Scalping FX with Cyrox Rainbow

[Stormin_Norman]

sorry Trembling Hand, whats an R loss? and when scalping you watch the whole trade so you won't lose more than you are willing to, so i don't understand what you mean when prawn86 is overleveraged. cheers.

I thought the discussion of risk deserved its own thread.

https://www.aussiestockforums.com/forums/showthread.php?p=265556

 

[Trembling Hand]

sorry Trembling Hand, whats an R loss? and when scalping you watch the whole trade so you won't lose more than you are willing to, so i don't understand what you mean when prawn86 is overleveraged. cheers.

1 R is your standard stop loss. The Max you planed to lose per trade.

With scalping small amounts you should have a stop or R value at equal or slightly less than your profit target. that means for these kind of trades you are looking at 5 to 10 pips stop. There is no way in the world that you aren't going to from time to time get hit harder than that.

 

[disarray]

thanks for the explanation gentlemen. i plan to start with US$1,000, trade 10 10,000 lots for $10 / pip and bail out once the trade goes -$50. it seems a reasonable enough risk as i am chasing 10 pip gain, i just wanted to make sure i'm not violating a fundamental trading rule or something

 

[Stormin_Norman]

thanks for the explanation gentlemen. i plan to start with US$1,000, trade 10 10,000 lots for $10 / pip and bail out once the trade goes -$50. it seems a reasonable enough risk as i am chasing 10 pip gain, i just wanted to make sure i'm not violating a fundamental trading rule or something

no 5% is pretty reasonable. Grab that calculator and have a go of it to see what difference the 5% to 10% trade rules make.

 

[tayser]

dissaray, don't concern yourself over each and every trade's risk to reward ratio right now.... just worry about getting to know your pair, spot when the big moves are about to start (you confirm it with a slower timeframe), pick the right time to get in and just ride them - if you bag 10 pips and you stick to the method's 5-6 pip overall S/L rule you'll be getting 1:2 or upwards nearly every time.

Get the method right first before worrying about your lot sizes.

 

[professor_frink]

sorry Trembling Hand, whats an R loss? and when scalping you watch the whole trade so you won't lose more than you are willing to, so i don't understand what you mean when prawn86 is overleveraged. cheers.

The possibility of taking a larger than expected loss is something that everyone that trades these sorts of timeframes should be very aware of when position sizing. **** happens when trading off of short term charts, and it happens quite a bit more than you think it will whilst papertrading/testing. Internet/computer/power problems, software problems, broker problems, order entry problems WILL happen, and it will surely happen when you are in a trade that isn't going well.

thanks for the explanation gentlemen. i plan to start with US$1,000, trade 10 10,000 lots for $10 / pip and bail out once the trade goes -$50. it seems a reasonable enough risk as i am chasing 10 pip gain, i just wanted to make sure i'm not violating a fundamental trading rule or something

personally I think 100:1 leverage and 5% risk without a hard stop is asking for trouble. What will happen if your broker's platform goes down just before a major news announcement and you are in a trade? You'll probably lose the entire amount and then some in one hit

 

[tayser]

Can I just reiterate once more. With this method you have a hard platform-set "DISASTER RECOVERY" Stop loss of 20 pips set. You NEVER let the market hit this stop as you keep the S/L you'll use in your head - i.e 5-6 pips away from where you got in, this should only be used in the instances as listed above by Prof Frink. I personally don't stick to the hard and fast rule of 5 pips down get out if the market is just starting to lurch in the direction I want it too (as you almost always get initial retracement) - this comes through experience of getting to know your currency pair (look at the last charts I posted for a good example). You would stick to that rule if you're entering with a lower probability of success - you also wouldn't use the same amount of lots if you were entering on a higher probability entry. Experience with the currency pair and the method of entering/exiting at the right time is crucial.

However if you're new and you want to learn to use this method just focus on the method and if you need a guide for lot size, just use 1 EFX mini lot (10,000 - when you start with $10,000USD you're only using about $90 of the balance to trade 100,000 AUD/JPY) whilst you practice and focus on money management afterwards - it is critical to recognise when big moves start and it's also critical to figure out how to jump on and jump off. Learn this first and the only way you can do this is with screentime - lots of it.

 

[tayser]

Entry was very late, however on days like these the odds of reaching to your targets are very much in your favour! Nice H&S eh:

Time Order ID Message Event TIF Orig Trader ID
02:16:09 0w6002s:05eq-00 Sell Short 900000 AUD/JPY @ Market on MBTX [expiring: 2/06/2008] (900000 traded at 96.15) Filled GTC
02:17:20 0w6002s:05ix-00 Buy 900000 AUD/JPY @ 96.03 Limit on MBTX [expiring: 2/06/2008] (900000 traded at 96.03) Filled GTC

11 up net, might try for some more after London's opened.

