How To Set Stops - page 3

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Steven Theobald
722
Steven Theobald  
Ubzen:

Ok, I'll try answering the rest of your question and hopefully some value to the thread. This is just my personal take based again on my testing, trading and observations. Given your about approach, you and I wouldn't be too different in psychology and since we're all humans, I'd say most people gravitate to something similar.

  • 1> You want 90+% win-rate, I mean who doesn't.
  • 2> You're employing a range based strategy,
  • last time I checked, markets stays in range 90% of the time according to most sites.
  • 3> You get burn when the market trends, {surprise}

There's nothing wrong with being a range_trader or scalper or trend_trader. But as the saying goes, the markets moves in 3 ways, up | down | and sideways. Should I be trading for sideways, i'll be to some extend admitting that I do-not know which direction the market will go. If the market will stay in a range, does it matter which direction i choose ... i don't think so. Imo, a range never made any trader cry, just the trend or stop_loss trend trader :). If you're placing a 30 pips stoploss, then imo you're defining a trend as anything greater than 30pips. If this thing moves to 31_pips and comes back, you'll be correct about it being a range and wrong about the degree of the range. The less things you need to be correct about the better for your health.

Money-management is key here, and I'm not talking about lot_sizes in this instant. If I've learned anything about money management it'll be these 1) No money management can make a losing system into a winner. 2) Money management means risking a % of your risk_capital which is <= your edge. The problem with calculating edge in trading to any mathematical degree of certainty is very ambiguous. Therefore for #2 in trading, I just define as trading a very, very, very small % of your risk_capital. Chances are you aren't doing this, and most people aren't also because it wouldn't be exciting then. So in your case, you could probably afford the 200 pips draw-down if you toke a smaller lot_size. And if someone is already at minimum_lot size, then perhaps they should postpone trading until they have some more risk capital.

Ok, enough about how you're trading and now about how I trade. I see the markets only in two_modes range_or_trend. In grid_or_anti-grid. Grids obviously for range and anti_grids for trends. Imo, every system ever created can be expressed as grid or an anti-grid and are two sides of the same coin. Most people gets familiar with negative grids first. Anti-grid is where you add deals as the price moves in your direction. And then......wait for it.... stop loss when it doesn't go in your direction. Example gird size 10, you buy... price goes against you by 10 pips... you close and sell, price goes down down by 10 pip... you add another deal... when account hit a new high ... close all positions.

Both of these have distant characteristics like %win-rate etc. Both of them are equally as powerful in terms of get_rich_quick <<< depending on the lot size you're using, profit targets etc. There's a price to be paid for using larger lot size then someone can handle. When measuring performance of these [or any system] i divide the running $profit by the maximum draw-down in $currency. When this value falls below 1_(after couple of weeks), then then i become concerned. So to summaries: 

  • Trading: I use grids or anti-grids.
  • Money Management: small percentage% of risk capital deposited. Harvested as soon as it doubles.
  • Stop-loss: Account level stop-loss. Deal_level stop-loss on anti-grids only.
Thanks for all the great info.  The GRID trading looks extremely interesting.  Want to start a thread on the topic?
Steven Theobald
722
Steven Theobald  
angevoyageur:
Those who are interested in this topic will be probably also this post.
Great info.
Ubzen
5301
Ubzen  
TalonTrader: Thanks for all the great info.  The GRID trading looks extremely interesting.  Want to start a thread on the topic?
What would you like to know?
Steven Theobald
722
Steven Theobald  
Ubzen:
What would you like to know?
The whole Grid trading idea deserves its own space.
alexjasen120
4
alexjasen120  

Hello Talon trader

Thanks for share forex trading topic. it's a very interesting topic.It's a very help full to increase the forex knowledge.

Steven Theobald
722
Steven Theobald  
Ubzen:
What would you like to know?

GRID TRADING.  I spent considerable time in the last year trying out no-stop hedged GRID trading.  I think your method has great merit, and it really opened my eyes to yet another way to trade the markets. 

What happened to me is that I failed at it.  I think it has great merit, but in all fairness to the system, my interventions killed it off.  I should have left it alone.  The draw downs killed me because I did not have a huge balance, even though I was using a micro account.   I didn't realize how many positions could be opened in both directions during big market moves.   Well, I didn't prune my losing trades well enough, and I was impatient with the progress.  I found myself anticipating market moves and intervening.  And I should have minimized the system risk by trading the smallest possible position size with just one instrument.  The range trades were amazing, of course, but the moment a trend began, things went crazy because the gains are linear and the losses additive.

For me, for now, I will continue with a tight system of 3 open trades and a 30 to 50 pip max stop loss.  But thanks so much for the contribution.

Ubzen, I still think you should start a new thread on the topic (maybe you already did?) and perhaps we can find others who succeeded at Grid trading.

cozyman
271
cozyman  
Very nice article, btw, do you know where I can find an adjustable ATR projections indicator? or do you sell one? I like to put mine at 20 Atrs, 80 is way to much for me.
Max Van Dijk
135
Max Van Dijk  
Good topics
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