Prices to the uninitiated tend to look random but although variabilities happen there are predictable things that will always happen such as the oscillation of price. By how far no one knows, for example, price might rally sharply and keep on rallying just after which you see a sell signal on your oscillator. But we know one thing, price cant keep on rising with at least pulling back a little before rallying further. So, as this is always happening so are recent highs and lows being broken. And it is this little fact that ZZ Scalper takes advantage of.
How does ZZ Scalper work?
ZZ Scalper works by placing pending orders at the most recent highs and lows with the goal of scalping small but consistent profits time and time again. It uses stop loss and trailing stop in such a way so as to capture consistent profits every time price breaks through these recent highs and lows.
Here we see an example of ZZ Scalper in action when at 19:00 it places a pending sellstop at the lowest low which occured at 15:00 4 bars earlier. This lowest low is at price 0.90154. Later on, we see a breakout occurs at 10:00 where price passes through this level. Here we open our order with a stop loss set at 10 pips and trailing stop set at 2 pips as price moves more into our favour we see the trailing stop locks in profit.
Just to show you exactly what typically happens here a close up of the price on a 5m chart. It will have scalped a small chunk of profit from this move.
The question is does price hit our trailing stop level in profit more times than hitting the stop loss and hence give positive PFR over the longterm? I can show you backtest after backtest of randomly picked sections of market prices and it will show positive. As can be demonstrated from demo here :
MT4 Version https://www.mql5.com/en/market/product/22082
MT5 Version https://www.mql5.com/en/market/product/41175
Free MT4 Version https://www.mql5.com/en/market/product/31538
Free MT5 Version https://www.mql5.com/en/market/product/41241
But we still have to make sure it gets around a few other problems before we can say yes this system is truly profitable live.
Problems to overcome
You see there is one thing against it, and that is whether or not your pending order gets taken at the price you placed it at on the most recent high or low. This is because of various things that might get you in late which spoil the system. So we must do all we can to make sure it gets in at the agreed price. There will be many other traders also trading these highs and lows so with this we need to be aware of the following vital points that are in the way of us.
These are as follows :
Slippage
Make sure slippage stays at the default position of 10 making sure it doesn't place the pending order if the price is 10 points above or below the agreed price.
Execution Speed
By pressing the execution button on panel we can see if the broker has an execution speed less than 150ms. If so the panel will so good if more than 150 ms you need to
Spread
Make sure the market is high liquidity. These being the major currency pairs. These types of markets have low spread.
Stop Level
This must be 0.0
This might seem confusing and off-putting but before you run away, its simply a matter of finding the right Broker and VPS. I will provide an attachment with the demo and main product that explains each of these factors in more detail. But here is a rundown of recommended brokers :
Pepperstone Razor Edge
IC Markets
FXCM
Octa ECN
Roboforex
Alongside using MQL5 VPS
