Hi cabletrader,
Thanks for your response,
I realise that you trade through a market maker. Yes Iv heard those stories as well. That's why I would trade through an ECN broker, like EFX/MBT, you pay a bit of commish, but tight spreads, great executions, top customer service, and they dont give a damn how you trade.
Im not sure what you mean by the risk?
I would think scalping is quite a low risk strategy due to the short holding times you would never let a trade go against you too far and thus maximum trade drawdowns and overall drawdown would be quite low.
Also, market exposure would be decreased as well due to the nature of scalping. Less time in the market = less risk.
I trade a long term trend following system for equities. This trades off weekly timeframes, and though its only just started, I expect it to do very well over the course of time.
I turned to forex only recently because of the high volatility and because its a very dynamic market, i saw the potential for income from forex, and because forex and equity markets have historically very low correlation, it makes sense to have both systems running in the portfolio.
so why don't I trade both forex and stocks longer term?
Well, Short term trading has many advantages, less market exposure, as mentioned before, quicker recovery time from drawdowns, more opportunity (trade frequency), and a super smooth equity curve.
The forex advantages over this are much higher liquidity than stocks, and also its a 24 hour market.
And though I have a fulltime job outside of trading and have no intention to watch the screen all day so thats why automated trading holds great appeal.
I have been looking at some charts over the past week or so and the strategy though only in its initial stages, looks promising.
It trades off 5-minute charts, on the cable and Usd/Jpy, does 60-80 trades per day, and makes about 3pips nett of spreads and commissions per day, with average trade length being about 15-20mins.
The hit rate actually is only about 50%, and the average win/average loss less than 1.5. But its the high trade frequency that brings home the bacon.
USD/JPY actually alone has better stats, but adding cable though it decreases expectancy a touch, it adds to the trade frequency quite significantly.
Lot of work still to be done though, but im in no hurry.
Im planning to use Neoticker/Esignal for software and data and EFX as the broker.
And further feedback or discussion appreciated.
