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Scalping FX with Cyrox Rainbow

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Tayser,

Good call though....others unfamiliar with the maths might not know what it means, so for readers who don't know....

AW = average winning trade size (calculated here in pips ie. 0.01 = 1 pip)
PW = probability of win ( 0.755 = 76%)
AL = average losing trade
PL = probability of a loss

And an important calculation from that is Risk:Reward where formula = (AW*PW) - (AL*PL)....My running R:R so far is 8.4:1

What this means is every time I risk 1 pip on a trade, I will on average win 8.4 pips. A positive R:R is essential for long-term survival. A negative R:R means you will go broke trading the system.

Another factor is opportunity. A high R:R system with low opportunity (say 10 signals a year) may not have as good a return as a low R:R system with many, many opportunities (say 30 a day). Then if you can get a high R:R with many opportunities...excellent!

-----------------

TH,

Thanks. I like it a lot too! I can discount some stuff now as luck but with a few hundred trades notched up I'll have a very good idea of how it will be.
 
Oanda - but the rainbow is more of a confirmation for me than anything. I'm using the direction, volatility and speed of the spread to generate entries and looking for stalls or retracements to jump out. If the trend is slow moving I won't jump out of a retracement instantly. I give it more room and time. Kind of hard to describe, easier to see. I give more weight to the rainbow in very slow moving trends. I discount it heavily in the fast moves, because by the time it reacts much of the move has already gone....that's just what I'm finding. I have two 5sec charts opened. One zoomed in close to watch the spread, the other out as far as possible, to keep s/r of trend lines, channels and ranges in view.
 
For readers who are interested in why it is purely a numbers game (with some provisos)...

As a follow-up to my discussion above about R:R and positive expectancy I decided to do an experiment. This does not count towards my system results, it's entirely separate. I went very aggressive and took entries I wouldn't normally touch but exited the same as normal.

I made 38 trades for a net finish of 64 pips. Here are the stats:

AW 8.6
PW 50%
AL 4.0
PL 50%
R:R 2.3:1

There were 19 wins and 19 losses. In other words the chance of winning or losing was the same as a coin flip. But the average win was over twice the size of the average loss, showing that (should these results be consistent over a larger sample size) a completely unspectacular method can make you money if you are consistent with your stops and let your winners run longer.

(*The danger of this kind of system is one catastrophe could wipe out more than is gained, and that needs to be considered of course. Hence, while it is positively expectant I wouldn't trade it for real.)

But this is off-topic so apologies to tayser.
 
Had another learning experience this morning. Took me awhile to clue in that the AUDJPY was range trading. I missed the early move from 4am-8am QLD time. Got caught in ranging around 9ish. Sat aside for awhile then caught some of the downswing in and out several times from 10-11:20ish then switched to EURJPY and got some more. So that ranging cost me stats.

Netted about 159 pips today.

Stats for today:

AW 0.0987
PW 0.612244898
AL 0.056473684
PL 0.387755102
R:R 0.038530612 (3.9:1)


Running stats for 123 trades:

AW 0.134029916
PW 0.727081014
AL 0.088616237
PL 0.272918986
R:R 0.073265554 (7.3:1)


This seems to be working and beyond the scope of sheer luck now. I'll give it till this weekend then I'll give a rough rundown on what I'm doing. I'm just focused on actual trading for the moment...can't be bothered taking screenies.
 

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Hey looks like u are back on the horse Tayser

.. havent been here for ages good to see this thread is still going strong

Oh and Prawn... TH looks like he is using IB booktrader. 10k deposit gets u in.
 
speaking of brokers - whats the current recommendation for us <25K traders? I could pony up 10K if needed. I installed the Viking Demo (with an ADM demo account) as that was what the recommendation was a while back but i wonder if that was more for the Pro'ers not the lite...

MS+Tradesim - u in brissi?
 

have a look at the Currenex Margin demo: http://www.cyrox.com/forum/index.php?topic=445.0

same deal as Viking (although better IMO) but web-based.

Only need $2.5k for an account too.
 
Well, end of my first week live with IB. Learnt a lot more live than on play trading. On demo I was only really trading EURJPY. When I went live the spreads were quite wide so I switched to EURUSD for tighter spread. But I discovered the hard way that it just doesn't move the same. Lost 10.5% on EURUSD before I gave it up. Back onto EURJPY and made 21.5% to finish the week positive for 8.5%.

I've given up the Oanda charts and I'm just using the IB live chart which is all I need for scalping. All I use is basic support/resistance and clip pips off the moves when they break from a range.
 

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watched the whole thing unfold and thought I got to get me some of that... entry when price started plowing down toward previous support.
 
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