Scalping is a rip off

Scalping is a rip off

30 January 2016, 15:36
Andrea Ferrari

Why Not to Trust scalping expert advisors you find online

I would like to underline the following consideration about scalping expert advisors. It is usual to see exponential growing equity charts as a result of a scalping expert advisor and probably I am lead to think that the backtest has really been run; although the backtest has been run, they probably did not take into consideration spread and slippage.

The first one is the difference between bid and ask prices that can be a mess for a scalping expert advisor, because operations are so frequent that they do not earn enough to cover the spread. Here an example of bid-ask spread. In this case the spread is not fixed and change daily.

The light blue line is the average spread level.

Furthermore we have to take into consideration the imperfections of the market, first of all slippage. Slippage is a range of prices you are accepting when trying to buy or sell a future or any kind of stock. For example if you are going to buy a oz of gold for 1100$, you can set the slippage of 30 points, that is 3 pips and accept a buy order of 1100.3$. It is quite common not to be able to buy exactly the price tou will. Same for sell. This imperfection is not much inportant for a day trader or a long term trader, but is really important for scalping.

Thus I think that almost the whole expert advisors you find in the web promising you to earn 300% in a month easily, do not take into account spread and slippage.

Trust me, they can turn a highly profitable backtest in a complete waste of time and money, so pay attention

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