Gridding with tiny stop loss

Hey FF members,

So I have built some code in Mt4, essentially to make my life easier when it gets to journaling.
I load the data into my database so I can easily analyse it.

So turns out that the strategy I use is profitable, although really counter intuitive.

The strategy is a simple gridding system with tiny (let's say 3) pip SL-s wherever it makes sense due to spread...like GBPUSD.
So on a higher level determine a direction, set some levels where I would like to enter and exit (Open + SL) and then let it run. Targets are not really set in stone, but definitely are from higher timeframes. This is swing trading.

Considering the volatility, it is rare that a position survives, but no problem, with a limit order, it automatically gets back into its place. I have a hard "stop doing so" after the 100th "reopen"... after that level gets "inactivated". This process is automatic.

So I set a level, a direction, SL, using consistently little Lot sizes due to margin requirements. Then let the code and price do its work.
When let's say the market is so volatile that it reverses against my level where let's say I have already lost like 10 positions ... (let's say like 30 + 10*spread ... like 40 pips) ... so market reverses like 50+ pips, I manually deactivate that level ... and open near the price... So if market reverses (now into my direction)... that position potentially "cover" some of the previous losses on its own. Like buying "cheaper".

Needless to say, it is very easy to achieve 20-50-100+ RR-s like this, but of course I always track the accumulated losses. And your success ratio is way below 5%.

The point is, it seems to me, when I get the direction right, I capture a trend, these levels accumulate profits much faster compared to small losses once they reach constant positive floating equity. So every other day I "add" extra levels to my "basket of levels". Due to margin ... I don't get greedy and stop this after like ~10 levels. This way entries are not that problematic for me.

Also if I am totally wrong about the trend even, I get an X amount of loss, then market doesn't trigger my positions "ever" again. So this is definitely not trading without SL. Also, I have to be realy unlucky to get a level, where it gets reopened like 20+ times ... So far 40 was the max for me. The position alone made itself back into profits after 2 weeks. Also don't care about swap much, that fee is tiny to pay compared to Total profits.

My question to you guys, have you seen, worked with, played with similar systems like this? I am doing this live since last December and I am happy with it so far.
I have closed almost 1300 positions in this timeframe... no margin calls

What is your opinion? What could be wrong with this?

Gabor.

You should just post the EA so we can see how your strategy works. From your description alone it might be difficult for people to understand your entries and exits and your RRR. Keep up the good work, GL!

I have the same thought
It is not very clear.
Share more details: charts, screenshot, trades, etc ...

Hi,

2 things.

 

1. I am not going to share here any EA-s. This thread is not about telling anyone to do anything. Also, this EA cannot be backtested. It opens on levels only if I said so with an initial, manual entry.
2. Charts...trades.. Guys, please open any chart, where you see a trend. Imagine that you expected that trend .. maybe after a breakout. Check H4/Daily charts. Then imagine every day, randomly you open a trade with 3 pips SL ... like GBPUSD (my broker there has a 0.8-0.9 pips spread). So draw 2 horizontal lines with 3 pips distance...then start counting manually... how many times did it get hit... Then look ahead and calculate what could have happened (for example after 15 consecutive loss... (circa 60pips loss considering volatility) ... how much the market moves regardless )...Rinse and repeat. Build a grid.

Where you enter into a market is totally subjective. Some sees a trend somewhere, where others say it is a sideways market. I am not going to try to change anyone's belief.

I am just curious if anyone has any idea what could be wrong with this. Like overtrading, over leveraging... too many "grid levels"...etc.

Check GBPJPY since 2021-Jan-24... Or anything like that. My exits are simple... I just want to earn more, compared to my losses with the actual basket of trades. I have no clue how tall the trees are going to grow... but once they reach/near wome weekly/daily S/R levels, and I am in the green, it just make sense to close all open positions. Again, manually.


A live example... 2021 April 1 - AUDUSD. Level: 0.75573. I figured if price goes below this, I may expect a downtrend starting... if above it, uptrend potentially continues. My exit would be around 0.797. Circa 400 pips. So I started to put around that initial level some buys, sells. I added there after all 9 sell levels on which I lost 50 times. 12 buy levels, from which only 5 remained open (manually closed levels, to "buy cheaper"). So far that 12 levels costed me 77 positions. Right now after 127 losses, 5 open positions, I am at break even - 2021-Apr-7.

The 5 levels are at: 0.75557 - 0.7557 - 0.75634 - 0.75594 - 0.75694

I have no clue what is going to happen ... but if these 5 positions survive, and market does not come back down any more, then I get a nice payday. If not...I still going to buy cheaper, if possible...if not, then I was wrong... moving onto the next trend.

Regards,
Gabor.

if it works, then keep going.
in a way you are following traditional trend following principles, cut losses short and keep trades open when trending.
the things you need to watch out for is leverage and free margin, too many trades open at the same time could cause you to come undone.

BTW you could modify your code slightly so that it could be backtested. It is possible to add trade buttons in your EA which when run on backtested charts initiate your "manual" entries.