If you are looking to trade forex automatically, you might be considering a forex scalping robot. They can all of the hard work for you, from analysing currency pairs to placing and managing trades without you needing to lift a finger. This makes them a popular choice for those who might not have the time or skills require to trade forex manually. However, there are some important things that you need to consider before using a forex robot for scalping which I will cover in this guide.
What is forex scalping?
If you don’t know already, scalping the forex market involves taking frequent trades that target a few pips here and there. The goal is to try and gain enough pips to grow a trading account as quickly as possible. Some forex scalping strategies aim for a couple of pips and others will try for more depending on the current market conditions.
Forex scalping trades usually last just a few seconds to minutes. This means that they can be very dependent on broker conditions. When using any manual or automated forex scalping system, the tighter the spreads and lower the commission the better. We also need quick execution speeds as any small discrepancy in price can turn a winning scalping strategy into a losing one.
I would be looking to use an ECN forex broker for the best possible trading conditions for scalping. IC Markets are one of my top choices for manual and automated scalping strategies because they have plenty of liquidity which means we can get access to some of the best prices on the market with superior execution speeds at all times. They also have tight spreads, low fees, multiple funding options and excellent support.
What is a forex scalping robot?
A forex scalping robot is an automated trading software that can run in your trading platform and trade on your behalf. You simply load it to the charts and timeframes that you wish to trade, then the robot’s built-in algorithm will start looking for buy or sell signals. When it finds a valid setup according to the implemented scalping strategy, it will enter a position and manage it.
Forex scalping robots can place trades throughout the day on lower term chart time frames such as the 1-minute, 5-minute and 15-minute charts. They usually require low volatility market conditions when price is trading in a range. You will see many of them include volatility filters such as the average true range (ATR) to try and avoid trading when the forex market is volatile, which is nearly all the time.
Hence, many forex scalping robots trade a few hours after the NY close and prior to the Asian open, when the market is least volatile. This way, scalping robots can trade with a tight stop loss and try to take advantage of minor pop movements in price. Just keep in mind that forex brokers tend to increase spreads during less volatile market conditions when there is not enough liquidity. This can significantly eat into the profits of a forex scalping robot.
For example, let’s say a broker has a spread of 2 pips on the EUR/USD, charges 2 pip commission and has 1 pip slippage. If the scalping robot had a target of 5 pips, it would need to price to move 10 pips in its favour to reach this target. This can make it very difficult for some scalping robots to succeed.
On the other hand, let’s say the broker had a 1 pip EUR/USD spread, charged 1 pip commission and had zero slippage. The scalping bot would only need price to move 7 pips in its favour to gain the 5-pip target. This shows how important a good forex broker is when using scalping strategies.
How to use a forex scalping robot?
It is pretty straightforward to get started with forex scalping robots. Once you have made your choice, you just need to attach it to the relevant charts and timeframes in your trading platform. From there on, the robot will scan the markets and trade automatically. Some forex robots you can even set to semi-automated so that they will send you a signal alert and you can decide if you would like to take a trade or wait for the next opportunity to come along instead.
Most robot developers will provide you with the setup details along with default settings that they have already optimised. You can amend the settings according to your preferences if required and experiment with them. At the very least, you will want to check to make sure the lot or risk size is set to a suitable level depending on your risk preferences.
Keep in mind that you will probably need your trading platform up and running in order for a forex scalping robot to trade and manage any open positions. If this is not feasible, you could always consider a forex VPS which will enable you to remotely run your trading platforms and forex robots around the clock without needing your own computer switched on. You simply setup the forex robot on your VPS and check back when it is suitable for you.
I would always test any forex scalping robot on a demo account to begin with. You can get a free forex demo account from the majority of forex brokers. This will allow you to get a feel for how the automated scalping strategy works to see if it meets your expectations without taking any unnecessary risk.
However, demo trading account conditions do not always replicate a real live trading environment. This is because they cannot account for things such as real market liquidity and slippage whilst they do not all have realistic spreads. I have seen forex scalping robots that perform amazing on demo accounts but fail miserably on live accounts, not because the strategy is bad, simply because the spreads are not suitable. That is how important tight spreads are when using a scalping robot.
How to choose a forex scalping robot?
Now that we have covered what forex robots are and how they work, let’s take a look at some of the key things to look for when choosing a forex robot.
This is the most important thing to look for in my opinion. We want to see how good or bad a forex scalping bot has been performing over a sustained period of time. I would usually go for at least 6 months but the longer, the better. Ideally, we would want to see how it has performed through various different market conditions. Some robots can do well in a bull market but may crash horribly in a bear market. Be careful if a developer has stopped updating results. There may have been something happen to the robot that they are not showing.
Any robot results should be verified by a reputable third-party such as Myfxbook. Otherwise, there is no way of telling if the results or genuine or just made up by the bot developer. Even with verified results, go careful because I have seen some developers claim a forex robot is running on a live account when it is actually a demo account. Some also use unregulated offshore brokers who give them unrealistic trading conditions to promote the brokerage firm that other users wouldn’t be able to access.
After real account results, backtests are what I look for next. I will at least want to see backtests of the scalping robot on all of the currency pairs and timeframes that it has been developed for. The backtests must be done with as realistic test conditions as possible.
