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Linuxtroll Simple Scalping

Quoting FXSurfer
Hello Neznaika!
It's just a free desktop clock available here:
http://www.softdemon.com/freeclock/

Thanks, man...
Quoting Yuppie
RISK... A love/hate relationship...
Magnus,

Great question! I am not currently trading live with this strategy (still trying to earn the right), however I am still developing my risk parameters for when I do so. I have been wanting to bring this topic up for discussion, so I am glad you beat me to the punch!

Quoting Yuppie
How much risk are you taking on?
Does it vary depending on your confidence in each individual trade?
When do you decide to increase your lot size / $ per pip?
20:1 leverage
3% max risk per trade

With 20:1 leverage, I will trade one full 100k lot for every $5000 in my account. (I trade with EFX, and since they trade in 10k lots, I trade 10, 10k lots per $5000 in my account) I trade EUR/JPY exclusively, and currently each pip on a 100k lot is worth $8.65. This value per pip will change slightly as the EUR/JPY fluctuates. I am comfortable risking a maximum of 3% per trade - WORST CASE SCENARIO. Including the spread and commission (EFX) this leaves me with a stop loss of approximately 15 pips from where I enter the trade.

I say worst case scenario, because it will be rare for any of my trades to actually hit the stop loss. I exit manually as soon as I feel my position is "wrong" (see signature). Usually this results in a 1 - 5 pip loss which is less than 1%.

I am confident that I am right in every trade I take! But, when I know I am wrong, I cease being wrong as quickly as I can by exiting the trade. So, the risk does vary on each trade depending on what happens as it develops. I might manually exit for a 0%, 1%, 2% loss or anywhere in between. But worst case scenario, (internet connection goes down, break my trigger finger mid-trade, etc. http://www.forexfactory.com/images/icons/icon12.gif) my stop will be hit for a 3% loss.

As far as increasing lot size, if I have time (sometimes not possible when immediately closing one trade and opening another) I adjust the number of lots traded on each trade. The following formula gives me the number of 10k lots to trade:

Account Balance / 5000 * 10 = # of 10k Lots

For example, if I have $6859 in my account:

6859 / 5000 = 1.3718, 1.3718 * 10 = 13.718

I would trade 13.7 10k lots.

Time to end!

Sorry to ramble on for so long. This is my current strategy for Rainbow risk management. Please feel free to ask questions or provide feedback. Risk parameters definitely come down to each individual. They will depend on their trading accuracy and risk appetite, among other things. It is great advice for all of us to develop our risk parameters as we develop our Rainbow trading skills.

Thoughts everyone?

Glen
Glen,
Just wanting to clarify on spread and commission with EFX. Based on the current exchange rate for the EUR/USD, commission for the EUR/JPY is more like 1.7 pips of profit--especially since EUR/JPY doesn't profit as much/pip as the EUR/USD (ie one lot gives $1/pip on EUR/USD, but only .87cents/pip on EUR/JPY) This can really eat into your profits if you don't get more than 6 pips, especially since I haven't seen many 0 spreads recently and then only for brief moments fleeting before I can punch my button...Normally I don't consider myself freetrading until I've seen that 1.7, then try to hit at least 6 for a close.

Surfer,
Are those in order of importance?

Eyecell,
I just trade the 5 second chart as LT instructed. Someday I may go to ticks, but we are creatures of habit and since I've gotten somewhat comfortable with 5 seconds i keep it that way.

Magnus,
Great post on risk--probably one of the biggest account bashers out there. I use 3% sl's. I've just found that I'm comfortable with that. Someday when I get to 99% I'll probably change that, but then, when i get to 99% I'll probably be making enough money to leave it at 3%--and it never pays, especially in the forex market, to get greedy. My lot sizes don't increase or decrease--when trading live I believe we should be fully confident about every trade--it's that questionable trade that always bites harder--and I have enough confident trades that just don't go my direction to want any questionable trades...Philip Nel had a statement that went something like--better to not be in a trade than to be in a losing trade. As far as increasing your lot size--I think LT talked about this a while back--something like when your % of success is high enough after making 100 trades (LT correct me if I'm wrong in my recollection...).

