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‘?
- 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!
- 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.
- 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.