My TP ends up too small compared to my SL, what other approach can I use?

Guillermo Bondonno
30
Guillermo Bondonno  

Basically, I've been trying to set my TP in order to maximize my reward, which would be TP*P (TP). After some math, taking into account the mean and Std deviation, I end up with a TP of 2.6 something pips, which, of course, maximizes the probability of hitting TP because is so small.


On the other hand, I set my SL to be 1% of my equity because that's the risk I want to assume per trade. This may technically be the best setup as in risk reward because I'm technically guaranteed to hit TP before SL, but it really doesn't work for me to have a TP so small.


How can I scale up the TP maintaining the risk reward ratio? Do you see any other approach I can take to maximize risk reward?

William Roeder
23727
William Roeder  
Guillermo Bondonno: I set my SL to be 1% of my equity

That is not what you are doing.

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/pip but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum 2017.10.10
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum 2018.02.11
              Lot value calculation off by a factor of 100 - MQL5 programming forum 2019.07.19

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

Guillermo Bondonno
30
Guillermo Bondonno  
William Roeder:

That is not what you are doing.

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/pip but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum 2017.10.10
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum 2018.02.11
              Lot value calculation off by a factor of 100 - MQL5 programming forum 2019.07.19

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

Yeah, when I said I placed it to be 1% I mean that if I hit the SL, I would have lost 1% of my acc, as in if I deposited $100 I would lose $1. For that, I take into account the lot size and value of symbol. It still ends up too big for my tp
Jamie McCullough
9
Jamie McCullough  
Well, if you set your SL to hit when you reach 1% of your deposited funds than you need to increase the balance in your account to make the SL go further. You can set a TP and NOT set a SL at all, which is what I do. This is if you have the ability to sit there and watch price action.  
William Roeder
23727
William Roeder  
Guillermo Bondonno: Yeah, when I said I placed it to be 1% I mean that if I hit the SL, I would have lost 1% of my acc, as in if I deposited $100 I would lose $1.

You could double your SL and halve your Lot Size and still have the same risk. What part of “you place the stop where it needs to be,” was unclear?

Olaniyi Matthew Olaleye
438
Olaniyi Matthew Olaleye  
William Roeder:

That is not what you are doing.

Risk depends on your initial stop loss, lot size, and the value of the symbol. It does not depend on margin and leverage. No SL means you have infinite risk. Never risk more than a small percentage of your trading funds, certainly less than 2% per trade, 6% total.

  1. You place the stop where it needs to be — where the reason for the trade is no longer valid. E.g. trading a support bounce the stop goes below the support.

  2. AccountBalance * percent/100 = RISK = OrderLots * (|OrderOpenPrice - OrderStopLoss| * DeltaPerLot + CommissionPerLot) (Note OOP-OSL includes the spread, and DeltaPerLot is usually around $10/pip but it takes account of the exchange rates of the pair vs. your account currency.)

  3. Do NOT use TickValue by itself - DeltaPerLot and verify that MODE_TICKVALUE is returning a value in your deposit currency, as promised by the documentation, or whether it is returning a value in the instrument's base currency.
              MODE_TICKVALUE is not reliable on non-fx instruments with many brokers - MQL4 programming forum 2017.10.10
              Is there an universal solution for Tick value? - Currency Pairs - General - MQL5 programming forum 2018.02.11
              Lot value calculation off by a factor of 100 - MQL5 programming forum 2019.07.19

  4. You must normalize lots properly and check against min and max.

  5. You must also check FreeMargin to avoid stop out

Most pairs are worth about $10 per PIP. A $5 risk with a (very small) 5 PIP SL is $5/$10/5 or 0.1 Lots maximum.

Placing Stop Loss where it needs to be is one of the vital components of trading plan

THOMAS RAY GURCHIEK
181
THOMAS RAY GURCHIEK  

Not sure what your spreads look like, but you may have to look at lower time frames with such a low deposit. Higher the time frame the larger the swing potential which means your support, resistance, or SL targets may be way outside your risk tolerance for the account size. I am a firm believer that literally any strategy can work IF you can work out the risk/SL properly.