how to build a +scalping strategy using adaptrade

How to Build a +Scalping Strategy Using Adaptrade: 5 Proven Tactics

How to Build a +Scalping Strategy Using Adaptrade?

Scalping is a trading strategy that involves opening and closing positions within a short time frame, typically seconds to minutes. The primary objective is to profit from small price differentials that occur due to market inefficiencies or temporary imbalances in supply and demand. Scalping requires precision timing and execution, as well as a reliable trading platform and software.

Adaptrade is a software company that offers innovative tools for active traders. One of their products is Adaptrade Builder, an advanced yet user-friendly trading strategy generator. Builder can discover, code, and test thousands of unique and complete trading strategies in minutes for stocks, futures, forex, ETFs, and other markets on time intervals from tick bars to monthly bars.

Builder uses artificial intelligence (AI) to evolve your strategy while you watch. You can also customize the results by specifying the types of trading orders, indicators, entry and exit conditions, risk management methods, and other options.

In this article, we will show you how to build a +scalping strategy using Adaptrade Builder in five proven tactics. We will use the example of scalping the EUR/USD currency pair on a one-minute chart, but you can apply the same principles to any market and time frame.

Tactic 1: Define Your Performance Criteria

The first step is to define your performance criteria for your scalping strategy. This includes the minimum and maximum values for the following metrics:

  • Net profit: The total profit or loss after deducting commissions and slippage.
  • Profit factor: The ratio of gross profit to gross loss.
  • Drawdown: The maximum peak-to-valley decline in equity.
  • Average bars in trades: The average number of bars (minutes in our case) that a trade lasts.
  • Number of trades: The total number of trades taken by the strategy.

You can enter these values in the Performance tab of Adaptrade Builder. For example, you can set the minimum net profit to $500, the minimum profit factor to 1.5, the maximum drawdown to 10%, the maximum average bars in trades to 5, and the minimum number of trades to 100. These values will ensure that your strategy is profitable, consistent, resilient, and frequent.

Tactic 2: Select Your Indicators and Inputs

The next step is to select your indicators and inputs for your scalping strategy. Indicators are mathematical formulas that transform price data into signals that can be used for entry and exit decisions. Inputs are the parameters that control the behavior of the indicators.

You can choose from a wide range of indicators in Adaptrade Builder, such as moving averages, oscillators, trend lines, volatility measures, and more. You can also specify the range of values for each input that you want Builder to consider.

For example, you can select the simple moving average (SMA) indicator and set the input range from 2 to 20 bars. This means that Builder will test different values of SMA within this range to find the optimal one for your strategy.

You can add as many indicators as you want, but keep in mind that adding more indicators does not necessarily improve your strategy. In fact, it may increase the risk of overfitting, which is when your strategy performs well on historical data but fails on new data.

To avoid overfitting, you should limit the number of indicators and inputs to the minimum necessary for your strategy.

Tactic 3: Set Your Entry and Exit Rules

The third step is to set your entry and exit rules for your scalping strategy. Entry rules are the conditions that trigger a buy or sell order when they are met. Exit rules are the conditions that close an open position when they are met.

You can set your entry and exit rules in the Strategy tab of Adaptrade Builder. You can use logical operators (AND, OR, NOT) and comparison operators (=, <>, >, <) to combine different indicators and inputs into complex expressions. For example, you can set an entry rule like this:

Buy when SMA(10) crosses above SMA(20) AND RSI(14) > 50

This means that you will buy when the 10-bar SMA crosses above the 20-bar SMA and the 14-bar RSI is above 50.

You can also set an exit rule like this:

Sell when SMA(10) crosses below SMA(20) OR RSI(14) < 40

This means that you will sell when the 10-bar SMA crosses below the 20-bar SMA or the 14-bar RSI is below 40.

You can also use stop-loss and take-profit orders to protect your position from adverse price movements or lock in profits. For example, you can set a stop-loss order at 10 pips below your entry price and a take-profit order at 20 pips above your entry price.

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Tactic 4: Optimize Your Position Sizing

The fourth step is to optimize your position sizing for your scalping strategy. Position sizing is the method of determining how many units of an asset to buy or sell per trade. Position sizing can have a significant impact on your trading performance and risk.

You can optimize your position sizing in the Money Management tab of Adaptrade Builder. You can choose from different methods, such as fixed size, fixed fraction, fixed risk, percent volatility, and more. You can also specify the maximum percentage of your account equity that you are willing to risk per trade.

For example, you can use the fixed fraction method and set the fraction to 2%. This means that you will risk 2% of your account equity on each trade. If your account equity is $10,000 and your stop-loss is 10 pips, then your position size will be 2 lots (assuming 1 pip = $10).

