Doorways to Wealth, Health and Happiness

[Paul Crewther]

For the last 5 months I have used an automated program to trade currencies.

This is something I designed and built myself as other similar packages cost $6,000 to set up and cost $600 a month to rent.

Mine cost $95 to set up and $0 a month to rent

This is NOT a technical analysis "black box" or any system that tries to 'predict' the market. My system simply buys and sells very small amounts of currency very often for a very small profit. Its like a giant vacuum cleaner sucking up 5c pieces once a minute 24/7!!

Anyways, this setup makes me around $30 a day, or $160 a week. Doing this requires around $6,000 capital. Here is the issue. The computer must be running 24/7. At 30c an hour, this really adds up.

Currently it costs around $40 a week in electricity. Also, the hard drives tend to wear out fairly fast, and Im now on #3.

So, although my $160 a week sounds good, its not an efficient system. I really need to increase the profit, either by optimising the buying/selling, or adding more capital.

Is anyone here a maths expert? I have some mind-bending calculations.........

Is it better to limit buy 1 pip below market and sell 1 pip above buy price?

or

Is it better to limit buy 10 pips below market and sell 10 pips above buy price?

using the 1 pip system, there are a lot more trades, but the profit they produce is very small. In a downtrend it is easier to sell on a 1 pip bounce.
Likewise in an uptrend, there are plenty of pullbacks allowing you to buy.

using the 10 pip system, there are far less trades, but each trade makes a good profit. You dont get too many 10 pip bounces in a downtrend, so you can end up owning a LOT of currency. In an uptrend, there is rarely a 10 pip pullback so you often miss the rise completely.

Can anyone determine a formula / logic to optimise this system?
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http://www.posigear.8k.com

[Gazzer]

Why can't you just increase the gearing or increase the lot size?
I cannot see how you can run this without a stop.

[emw]

Yep, Gazzer has suggested the obvious. Is there a problem with that? If costs are high compared to profit, increase your bankroll & costs become almost irrelevant.

Are we missing something here?

BTW, this is a common tradeoff. If you enter a trade more quickly, you'll often get a higher winning %age, but lower average profits, and vice versa. So it comes down to things like slippage, your need to be right, etc.

Best if you can backtest. That shouldn't be too hard if you can program yourself.

Any progress since you posted?

Ed
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Ed Love Relationship Coach Brisbane, Australia
http://www.solutionsontap.com http://www.lovediet.info

The greatest thing you'll ever learn
is just to love and be loved in return

[Paul Crewther]

lets put this in automotive terms:

I ask "is the engine as efficient as possible for the power output?"

some of your replies:

"who cares, if theres not enough power, just put a bigger motor in it!"

In 1906, it took 1 litre of petrol to produce 1HP. Today it takes 1mL to produce 1HP.
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http://www.posigear.8k.com

[Gazzer]