Flame On!!!pk
Quoting linuxtroll
I like to create leaders
I think that LT would be proud of the last few days' posts!
Quoting pkchilly
Glen,
Just wanting to clarify on spread and commission with EFX. Based on the current exchange rate for the EUR/USD, commission for the EUR/JPY is more like 1.7 pips of profit--especially since EUR/JPY doesn't profit as much/pip as the EUR/USD (ie one lot gives $1/pip on EUR/USD, but only .87cents/pip on EUR/JPY) This can really eat into your profits if you don't get more than 6 pips, especially since I haven't seen many 0 spreads recently and then only for brief moments fleeting before I can punch my button...Normally I don't consider myself freetrading until I've seen that 1.7, then try to hit at least 6 for a close.
Great clarification, thanks PK! Similar to you, I look for at least 2 pips profit before I consider it a free trade.

Glen
Quoting pkchilly
I just trade the 5 second chart as LT instructed. Someday I may go to ticks, but we are creatures of habit and since I've gotten somewhat comfortable with 5 seconds i keep it that way.
the reason i want to switch to ninja is the datafeed, mbt data is really different than oanda. ninjatrader however has some disadvantages. the main is their gridlines.

btw, does anyone know what sofware could produce sound alarms every 5min, for example? that could be used as a v-line, lol
"Nothing is unexplainable, Everything is mystery" W. Liquorman
  •  Yuppie
  • | Joined Jun 2007 | Status: ̿ ̿ ̿̿'̿̿\̵͇̿̿\=(•̪●)=/̵͇̿̿/'̿̿ ̿ | 2,727 Posts
Quoting Blazer
Zig Ziglar said that we must read each thing 16 times in order to understand it properly and in depth.

Many little things are making different sense after screening time.

My 0.2 drachma

Basil

Basil, I recall you mentioning that in this thread some time ago. I remembered it and have been thinking about it...

I know for a fact that it applies to me anyway. And that is basically what the screen time premise is based on. Repetition....

I believe it is as much about witnessing the same patterns repeat themselves over and over and over, as it is about seeing as many different scenarios as possible...


Magnus
Quoting Canyouseeme
News time? nice :-) best time to trade as long as you watch the spread
and watch 5 sec Cyrox Rainbow... LoL
  •  Yuppie
  • | Joined Jun 2007 | Status: ̿ ̿ ̿̿'̿̿\̵͇̿̿\=(•̪●)=/̵͇̿̿/'̿̿ ̿ | 2,727 Posts
Quoting prosperfx
...Time to end!...
Very nice Glen. Excellent explanation.

Now, 3%? The way you have presented it seems fairly well justified. I will go through it in more detail at the weekend (it's 3 am here just now and I can't sleep so am not really in a thinking mood...)

Because basic MM [Money Management] is pretty much the same for most basic trading strategies, there is a general tendency in most methods for a stoploss to be hit. This stoploss was generally the initial stoploss and thus the initial % risk (I am really generalizing here just to better explain myself).

In my short forray into Rainbow scalping so far, I have seen that most losing trades go nowhere near [or I don't let them get near] the initial pips risk I had in mind. I do set an actual SL of 18 but my current stoploss is generally no more than 10 pips. Still trying to figure out the movement of E/J for this...


MM/Risk has to be approached at a sort of oblique angle because of the [ultimately] discretionary based tendency for losses to be smaller than initial risk... Using the Rainbow scalping method.

So here are my current thoughts... There must be some resolve between the initial stoploss, guaranteed in size and thus guaranteeing our risk, and the typical average loss that can be expected over time. The fixed initial stop is easy. Finding the typical size of a losing trade; not so easy.

Look at it this way: Assume only 5 out of every 100 losses [NOT TRADES! I am talking about losses here...] end up being stopped out for -15 pips and the other 95 get stopped out for an average of -4 pips. (so average pip loss = ((-15*5)+(-4*95))/100 = -4.55). Let's round it up to an average of -5 pips loss. Now, if you are risking 3% on an initial potential loss of -15 then, because of probabality that your average loss will be -5, you really are only risking 1% per trade. Does this make sense?... I think we need to be able to quantify our average loss to be able to maximize our use of MM.

Maybe I am over-complicating this... Maybe not... I do know that it is the second most important concept in trading... [The first is psychology/discipline... and sadly the method comes in a slow third...]

This is something that I am far from having sorted so it would be good to hear everyones thoughts...


Magnus
Quoting hensch
Trade what you see, not what you think. That's all there is to it.

S/L, Fibs, Pivots all OK to be aware of (what you think= subjective).