Tactic 5: Test Your Strategy on Out-of-Sample Data

The final step is to test your strategy on out-of-sample data. Out-of-sample data is the data that was not used for building or optimizing your strategy. Testing your strategy on out-of-sample data is a way to validate its robustness and reliability.

You can test your strategy on out-of-sample data in the Testing tab of Adaptrade Builder. You can specify the percentage of data that you want to reserve for out-of-sample testing. For example, you can set the out-of-sample percentage to 20%.

This means that Builder will use 80% of the data for building and optimizing your strategy and 20% of the data for testing it.

You can compare the performance metrics of your strategy on in-sample and out-of-sample data. Ideally, they should be similar or better on out-of-sample data. If they are significantly worse on out-of-sample data, then your strategy may be overfitted or curve-fitted to the in-sample data.

How does Adaptrade Builder work?

Adaptrade Builder is a software that can help you create trading strategies for various markets and time frames. It works by using artificial intelligence to find the best combination of indicators, rules, and parameters for your strategy.

You can customize the results by setting your performance criteria, choosing your indicators and inputs, setting your entry and exit rules, optimizing your position sizing, and testing your strategy on out-of-sample data.

You can also export your strategy code to your trading platform and start trading with it. For more information, you can visit their website or download a free trial.

Conclusion

Scalping is a challenging but rewarding trading style that requires a systematic approach and a powerful software. Adaptrade Builder is a tool that can help you build a scalping strategy in minutes using artificial intelligence and customization options.

By following the five tactics in this article, you can create a scalping strategy that meets your performance criteria, uses your preferred indicators and inputs, has clear entry and exit rules, optimizes your position sizing, and tests well on out-of-sample data. You can also export your strategy code to your trading platform and start trading with it.

If you want to learn more about Adaptrade Builder and how it can help you build better trading strategies, you can visit their website or download a free trial. Happy scalping!

Frequently Asked Questions

Here are some FAQs for “how to build a +scalping strategy using adaptrade”

  • Q: What is scalping and why is it a challenging trading style?

    A: Scalping is a trading strategy that involves opening and closing positions within a short time frame, typically seconds to minutes. The primary objective is to profit from small price differentials that occur due to market inefficiencies or temporary imbalances in supply and demand. Scalping requires precision timing and execution, as well as a reliable trading platform and software.

  • Q: What is Adaptrade Builder and how can it help me create a scalping strategy?

    A: Adaptrade Builder is a software that can help you create trading strategies for various markets and time frames, including scalping. It works by using artificial intelligence to find the best combination of indicators, rules, and parameters for your strategy.
    You can customize the results by setting your performance criteria, choosing your indicators and inputs, setting your entry and exit rules, optimizing your position sizing, and testing your strategy on out-of-sample data. You can also export your strategy code to your trading platform and start trading with it.

  • Q: How do I set my performance criteria for my scalping strategy?

    A: You can set your performance criteria for your scalping strategy in the Performance tab of Adaptrade Builder. This includes the minimum and maximum values for the following metrics: net profit, profit factor, drawdown, average bars in trades, and number of trades. These values will ensure that your strategy is profitable, consistent, resilient, and frequent.

  • Q: How do I select my indicators and inputs for my scalping strategy?

    A: You can select your indicators and inputs for your scalping strategy in the Indicators tab of Adaptrade Builder. You can choose from a wide range of indicators, such as moving averages, oscillators, trend lines, volatility measures, and more. You can also specify the range of values for each input that you want Builder to consider.
    For example, you can select the simple moving average (SMA) indicator and set the input range from 2 to 20 bars.

  • Q: How do I test my strategy on out-of-sample data?

    A: You can test your strategy on out-of-sample data in the Testing tab of Adaptrade Builder. You can specify the percentage of data that you want to reserve for out-of-sample testing. For example, you can set the out-of-sample percentage to 20%.
    This means that Builder will use 80% of the data for building and optimizing your strategy and 20% of the data for testing it. You can compare the performance metrics of your strategy on in-sample and out-of-sample data.
    Ideally, they should be similar or better on out-of-sample data. If they are significantly worse on out-of-sample data, then your strategy may be overfitted or curve-fitted to the in-sample data.

Disclaimer: The information and content provided in this article are for educational and informational purposes only. They do not constitute financial, investment, or trading advice and should not be construed as such. The author and Adaptrade are not responsible for any losses or damages that may arise from the use or misuse of the information and content in this article. Trading involves substantial risk of loss and is not suitable for all investors. You should carefully consider your objectives, financial situation, needs, and level of experience before engaging in any form of trading. You should never trade with money that you cannot afford to lose. You should also seek professional advice from an independent financial advisor if you have any doubts.

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