The Protector strategy for futures trading

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A scalping strategy for options

The format of scalping on options is a fairly common way of making a profit in this area of the market. The speed of trading and its high profitability results are the main factors that attract people to this method of trading. Today we will consider the effectiveness of high-speed trading, as well as a few practical examples of scalping strategies for futures contracts that could become highly effective tools for predicting the market using short-term contracts.

How reliable is the scalping strategy for options?

The question of reliability and effectiveness of this strategy for scalping on the market is primarily related to the effectiveness of the trading signals of the system, as well as the correct risk management. In addition, the reliability of this scalping strategy is tied to the professional level of the trading terminal and the parameters of the trading conditions that are available on the operator’s platform. By picking the right technical and trading parameters for the scalping strategy you can get fairly stable and high results using this trading format. Here are a set of recommendations that contribute to the effectiveness of scalping on options:

• Use platforms for trading from professional companies — in this regard, we recommend the terminal for futures trading from the our brokers rating, where you will find all the necessary technical indicators for scalping, as well as a set of highly effective forecasting tools
• Carefully and accurately calculate the risks when registering trading positions. The correct ratio of the cost of the trade to the volume of capital will help you avoid critical losses and drawdown in your account
• To conduct trading in scalping mode, use a system with an efficiency level of at least 85% and maximum universality for all underlying assets

This list of recommendations will allow you to engage in high-frequency trading in a safe and profitable mode.

Scalping indicators for options

Market professionals recommend using technical indicators that are capable of generating signals on fast impulse changes in the price of an asset as forecast indicators for scalping trades on the futures market. In this case, the main trend indicators work perfectly, and they can be found on the many platforms:

This set of forecasting tools will allow you to build universal strategies for scalping on electronic options.

A scalping strategy for futures trades – practice

For our first practical example of a strategy for scalping on the financial market, we will show a system that uses a combination of settings of two trend indicators. This format of generating technical signals allows you to best assess the current market situation on the asset chart and opens up the possibility of determining the points of price quotes where the chart reverses to build corrections or new trends. So, let’s set the following technical forecasting tools on the asset quotes:

• EMA Indicators with technical parameters 10, 20, 30
• 2 MACD indicators — 50/75/9 and the standard configuration

We will use turbo trades with an expiration period of 120 to 240 seconds, and we will register the positions when we receive the following signals from the indicators:

• EMA Indicators – a beam of movings reverses upwards on the chart after convergence in one point
• Indicator MACD 50/75/9 – the lines intersect upwards
• Standard MACD – the movings intersect level 0 upwards

Signals for trades DOWN will have the reverse building configuration. This scalping strategy format has a technical signal efficiency ratio of 90% and allows you to make the most stable earnings for short-term trading. It should be noted that the risk management parameters for this system are of the classic parameters – the maximum amount of trading funds for one trade should not exceed 3% of the total amount of capital.

Scalping in 1 minute

The next scalping strategy format for electronic options is designed to work with contracts that have the minimum expiration period of 1 minute. Here, trend indicators are also used with subtle settings parameters, allowing for the formation of two types of trading signals for turbo contracts. In this way, we will achieve high cyclicity of our technical signals and increase profit opportunities for scalping since this operating approach makes it possible to register contract packages. So, let’s install the following instruments on the trading chart:

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• SMA 5 and 10 indicators — we use blue for the moving with a five-minute period of building, for the second technical tool we use the standard coloring.
• MACD indicator – standard

To register trades UP with expirations of 1 minute, we use the following types of technical indicator signals:

Signal for the 1st type:

• The technical movings of the MACD indicator intersect upwards
• The blue lines of the SMA indicator intersect the second moving upwards

Signal for the 2nd type:

• The MACD oscillator lines intersect level 0 upwards
• The SMA indicator movings diverge upwards on the chart without intersecting

Using these signals, you can register up to 40 trades with short-term options in one hour, of which 90% will close with a profitable result. This factor will make it possible for you to earn up to 300% per week on options scalping.