Flame= the real thing.
Absolutely... You got that right Hensch... That is Linuxtroll Simple and Smart Scalping...
  •  Yuppie
  • | Joined Jun 2007 | Status: ̿ ̿ ̿̿'̿̿\̵͇̿̿\=(•̪●)=/̵͇̿̿/'̿̿ ̿ | 2,727 Posts
Quoting pkchilly
Magnus,
Great post on risk--probably one of the biggest account bashers out there. I use 3% sl's. I've just found that I'm comfortable with that. Someday when I get to 99% I'll probably change that, but then, when i get to 99% I'll probably be making enough money to leave it at 3%--and it never pays, especially in the forex market, to get greedy. My lot sizes don't increase or decrease--when trading live I believe we should be fully confident about every trade--it's that questionable trade that always bites harder--and I have enough confident trades that just don't go my direction to want any questionable trades...Philip Nel had a statement that went something like--better to not be in a trade than to be in a losing trade. As far as increasing your lot size--I think LT talked about this a while back--something like when your % of success is high enough after making 100 trades (LT correct me if I'm wrong in my recollection...).

Flame On!!!pk
Yeah, I may be coming 'round to the idea that you only evaluate your risk once you know what your winning percentage is...

In the beginning, with starting money, is it best to keep the % risk low because you are less experienced, or ramp it up because you should really be aiming at growing capital?...

But I remember reading some posts on this forum from a scalper who had a steady $6000 account and made [I think] $500-1000 per week. High leverage, but could easily refund if things were not going well... Will try and source the thread...


Magnus
Quoting prosperfx
Anyone having trouble with EFX Demo? I am currently in a profitable trade, but unable to exit. I normally just right click on the position and click "Close All Positions", but as the screen shot shows this option is unavailable right now. I also tried to cover buy simply buying back 200,000, but that does not work either.

Not really concerned as this is just a demo account, just wondering if anyone else is having issues with EFX demo accounts. More importantly, has anyone with live EFX accounts ever had issues like this?

Glen
Hmmmmmmmm, you are trading a 10k demo account, and took a trade for 200k ..... thats 20:1 leverage use...... :surprised
  •  Yuppie
  • | Joined Jun 2007 | Status: ̿ ̿ ̿̿'̿̿\̵͇̿̿\=(•̪●)=/̵͇̿̿/'̿̿ ̿ | 2,727 Posts
Quoting FXSurfer
I think that LT would be proud of the last few days' posts!

This thread is starting to heat... Will hopefully be glowing white hot soon... :
Quoting eyecelll
thanks for the help. i finally got it!!! but the problem was with something else. i couldnt manually enter eur/jpy on ninja, i had to find it in the list of available instruments, then, i had to choose 1 min tf before jumping to ticks

btw, how many ticks are u using for charting during active trading hours? something that would be similar to 5 sec? thanks
You can setup ninja so it open a EUR/JPY chart each time you start it. once you login, the datafeed will be online.........

I just hate it cant adjust the vertical zoom level........
Quoting Canyouseeme
Flame = price + a few more mmas

it is also what you would see on a tick chart with 1-144 mmas
Absolutely...
Quoting Yuppie
I think I am gettin there on this Flame thingy...


Well, missed the nice one on the left...

But caught the one on the right for +5 pips...

No S/R levels in sight. Took it only on following the flame...


Thank you for your help thus far today hench and Canyouseeme. Very much appreciated!!


Magnus
If you want the flame thingy use the original Rainbow (for aggressive scalper), If you want the spine thingy use my monochrome version (for conservative scalpers)...
Quoting eyecelll
ok, i finally talked my boss into giving me 2 hours every morning for practicing and started watching rainbow this week. i used oanda for charting and mbt for execution. the first 3 days were a total disaster. micro lots seemed like not an option for me, i treated it like a demo: tried to use every possible aggressive entry.
Every possible aggressive entry maharajah? Take a look...
Attached Image
Quoting Yuppie
This thread is starting to heat... Will hopefully be glowing white hot soon... :
The reason this thread is hot is because...
1.) It works!
2.) The teacher has been very patient
3.) It works!
4.) The teacher has been very instructive
5.) It works!
6.) The teacher teaches how to trade, not follow
7.) It works!
8.) Etc.
Quoting Yuppie
However, really study this post made by Alessandro yesterday. It gives some excellent examples of how, when, why, why not, and when not to enter trades.

Ask some questions on it...
Magnus
Alessandro is the Rainbow Pirate of ForEx...
Quoting EllisEdi
It is also about fine tuning Traders.

--Mark
Fine tuning scalpers... :
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