If we are looking at an MT4 forex scalping robot, I would expect to see 99% modelling quality backtests that have been conducted in the MT4 strategy tester using real tick data, variable spreads, including commission and simulated slippage. These are the most accurate backtesting conditions possible which can be achieved with the excellent Birts Tick Data Suite.
If you see forex scalping robots that are not back tested with quality data or real spreads and commissions, then you should take the results with a pinch of salt. As we have already discussed, these are factors that can have a huge impact on the results of an automated forex scalping strategy. Some developers will deliberately leave them out to make historical results look better than they should.
However, regardless of how good the results of a scalping robot look in a back test or even on a real account for that matter, this is not an inclination of what will happen in the future. If years in the forex industry have taught me anything it is that nobody can predict the markets with 100% certainty. Even the best forex scalping robot today could get blown out of the water tomorrow.
I also like to study the money management that a scalping bot is using. Too often I see forex robots with very poor money management that use a dangerous martingale strategy or grid trading strategies. Even those that don’t can still have really wide stop losses and small take profits. This means that one bad trade can wipe out a consecutive run of winners.
It is quite typical that forex scalping robots rely on a high win rate as they have such small targets it is hard for them to have a good risk to reward ratio. If the stop loss was too tight, they would probably get whipsawed in and out of the market.
The money management also needs to account for the spread and commission fees. There is not much point developing an automated forex scalping strategy that targets just 2 pips if they are going to be eaten up by trading costs.
When choosing a forex robot, have a look at the important statistics including drawdown. If you have a low risk tolerance and see that the robot has a drawdown over 50%, this might be way too risky for your taste. A scalping robot with high drawdown can be a sign of poor money management. With drawdowns too high, they may eventually end up getting a margin call and blowing up an account.
Make sure you check to see what currency pairs the forex scalping robot trades. This is because some currency pairs have tighter spreads than others. I like to trade forex on major currency pairs such as the EUR/USD and GBP/USD as they usually have plenty of trading volume which means they have some of the lowest spreads.
More exotic currency pairs such as the EUR/PLN and EUR/TRY can have very high spreads due to low liuqidity. This makes them almost impossible to scalp successfully. You could always check your broker spreads oi the relevant currency pairs around the robots trading hours to make sure they are suitable.
For example, if you see that the scalping robot targets 5 pips on the EUR/CHF and your broker has a spread of 2 pips on that pair, it might be acceptable. However, if your broker had a 5-pip spread on the EUR/CHF, then scalping it may be tough. It is worth noting that some forex scalping robots have a maximum spread filter to avoid trading when the spread are not suitable.
You can have the best forex scalping robot in the world but it would be pointless if you didn’t know how to set it up and couldn’t get hold of support. You should check to make sure the developer is responsive and readily available to help if and when needed. There should be detailed setup instructions provided for a quick and easy setup.
Have a look and see if they provide free updates which is important when you consider the forex market is always changing. What worked last year, might not work this year. Although in saying that, the best forex robots should be able to adapt to all market conditions.
Best forex scalping robots
I have reviewed and tested a countless amount of forex robots over the years. It is quite rare to come across a good forex scalping robot that has taken into consideration what I consider to be some of the most important things to look for when choosing one. That being said, please see a selection of my best forex scalping robots below.
The Forex Robotron EA has been around for many years and has the real verified results to prove it. You can see how it has been trading over years of data on real trading accounts. It scalping a few pips on multiple currency pairs using the same settings which is a testament to the quality of the scalping strategy that it implements. It has 99% modelling quality backtests over 15 years of data showing it has been quite consistent through various different market scenarios. This is all backed up with excellent support and frequent updates.
Forex Scalping EA
The Forex Scalping EA is designed specifically to scalp a few pips across a good selection of currency pairs. It also uses universal settings which means that it has not been over optimized and curve fitted for specific data sets and currency pairs. You can customise all of the forex scalping expert advisor settings and experiment with it as much as you like. There are lots of back tests that give a rough idea of how it may have traded on different pairs over many years of data. As with any forex scalping strategy, it does require tight spreads and low commission fees.
Advantages of forex scalping robots
- Can trade frequently
- Hands-off automated forex trading
- Versatile and customisable
- Lots to choose from
- Verified results and back tests
- Ongoing updates and support
Disadvantages of forex scalping robots
- Require idea broker and market conditions
- No guarantee on results
- Lots of poorly coded robots to avoid
Conclusion: do forex scalping robots work?
Yes, forex scalping robots can work but there is absolutely no guarantee on the results. Any manual or automated forex scalping system can go through good and bad phases. If a scalping robot is on a bad run, that does not mean that it is a scam. It could just be struggling due to the broker or market conditions.
I have seen forex scalping EA’s have a run of 12 good months followed by 6 bad months. Anyone who started using it from the beginning might still be up overall whereas someone who started using it 6 months prior might be shouting scam at the top of their lungs.
Remember, this is trading any anything can happen. However, you can improve your chances of choosing a good forex scalping robot by considering all of the pointers that we have discussed in this article. Real results, back tests and money management being some of the key factors to look out for. Just never risk more than you can afford to lose and always test a forex robot on a demo account to begin with.
Self-confessed Forex Geek spending my days researching and testing everything forex related. I have many years of experience in the forex industry having reviewed thousands of forex robots, brokers, strategies, courses and more. I share my knowledge with you for free to help you learn more about the crazy world of forex trading! Read more about me.