Strategy Overview The idea behind this scalping strategy is to forex averaging down method the short wave retracements that take place when the market reaches a peak overbought or oversold state. It is a low yielding strategy. That means the profits are not huge but they are consistent when the system is correctly applied. However, it can be adapted to work at higher timescales if you choose.
A key element of this strategy is that it spreads risk across a number of trades to create a scalp sequence. This averaging out is essential in restricting drawdowns and creating incremental profits. Unlike other scalping systems, trades are allowed to drawdown. Many scalping system abandon a trade as soon as it enters a loss. However because the exposure is spread among multiple trades the impact of drawdown on the account’s balance is limited.
Because of the need to allow trades to enter a loss, it is not advisable to use this method with aggressive leverage. That is, there is never more than one lot of exposure at any time. Typically, the exposure is spread over 100 trades. However, with the entry signal I use there are rarely more than 10 trades open at once. It averages around 5 trades per day and the average total profit is 25.
You can adjust the setup for more risk or less risk as required. Entry Signal I use a combined entry signal that detects high probability turning points. To do this I use a combination of the Bollinger band lines and by examining the price action at each bar. Two conditions have to be met to trigger a market entry. The first condition is that the price has to be at an extremity marked as one of the outer Bollinger band lines.