FX scalpers: what’s your measure?

I have been using the last three weeks or so to trial my momentum-based algorithm during the European and US market time zone. This period may not have been the best four-week slot to be running such a trial given the markets stuttering around Brexit issues and the US Election but this is how it is. I’ve encountered a few issues that I have needed to address but one that stands out for me is how to measure success of this trial period and, hence, this post and question. Please read on and I hope you might contribute.

It is easier for me to use the expression ‘scalping’ rather than ‘short-term trading’ all the time but please forgive me if that term offends you. Essentially though, despite what I like to believe, is a scientific approach to applying my algorithm to short term time frame trading, I’m essentially ‘scalping’. Call a spade a spade!

My question is ‘how do you determine profit targets for FX scalping‘? 

Do you:

  1. set a prescribed number of pips? If so, what number? I ask this as if I set just a humble ’10’ pips as my profit on each trade during my trial period then I would essentially have a 100% success rate!
  2. set a specific target: do you work out a target based on specific S/R levels pertinent to the pair being traded? For example, may people would be setting 80 as their targets on any current A/J LONG trades as this is long-term S/R for this pair.
  3. have a prescribed exit strategy: For example, do you wait for a certain EMA crossover or some other technical signal?

I’m hoping to receive some feedback to my question and I will share the tally for each of 1,2 and 3 above if sufficient numbers reply.

Thank you!

17 thoughts on “FX scalpers: what’s your measure?

  1. I guess i did not really address the question properly. If i am scalping i will use fractals, and trendlines for exits

  2. When I scalp I look for a modest 1 pip an hour kind of like how a job pays. My trade size is always 500K. It is not run of the mill.

  3. When I scalp the r/r is pretty dire.Normally 1 to 2(risk 2 pips risk for 1 gain)but the success rate is normally around 80%.I have tried various techniques but this is the best my brain could come up with.I would be very interested to know your results.Cheers

    • Hi Mack,

      I agree that simple always works best.

      The idea of risking more than gained might seem strange to some but scalping is a very different strategy so can see some justification here.

      Thanks for the input.

      Will collate replies over the w/e.

      Cheers,

      Mary

  4. Dear Mary,

    With regard to your questions, here are my answers.

    1. Do I set a prescribed number of pips? Yes. If I cannot see myself collect at least 10 (but probably no more than 20), I do not bother launching a trade.
    2. Do I set a specific target? Yes. Usually I see a chart formation that I like and I want my trade to following that formation or else I get out immediately. The formation could be something as simple as a channel or something a bit more complex, like watching to see how and when the EUR/GBP crosses down through 0.8900.
    3. Do I have a prescribed exit strategy? Yes. When entering the trade, I always set a “take profit” command up. That “profit” is based on my assessment of what kind of uncontrolled near-term media events are scheduled (like Dr. Draghi giving a press conference or the first Friday of the month’s “Non-Farm Payrolls” announcement in the US) and/or what kind of chart configuration lured me into launching the trade in the first place.

    Hope this helps. By the way, I have been trading for 50 years.

    Ciao,

    Solange

    • Hi Solange,

      Thanks for the detailed reply.

      This is most helpful and most appreciated, especially coming from one with time proven experience.

      As I mentioned to Peter just now, I do think I was being too ambitious!

      I’ll collate all the replies over the w/e.

      Thanks again.

      Mary

  5. best set a modest target. say 30 pips but get to breakeven after 10 pips. target will depend on pair.
    exit using heiken ashi as soon as the trend changes. get back in on the reversal later.
    short term is just that. fifty pips is too large a target for most 15min pairs unless there is a definite trend

    • Hi Peter,

      Thanks for that input.

      I’m starting to see my targets may have been too ambitious for my time frame!

      Cheers,
      Mary

  6. If you use your blue box to define the risk (1R) then try to get as many R’s as possible. I’ve found the sweet spot is approx +1.5R for this style of trading (W%~55%).

    1. Old highs and lows are obvious targets if the RR is acceptable. You can use limit orders to exit at these levels if you’re not watching.
    2. Get to break even at +1R.
    3. If you’re trading in the same direction as your 4H and short term daily trend then let them get bigger >2R.
    4. If you’re trading against your 4H then grab smaller chunks (anywhere from +1R to +1.5R). You may like to grab a pip target if you prefer when trading against the 4H trend. Any pip target should be based on the daily ATR value and where your trade starts in relation to this projection (and of course any prior swing highs/lows that are in the way).

  7. hi mary, i did some testing, scalping the 1 hour charts with a currency strength indicator.
    I am happy to give you the results, seems a two edged sword, eitrher have many small profits of 1R or 1.5 R, or let them run and then eventually you will get a long run to pay for small losses, the thing is , with the long run, you have to be at the screen virtually all the time.

    regards Robin

    • Thanks Robin,

      Yes…agree….it is a choice or balance between setting small profit targets or sitting at the screen long term.

      I’ll add this to the mix and post over the w/e.

      Thank you!

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