Let’s sum up — scalping with futures trades using the correct mode of risk management and in combination with an effective trading system is the most rapid way to increase your account balance.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

Grid Strategies

Grid Trading is when a trader keeps opening positions at some predefined levels even if the market goes against him or in his favor. This is done to catch all the moves and make profit from any Price movement. It’s either the price goes up or down the trader will make money anyway. Most of the times this is a well predetermined action at exact levels from entry point in both direction – up and down.

In order to make it simpler let’s illustrate it using some real data chart. Let’s assume we have a grid size of 30 pips between levels. As soon as first buy order is open and the price goes below for at least 30 pips we will enter another buy order #2. Again if the price goes 30 pips below we open Buy Order #3, and then another Buy Order #4.

Then price starts to raise up and there is no need to open new orders. As soon as price touched Buy #2 Level we close all positions. At this point we have the following profit for each order individually:

B#1 -30 pips,
B#2 BreakEven,
B#3 +30 pips
B#4 +60 pips.
Total Profit: +60 pips.

The same strategy apply for SELL orders and if managed properly it is a very powerful and easy to follow strategy.

The above example uses same lot size for each Buy Order. You might say it could take some time for it to reach the Take Profit Level, and we agree on this. But let’s assume we increase the lot size by 1.7 each time we open new order, this way as soon as there is a small retracement we can close all orders much faster and with a good profit as well. For example we will start with 1.0 Lots:

Buy#1 : 1.0 Lots
Buy#2 : 1.7 Lots
Buy#3 : 2.89 Lots
Buy#4 : 4.91 Lots

Let’s assume each pip is worth $10, and we close all orders 5 pips above Buy#3 Level. The Final Result will be like this on chart :

And the profit for each individual order will be:
Buy#1 : 1.0 * (-55 pips)*$10 = -$550
Buy#2 : 1.7 * (-25 pips)*$10 = -$420
Buy#3 : 2.89 * (+ 5 pips)*$10 = +$144
Buy#4 : 4.91 * (+35 pips)*$10 = +$1718
Total Profit: +$892

As you can see the orders can be closed much faster and we can keep opening new orders for new profits without waiting for the price to retrace to our predefined level.

Increasing Lot Sizes for each new order is dangerous, but if managed properly and with a limit of max 5-7 trades will give you enough room to have proper profitable outcome, especially when we know what is the potential maximum range the price could go during a week or couple of days using past data.

Grid Trading is more a statistical and mathematical strategy applied to future price movements. Since the price movement is somehow predefined, it will be easy to create a potential profitable scenario with proper risk management. This strategy does not really pay attention to the news events or other most of the indicators of fundamental trading.

In order to increase the change of success , trade lot sizes are being multiplied by a factor, most of the times 1.5 – 2 – 2.5, to make sure that as soon as price retraces it will close faster the trades.

Since the markets are very manipulative and controlled by big bangs this kind of strategy could provide better results with less efforts. This strategy takes advantage of any natural or artificial movement of the price. As soon as price moves profit will be made.

Disadvantages:

If there are too many open orders against the price, it could margin-out the account or close all trades in a very big loss. But with proper Money Management and Improvements of the time and number of maximum orders this could be avoided.

The biggest concern and challenge for a Grid Trader is the psychological ability to deal with loses and the time when you need to close your negative trades. With our new EA we took care of that and made sure it is not so painful to deal with them. We made sure there is an accepted level of loss we can take and as soon as we reach it we close all of the trades in negative and start again. Even if it is hard but as soon as you go through 3-4 loses like that you start to understand that this is part of the game and if we expect a profitable result we need to make sure we expect these loses as well which are part of the strategy. And believe it or not this is one of the most important aspect of this strategy. If you can’t handle a loss then there is no need to trade it. This psychological aspect comes together with proper money management. The most common mistake is that there is no enough money for the open positions, and in order to avoid that there should be a maximum number of positions allowed and a maximum level we can take with our settings.

