Is High Frequency Trading Really Works?

High frequency trading. Is it profitable?High frequency trading is used by many Forex scalpers. One of the main reasons for that is because scalping strategy is based on opening frequent trades within short period of time. Why? Because only excessively high frequency trading and a huge number of trades per day may bring your high profits. A one minute timeframe is the shortest period of time when a change of the currency price may occur and that shows at least some market analysis.

Trading on the Forex market is a very interesting and fascinating process. Its success depends on such factors as the knowledge of a trader, his experience, trading style, and, of course, a trading strategy. Note that there is a number of winning trading strategies in the Forex market. We have discussed some of them on this blog. Of course you should use them proficiently and first try on a demo account.

Forex trading styles may be long term trading, intraday trading and high frequency trading, so called “scalping”. Scalping involves performing of several trades within one trading day for the purpose of obtaining a large number of minor PA size gains. Scalpers are trying to increase their profits at the expense of the number of trades on the currency exchange market.

In order to trade using a scalping trading strategy for maximum benefit, you need to select the correct time frame for your trading.

High frequency trading strategies based on different time frames.

Selecting a high frequency trading strategy depends on a time frame in which a trader will prefer to analyze the Forex market and trade.

 

Here the the 3 basic time frames that are usually used in high frequent Forex strategies:

1. A trading strategy based on 1 minute time frame.
To start using this strategy, you need to open a one minute chart and set up the Bollinger bands and the moving average (of over 100 periods) indicators. Then you need to create a rule that will help you determine the direction of the market.

For example, the purchase signal will appear at the moment when the highest and average Bollinger bands will be above the line of the moving average line. If you want to get a clear signal for the purchase, all three of the Bollinger bands on the chart must be located above the curve of the moving average line.

A sale signal appears at the moment when the lowest and average Bollinger bands will be below the line of the moving average. Clear and confident signal for selling currency will be at the moment when all three of the Bollinger bands will sink below the moving average indicator.

2. Trading strategy with a 5 minutes timeframe.

This strategy uses two main indicators: MACD histogram and the moving average of over 20 periods.

The strategy of using a 5 minute chart involves waiting for the moment of the trend’s reversal, but involves taking profits from this trend movement only when the momentum of the trend’s change is sufficient enough to become a source for a bigger movement.

The trading approach is divided into two different parts. The first part helps making profit and assures that the winner will never be a loser, and the other gives a chance to catch serious market’s movement without much risk, since the stop order has already been set up at the break-even point.

3. A 15 minute chart trading strategy.

15-minute strategy is considered to be one of the most suitable for a short-term trading, because these charts are always more objective and have up-to-date information for market’s analysis. Thanks to this, trading on 15 minute charts can lead to lower losses than trading on 1 or 5 minutes timeframes.

You can apply your high frequent trading strategy on 15 minutes chart using a simple candlestick chart.

Purchase signal will be when you find three consecutive candles whose closing prices will exceed the previous closing price.

Sale signal will appear at the moment when you find three consecutive candles, whose closing price will be lower than the previous closing price.

So let’s sum it up. An effective high frequency trading strategy can help you get maximum benefit from trading on the currency market. If you have decided to apply this style of trading in your Forex trading and start profiting in the Forex market using scalping, then the above strategies are all you need.

Forex Trading In Singapore wishes you successful trading and making more profits by applying any of those high frequency trading approaches.

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