Quick question I want your opinion on. Where do you think the limitations for fast programs are bounded for the retail forex market. For instance, lets say that you have a program which has a take profit at X number of pips and an equal distance take loss at Y number of pips. Lets say the program hits the X more than 50% of occurrences. Where do you guys think the minimal effective values for this trade begin to come into play for a close spread set such as the EUR/USD? - 50Pip, 30Pip, 15Pip, 10pip, 5pip?
IMO, the optimum for liquid stuff is 6-8 pips or ticks. It can't be much bigger... Because you have to do volume when scalping... And rake up XXX pips on sideways days... Maybe 80% of which you give up on big move days... And end up keeping 20% in long run. If it's smaller you are too close to Algo Bots around BBO. This is a real Black Art... The typical 1.5 pip spread in EUR/USD may be too small... A spread of, say, 2.5 pips or ticks makes a HUGE difference... And pure mechanical is not enough... You need an experienced Pro actively managing this.
IMO, very solid mechanical can be marginally profitable... But the nature of Market Making and Scalping is: (1) Sideways days you rack up large positive ticks. (2) Big moves cost you ticks. So it's all about managing the big moves... Big moves on news often take 5-10 minutes... Like a $1.00 to $3.00 move in Crude these days... An experienced trader with a news + squawk service... Who can evaluate a move in 30-60 seconds... Will have a massive advantage over a mechanical system. Remember, this is all about running a profitable long term business... Not about making $2,000/month and surviving.
I just rack the scenario, say 1M in a retail fx account, wondering how fast you'll be able to execuite 10-30 lot trades. Thanks for the comments guys.