Our Experience

For more than 5 years we tested a lot of grid trading strategies on both real and demo accounts, and FINALLY after we saw what we lack, we developed our own strategy and EA to make sure it works exactly as we will following Grid Forex Strategy. We designed a stable and consistent EA that makes the exact same steps we will do manually. The advantage is that we can apply it to as many charts we want and with very flexible settings to keep experimenting.

Also simpler the strategy is, better are the results. At one time we had around 20 filters for our trades, but as soon as we made it very simple to 3-4 main filters it provided much better results.

Some analyses could help. Even if you like or not some analyses could improve your results. For example if there is a very big event like elections, Non-Farm Payroll, rate change, sometimes it is better to turn off the EA and put it back when the market comes back to its track.
The biggest challenge for us was to watch as our account goes down when we have multiple orders open, but as long as we have our strategy in plan we just follow it and know where this exact level is and can properly get ready for it.

Money Management for Grid Trading Strategies

For Grid Trading Strategies Money management is a critical point. Did you know that most of the trades which are using grid strategies have margin calls because of the bad money management? This is possible only if you will allow your strategy to risk more than 30% of your account – which is one way or another a lot. Our strategy and automated EA will not allow to risk more than 2%-5% of the account if set up properly. This is while we have an average 1% return per day or even more if taking in account the direction of trend and market situation.

We do not recommend you to risk per pair more than 5% of your account – the best is 2%. This is for those who like to trade conservative. If you want to take more risk go for 10% per pair, but not more. The golden rule is to risk less as your account grows. So for example on smaller accounts like $1,000 we can risk up to 10%, on accounts like $10,000 we will go for at most 5%, and on bigger than $100,000 not more than 2% tops.

How it works? Very simple – as soon as you reach 2% in minus for open positions in some direction, close the trades right away. So for a $10,000 account, if the open positions for any direction on a currency pair have around $200 in loss we close the position. In the same time we compute the numbers in such a way that we will not have open orders more than 5-7 and that our grid size is at least 1/5th of the average weekly move for the pair. You need to know at any point how far you are ready to go with your grid levels. What is the maximum nr of orders you can have open and what is the maximum loss you can handle.

Which currency pair to trade using Grid Strategy?

We are open all the time to new experiments for most of the currency pairs. But if you need an exact list we can tell you that the best pairs for Grid Strategy are the one which are ranging most of the time and the trending range without proper retracement is not bigger than 7 times your Grid Size. This rule can be applied to any timeframe as well. For example on M1 chart you can use GridSize of 5 pips and trade it during nights, or use a GridSize of 10 and trade during days. It is all about statistics.

How to Improve Grid Trading Results?

  • Use EMA Confirmation and open trades only when the market is trending or ranging, e.a. it is above some Moving Average or very close to it.
  • Open trades at a minimum of X min time difference. For example we open at most one trade during 2 hours of time after last order. This is very useful during news time and spikes. Even if we lose some potential money we know for sure we avoided a huge loss if we were wrong.
  • Don’t allow your strategy to open more than a maximum X nr of trades against price. For example we will not open more then 5-7 orders which will go against us. Statistically over time this will give more loss then potential gain, since the loss increases exponentially as there are more open trades, but profit increases linearly.
  • Instead of Increasing orders by a big number (above 2-3) try to increase each new lot number with 1.6-1.9 ratio and also increase the TakeProfit Level for all of your trades. Over long term this will provide better results and give you less risk over general strategy results.

Conclusion

In general Grid Trading can be considered as Counter Trend strategy, but when you look closer and apply proper Money Management you can trade it in the same direction as Trend and when Market is ranging. Follow your Money Management plan. Grid Strategies do not blow accounts, traders with bad money management do.

Forex Grid Trading is a popular strategy between traders because it can be automated with fixed rules and offer an easy strategy to follow at any time. Using this strategy is simple, but there should be pointed out that for best performance it is good to understand the basic market movements and trend directions in order to avoid taking out too much risk.

This is not a Holy Grail strategy or a magical system, but a steady and very statistical trading method which proved to be very efficient for a lot of traders around the world. This has its own specific approach and in the same time unique challenges, but as soon as traders overcome them, they start to see the profits in their accounts.

