A shielded USB cable should hold up as long as you're not putting it through too sharp a bend radius.
One alternative you might consider is an IR LED on the end effector, and two webcams at 90 degrees facing the work envelope, with OpenCV to do point tracking. A couple of IR filters over the cameras would make this easier. You'd probably have some dead spots though when the effector hides behind an arm...
Another would be to use an old mechanical digitizer type setup with string. Get three spring tensioned spools with encoders on the ends. Retractable cables or cheap tape measures might be a good start. Mount them at three corners of your machine, likely 60 degrees from your base, and tie each to the same point on your end effector. Then it's simple trig to find the position.
One alternative you might consider is an IR LED on the end effector, and two webcams at 90 degrees facing the work envelope, with OpenCV to do point tracking. A couple of IR filters over the cameras would make this easier. You'd probably have some dead spots though when the effector hides behind an arm...
Another would be to use an old mechanical digitizer type setup with string. Get three spring tensioned spools with encoders on the ends. Retractable cables or cheap tape measures might be a good start. Mount them at three corners of your machine, likely 60 degrees from your base, and tie each to the same point on your end effector. Then it's simple trig to find the position.