this set of design factors can work in the real world.

I am using the M1 with the Trix Unity indie, and some proprietary indies based on Better Volume, Mtf Stoch, and FX Snipers famous triple ema Ergodic CCI. Trading only occurs from 1 hour before session open to 2 hours after session open on the Frankfurt, London, and NY.

Fundamental to my scalp strategy is to go to break even when I reach 4 pips profit to cover the spread of 2 pips

So the question is, am I smoking dope to think that I can actually end up with a pip or two or three when considering broker stop hunting, and slippage?????

Be kind if I an delusional on this. Any sharing of experience would be helpful. Thanks in advance.

Hi,
just a quick calculation with your figures:
3 pips profit against 7 pips loss, really bad RRR setup. In case the win percentage of your strategy will be 70% (which is very good), you will end up with no loss/no profit result at the end of the day. Consider these facts before you start and do not forget that spreads can vary when trading live according to which type of broker you will choose to trade with (this is hardly a part of your backtests).

Hope you will be succesfull!

Oscar

It would definitely benefit you to lose the mt4 broker so you lose the 'what-if's' of the non-ecn world. Find a broker with liquidity and code to their api, as most offer solutions. I don't automate (but have) and used interactive brokers with only moderate issues. 2 pip spread on EU is pretty pathetic even in quiet asian session. Can't remember last time I got slippage on EU, as it generally holds to .00005 - as liquid as ES feels like.
Then I would suggest forward testing live with a sim account, if you can, to obviously strike out any issues with the API and to see if your results are holding true or if you curve fitted a bit too much to your data.
I don't know what those indicators are, but if you can't recode the indicators you mentioned, you probably shouldnt be using them

The indies are mine except for the Trix. Thank your for your input.

KH

Thanks for you input. Yup you are right on the RR. With my strategy, it is rare that I do not make it to 4 pips profit which is where I lock in my spread coverage + 2 pips with a stoploss move. From what I have been reading, in live trading, I should be able to get spreads closer to 1 pip.

Thanks again,

KH

Instead of having a TP, have something set up to just let good trades run.

That way you'll the the occational larger win and it will help with your RR and equity curve.

Maybe a tight trailing stop, or just locking in what would normally be your TP.

But, ya you are kind of smoking something. Even with a 1 pip spread your going to get killed.

Scalping for little pips ( and consistently making money with it) is actually quite a lot harder to do than shorter term trading going for 50-a couple hundred pips in a day.

I've tried many different variations of scalping for small pips. Last one I tried was a version of the cobra/trix stuff. Tried it with his recommended 50 pip stop and with a tighter 10 pip stop.

Niether worked out well. The 50 pip stop had days where I would make 100 pips and then give it back in a couple of trade. The 10 pips stop would get hit more than 50% of the time getting stopped out often by just few pippettes and then going to TP.

Other than cobra I havn't run across any serious traders who claim to have been doing it for years and making consistent money.

KumoDragon is absolutely right, let the profit run otherwise you don't have any chances, and if you basing on historic data and your system shows 75-80%rate then I am 90% sure that in real trading it will be actually around 30% because of the issues which are to complicated to describe in just short post, but usually those systems don't work in real market conditions if they show such a high rate. If they will then basically making 2-1 proportions TP/SL and letting your profits run to occasionally let them hit 10R will make you millionaire shortly.

You're not delusional, but your strategy needs some tweeking. I, and a lot of people I know can scalp pretty reliably.

However, a few things I think might help:

- 2 pip spread is MADNESS for scalping, absolutely won't work. You can find good brokers like FXDD or LCG (London Capital Group) that'll have <1 pip spreads.
- Your R:R ratio is whack. I trade manually, not an EA, but my stop loss is usually 3-4 pips to include spread, and i hold it until I see signs of reversing.


Scalping is great, if you do it correctly!

I hope it works out for you!