Midpoint cross - scalp/swing question

[alichambers]

Hi,

I've been reading about trading on midpoint crosses in this forum and have some questions that have come up during some of my trades.

I intend to scalp profits when the price crosses the midpoint on the GBPUSD. I intend to place my orders in advance for the next day's trading, for example:

midpoint today = 1.9000
buy tomorrow = 1.9000
limit sell (profit) = 1.9002
stop loss = 1.8998

I do not intend to spend all day in front of the PC waiting for the midpoint to cross, so I place my orders in advance as above.

My questions are:

- Is the midpoint target for tomorrow the midpoint of today's daily candle? Or is it today's current midpoint when the market opens? Or the last 60min candle's midpoint?

- Without backtesting, how do you determine how much scalping points to take? Manually examining the GBPUSD, showed that the other day, it crossed the midpoint as a short trade (I think it was 1.9426 from memory) and reversed at 1.9425. My limit order did not get hit, so I lost money on the stop loss. I use spread betting in the UK, so lost money on the spread also. I bet £100 per point, so have to keep my stop loss near to the midpoint.

- If I was to do this swing trading, how would I alter the system?

Thanks - alex

[jhtumblin]

I will be straightforward with this, what you are wanting to do is NOT a good strategy by itself, especially not one you can leave unattended. Typically you will find that the price bounces off the midpoint even if it is considering going through it. With such a small profit target using long timeframes, you will find yourself getting whipsawed for a loss most of the time.

This middle cross itself is more of a trend determining tool rather than a trade trigger (on the timeframe you are talking about) and your exits when scalping should be to stay in the trade till it looks like the trade is giving out. Unless you are hitting a huge percentage of your trades accurately you will need a ratio better than 1:1 to turn profits.

You can use the middle cross on longer timeframes to swing trade, which is your best bet if you can't watch the market all day. There is still however, no way to tell how much profit to take in order to set a pre-determined limit exit. You just have to exit when the market tells you to.

If you want to swing trade this method, I would suggest you look at the behavior of the middle cross on a long term timeframe to decide how much risk you are willing to take based on the profit potential of crosses in the past.