Do Forex Scalping Expert Advisors Work in All Markets?

It seems even the experts can misjudge the market and make, what is in hindsight, poor choices. The strategy of using scalping expert advisor software had been a popular trading technique, but many now are questioning its efficacy. Should you scalp forex using a scalping expert advisor? What are the pros and cons?

A Forex scalping system is a supercharged, ultra-fast trading strategy in which investors enter and exit the market for minutes at a time. Quick trades are the rule when you scalp forex. The goal is to enter, make a fast trade, and exit with a small profit that covers the spread and little more.

To be considered forex scalping, profits do not exceed over three times the spread. Scalpers move weave in and out of the market for minutes, or even seconds. By doing this several times a day, they hope their forex scalping system results in many small profits that accumulate into solid gains in the long-term.

Forex scalping is difficult for a few reasons, not the least of which is that it is hard to find a broker through which you can successfully complete these very quick trades. Even if allowed by the brokerage house, there may be a slight time delay before trades can be executed. While seconds do not matter to most other investors, it can mean significant loss of profit for a forex scalper. Time is of the essence here.

Finding a broker who allows forex scalping so you can work with your expert advisor program to buy and sell quickly is only half the battle. The other half is finding an effective EA.

EAs (expert advisors) are Forex robots that can be programmed to buy and sell automatically based on your parameters. A problem with expert advisors in relation to scalping is that some indicators have a time lag. Forex scalping depends on making rapid moves and pouncing on new trends. Lagging indicators, such as those that measure moving averages, are not effective in this type of trading when markets are choppy.

During relatively calm periods in the market, even lagging indicators can be used with success by scalpers because trends are moving more slowly. Stable markets may prevail for long periods, even years, which gives forex scalpers a reasonable expectation of making profits with this method. Scalping with expert advisor programs certainly looks like a solid, reliable system during these smooth markets.

But what goes up must come down, and vice versa. Calm markets give way to tumultuous ones, making lagging indicators irrelevant because they measure trends over a longer period of time. While smooth markets can last for years, it is inevitable that they will experience volatility at some point. During these times, it is better to use Bollinger bands, a system designed for more unstable markets. Bollinger bands and other indicators that are based on factors other than long-term movement are more appropriate for these types of situations, and should be considered by your forex scalping system.

Even if you have found success with forex scalping during stable markets, you may want to rethink your strategies and EA for volatile markets. Make sure that your forex scalping expert advisor software uses measures other than lagging indicators.

Learn more about Forex Robots and gain access to the best Forex Training available.