4 Comments » for Grid Strategies

Can you set this up for me on a vpn and make sure that all the setting are correct and set to conservative settings? and is there a trade time feature?

Hi Kevin
yes – we can set it on a VPS account for you with conservative settings.
it will cost $97 extra and will take 1-2 days
We sent you an email with details

can you tell me which lot size i can start with it on my account
my account 2500$
thank you

Start with 0.01 Lots. Try to open one manual trade with this lot size, if it fails try to place it at smallest Lot Size. One way or another you should set your BuyCloseALLInLossMoney/SellCloseALLInLossMoney to be not more than 2% then your account and go for at least 4-5 trades in one direction.
Or you could try using a mini/micro account and put at most $50 per BuyCloseALLInLossMoney/SellCloseALLInLossMoney. and start there as well with smallest lot possible then increase to your proper risks.

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The “Baedeker” effective options trading system

When analyzing professional recommendations and the operating principles of the main strategies, you can notice the following pattern – everyone without exception mentions the ineffectiveness of analyzing the smallest chart time frames, while many specialists suggest options scalping on a minimal expiration range. Two incompatible things – analysis of an extended market period and trading contracts with very small expirations from 1 to 5 minutes! In our material, we will suggest breaking these templates and we’ll present the effective Baedeker strategy for assessing and analyzing minimal market periods with forecast efficiency of 85% for profitable contracts. This technical approach is based on standard indicators and allows you to earn on the market movements of any trading asset.

Operating principle of the system

The technical operating algorithm of the strategy is based on a combination of highly professional indicators. In principle, it uses quite standard analytical tools with clear and proven settings. For this reason, you can use the system on any options trading platform that offers a set of trend indicators. We recommend the platform from our rating as the main trading service for efficient trading on this system. You will get all the tools necessary for forming the system template and you will be able to carry out your trading under the best financial and technical conditions.

You will need to make the following adjustments to the operating chart in order to work effectively on the system: set the quote time frame to S15 (in this mode, one price candle is formed on the chart after 15 seconds), then apply the following analysis tools to the liquidity of the asset:

• The Bollinger Bands with the minimum channel building range of 10/1. In this mode, we will immediately get 3 moving averages capable of displaying market trends for the current time period in several projections.

• The SMA with a market evaluation duration of 120. Such a moving average period is necessary in order to obtain information for a wide range of market fluctuations. In addition, in conjunction with the channel indicator, this service will generate signals for the direct registration of trades

• The RSI – set the period to 75 so that we can track the overall medium-term trend of quote fluctuations and adjust the strategy for different market conditions

After completing the configuration of the trading chart, we get the following form of technical markup:

System signals

CALL trades are registered upon receiving system signals of the following type:

• On the trend RSI, the moving indicates a steady upward trend in market movement

• The narrow-band price channel intersects the level of the medium-term SMA with upward dynamics

The trade is opened when the combination of strategy signals is fully formed:

PUT trades are registered upon receiving system signals of the following type:

• On the trend RSI, the moving indicates a steady downward trend in market movement

• The narrow-band price channel intersects the level of the medium-term SMA with downward dynamics

The trade is opened when the combination of strategy signals is fully formed:

As you can see, the system signals have a very simple format. But at the same time, it is possible to effectively evaluate the minimal time frames of the asset chart and get great trading results in the process of trading.

Expiration

In order to obtain a high level of effectiveness when using the strategy, and to steadily increase your profits, use contracts for trading on this strategy with expirations from 180 to 300 seconds. Thus, you will be able to effectively work out trading forecasts on the strategy under dynamic trading conditions.

Money management

Frequency trading of contracts with minimal expirations is characterized by a high risk level. Therefore, in order to ensure that losses do not destroy your investment capital, and profit growth is dynamic and stable, use contracts for your trading operations with a cost level of no more than 3% of the amount of available trading funds.

“General Risk Warning: Binary options and cryptocurrency trading carry a high level of risk and can result in the loss of all your funds.”

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