Bail out of losing trade - page 2

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Thanks, MiniMe. To "teach" my EA fundamentals is too hard, of course; I'd need to build in a MicroMe for that ;-) but certainly to use hedging/correlation as remedy actions is possible. Though, that immediately calls for a portfolio EA; perhaps we can find something less advanced to start with?

Otherwise I'd agree that you may well do without stop-loss in the trade policy, if you like and can afford it. Still, isn't it a bit along Wolfe's thought that you do have something in mind for closing a position in loss, although you might not declare this to your friend the broker ? Or do you actually mean it as a hard rule to never ever close a position in loss?

Wolfe: yes, hidden stop-loss is good; then you can make it "soft" as well, and avoid it hitting "ignorable quirks". For instance, you might recognise a stop hunting session and simply ignore that period from your price movement analysis.

What's your criteria for saying that "this trade is bad from start"? When do you know it? How do you know it?

 

Ralph ,

Your a good programmer and if you want to start an EA to get out of a losing trade , that means your stops will be dynamic, but I would suggest to make your profit dynamic as well , that would be difficult cause it means we will never exit a trade, theoritically yes but you can apply certain limit conditions like the daily range.

Or whats the point of getting out from a losing trade while not keeping the winning trade, its our nature we like to hold on to a losing trade and let go a winning trade, so since your going into that direction I though I would also suggest to develop the EA to work on the winning trade as well.

wish you luck in your approach, and I will try to help whenever I can

 

MiniMe,

I like your dynamic stop, and dynamic profit idea. I assume you mean that the SL & TP are not set variables, but re-adjust themselves according to market conditions. This is an idea I've been working on for a while now. If these dynamic variables were implemented into an EA, what ideas do you have as far as indicators to use for decision making on the dynamic variables? Maybe direction and separation values of a fast and slow EMA? What are your thoughts?

Ralph,

As far as when do I know a trade is "bad from the start"? I don't. What I meant was that my decreasing trailing stop would not re-adjust if my trade never went a pip in my favor. Sorry for the bad example. I think we're on the same page though. What to do with the trade that goes bad though. Hedge the trade off to "lock the loss"? Then lift the hedge + original trade when profit from another trade is > than your "locked loss"? The problem with that is you could wait for EVER to make that work. I think what we want is an idea that makes the losing trade just an "inconvenience", but not an equity destroying problem. Easy to say right! Any ideas?

 
wolfe:
MiniMe,

I like your dynamic stop, and dynamic profit idea. I assume you mean that the SL & TP are not set variables, but re-adjust themselves according to market conditions.

Thats exactly what I meant, however I am not sure how to apply that, I would consider the daily range of the last 7 days or so as my upper (target ) and lower limit (stoploss ) and as long as the trade in profit I would keep changing the TP to a point where I reach 40% of the daily range then I would close, same goes for SL, I haven't tested this setup as I don't use SL, but I consider the daily range in taking profit

personally I spend more time planning for my trade than trading, so when a trade goes wrong for some reason I grid the losing trade, if it went more in loss, I apply a corrolated trade, then close everyting at break even

I hardly hedge a trade, I prefer use using a corrlated pair

 
MiniMe:
Thats exactly what I meant, however I am not sure how to apply that, I would consider the daily range of the last 7 days or so as my upper (target ) and lower limit (stoploss ) and as long as the trade in profit I would keep changing the TP to a point where I reach 40% of the daily range then I would close, same goes for SL, I haven't tested this setup as I don't use SL, but I consider the daily range in taking profit

personally I spend more time planning for my trade than trading, so when a trade goes wrong for some reason I grid the losing trade, if it went more in loss, I apply a corrolated trade, then close everyting at break even

I hardly hedge a trade, I prefer use using a corrlated pair

Applying a corrolated trade to a loser is an interesting idea. Do you have that automated? What reasons do you prefer a corrolated trade to a hedge? The advantage to me with the hedge is it stops the bleeding from going any further, the problem is the wound is still there and needs to be taken away.

Using the high and low of the past 7 days could be a good way to set TP and SL. But, instead of a SL maybe a point when you apply your corrolated trading method?

Am a right in thinking that you prefer working with daily bars rather than lesser time frames?

 
wolfe:
Applying a corrolated trade to a loser is an interesting idea. Do you have that automated? What reasons do you prefer a corrolated trade to a hedge? The advantage to me with the hedge is it stops the bleeding from going any further, the problem is the wound is still there and needs to be taken away.

Using the high and low of the past 7 days could be a good way to set TP and SL. But, instead of a SL maybe a point when you apply your corrolated trading method?

Am a right in thinking that you prefer working with daily bars rather than lesser time frames?

I trade the 4H but my entry is on the 30M, cause i look to buy the pull back

The reason I trade a corrolated trade rather than a hedge is that each pair has different daily range, I start with a pair that has a small daily range, if the trade went wrong, I grid to a certain point

if the market went back to my fav, I add a more active corrlated trade, more active ( more daily range ) because I need more pips to cover up the loss.

thats the basic idea

 
MiniMe:
if the market went back to my fav, I add a more active corrlated trade, more active ( more daily range ) because I need more pips to cover up the loss. thats the basic idea

Using the same pair is better as it is 100% correlated. Just use Higher size to get the extra oomph.

Your hedge/corr idea is good as using tight stop - is giving $$ to charity. If you hedge you might end up winning double in ranges. In breakout - at least you know for sure it was a bad trade - and not a whipsaw!

 

Good advice. Though, I'm trying to cover my inexperience and ignorance with statistics and luck in technical trading, and from that basis I'm struggling a little with the hedge concept. Why not just take the loss, and still follow up with the balance recovery maneuvers? In my simple model: when I have opened a position, then that position goes good or bad regardless of what I do with other positions.

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