Scalping Strategy: Limit orders reliability

Attention! This article is for informational purposes only and does not contain recommendations or calls to action.

The review has been prepared by the CScalp terminal team. You can get CScalp by leaving your e-mail in the form below.

There are two main rules in defining proper volume of huge limit orders:

Always compare the volume of limit order you chose with the accumulated volume of executed contracts in clusters within at least 5 minutes. If the volume of orders execution is 2 or more times higher than the volume of contracts in limit order, the limit order is not reliable and large amount, large amount 2 parameters should be changed in accordance with current instrument price and volatility.

If the volume of colored limit orders is 3 and more times higher than the accumulated volume in clusters (executed within 5-15 minutes, watch accumulated volume within 3 columns of clusters), the limit order is reliable. In other words, it will be challenging for price to break it by a single hit.

Keep your settings of the instruments (bar filled at, large amount 1, large amount 2) up with the changing price. It is especially relevant when the instrument calls the shots and is popular among most traded instruments. Its price can change in time, then the volume that was reliable for limit order two months ago ceases to be reliable today due to increase of instrument's price.

The best way to define and apply proper volume of the core parameters in settings (Amount bar filled at, large amount, large amount 2) is to check if the instrument is in or out of top 100 cryptocurrencies by market capitalization.

600 000$ - 800 000$ inside the limit order is enough to treat it reliable. For example, if the current price of the instrument is around 5$, we calculate the minimal huge limit order volume for the parameter “Amount bar filled at” (600 000$ / 5$ = 120 000). Therefore, 120 000 contracts is the suitable number of contracts for “Amount bar filled at” of the instrument from top 100 cryptocurrencies with a current price of around 5$. Large amount and large amount 2 parameters can be 2X and 3X from the first parameter (240 000 and 360 000 correspondingly).

200 000$ - 400 000$ inside the limit order is enough to treat it reliable. For example, if the current price of the instrument is around 2$, we calculate the minimal huge limit order volume for the parameter “Amount bar filled at” (200 000$ / 2$ = 100 000). Therefore, 100 000 contracts is the suitable number of contracts for “Amount bar filled at” of the instrument out of the top 100 cryptocurrencies with a current price of around 2$. Large amount and large amount 2 parameters can be 2X and 3X from the first parameter (200 000 and 300 000 correspondingly).

Correct and relevant settings of your workplace (order book, clusters, etc) is the first significant step to your success in scalping. Stay profitable and follow your risk management system!