 

[prawn_86]

nice work

i have been busy back at uni so havnt been able to get in front of the screen.

oh well, im in no real rush to start live

 

[tayser]

Used a Stop + TTO order for this (Although I cancelled it after entry fill and repositioned a new limit to get me out - I thought I was being a little too optimistic (anticipating a bounce off support at 95.53), however as can be seen on the graph, it would have been close to filling...)

Time Order ID Message Event TIF Orig Trader ID
19:08:44 0w6002s:07nv-00 Sell Short 1000000 AUD/JPY @ 95.65 Stop+TTO [+TTO @ Market when AUD/JPY <= 95.50 or >= 95.75] on MBTX [expiring: 2/06/2008] (1000000 traded at 95.65) Filled GTC
19:09:32 0w6002s:07pq-00 Buy 1000000 AUD/JPY TTO [@ Market when AUD/JPY <= 95.50 or >= 95.75] on MBTX [expiring: 2/06/2008] Cancelled GTC DEMOBOT1
19:11:49 0w6002s:07v0-00 Buy 1000000 AUD/JPY @ 95.57 Limit on MBTX [expiring: 2/06/2008] (1000000 traded at 95.57) Filled GTC

EFX's demo servers are playing up again - the times on the chart probably won't match the orderbook.

 

[tayser]

things have slowed down considerably. 20's (18) enough for the day.

 

[Stormin_Norman]

how many times do you 'lose'?

 

[tayser]

plenty, like last night, I held on for a 15 pip loss.

It's the reason I'm not live yet - I've got the technique just about right, it's all the other things in trading that I've got to get sorted, specifically: psychologically.

I keep saying this, but it can't be said enough, this is the beautiful thing about FX - you can do all this with no financial risk to yourself due to the plethora of demos available which provide a far more realistic paper-trading environment than in equities.

 

[Trembling Hand]

It's the reason I'm not live yet - I've got the technique just about right, it's all the other things in trading that I've got to get sorted, specifically: psychologically.

Not so sure about transferring psychologically on a Sim to having real skin in the market. I reckon Sims are great for testing and practising a new system or for basic learning by new traders. I often use a Sim for replaying the day after a crappy result.

Have you got a goal to achieve when you will go live? One thing to think about is you may just find your learning is accelerated by trading live.

 

[tayser]

I understand what you're saying and I was live for a period of 2 weeks with Oanda, but that's the point where I learnt first hand how **** it is to scalp with a MM.

My own prognosis is this: I'll improve a lot when I learn to be more patient - I am improving, but not fast enough (lol).

 

[Stormin_Norman]

I understand what you're saying and I was live for a period of 2 weeks with Oanda, but that's the point where I learnt first hand how **** it is to scalp with a MM.

no wonder you dont like them! they stole your money!!!

but seriously; if you lost with transaction costs in the past very similar to the ones in the future - will the small savings in transaction costs allow you to become profitable?

or like u said; was your non-success more to do with inexperience?

 

[tayser]

inexperience, different mindset and technique has matured since then.

 

[gosko]

Hi Guys,

Ive been following this method for the past few weeks and i think its awesome. Its been a bit up and down for me in terms success, but overall im definately up =). Has anyone read through LinuxTrolls posts. He mentions the mantra? I cannot find this anywhere, does anyone know where this is, if so could you provide me a link?

Thanks in advance.

 

[disarray]

Mantra

 

[tayser]

Aussie was a snore tonight. So switched to the Pome-dollar.

2 neg 2 pos, first two neg were caught in sideways / heavy upper resistance, 2 pos when it roared back into life in the other direction.

Time Order ID Message Event TIF Orig Trader ID
20:12:38 0w9002s:090m-00 Buy 10000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (10000 traded at 206.42) Filled GTC
20:12:56 0w9002s:0915-00 Sell 10000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (10000 traded at 206.44) Filled GTC
20:24:37 0w9002s:09ck-00 Buy 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.59) Filled GTC
20:36:51 0w9002s:09p0-00 Sell 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.53) Filled GTC
20:46:49 0w9002s:09u4-00 Buy 150000 GBP/JPY Stop 206.61 Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.63) Filled GTC
20:51:45 0w9002s:09zh-00 Sell 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.55) Filled GTC
20:53:38 0w9002s:0a0w-00 Sell Short 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.53) Filled GTC
20:57:07 0w9002s:0a4r-00 Buy 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.42) Filled GTC
21:02:26 0w9002s:0abx-00 Sell Short 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.30) Filled GTC
21:04:34 0w9002s:0ais-00 Buy 150000 GBP/JPY @ Market on MBTX [expiring: 5/06/2008] (150000 traded at 206.11) Filled GTC

-6(-8), -8(-10), 11(9), 19(17) total: 16 gross, (8 net - or the equivalent of 3-4 on AUD/JPY). Might give the Sterling and Euro Interest rate statements a look in later tonight, otherwise that's it for the night.