Attachments: Scaling in - no stop loss

Scaling in - no stop loss

#1
First Post: Edited 4:50am Sep 28, 2017 2:20am | Edited 4:50am

bmcgowra
| Joined Apr 2014 | Status: Trader | 270 Posts

This strategy was tought to be by someone in Amsterdam, who claims to trade it with great success.

You need a big account, due to drawdown. (Balls of steal as well)

Open the 1 hour chart and look if the past 2 days where bullish or bearish. If Bullish buy and if bearish sell.

Suppose it has been bullish.

Buy 0,1 lot and tp after 3 pips.

Add pending buylimit orders after 5pips drawdown (tp 5 pips), then 10 pips drawdown (tp 10 pips), then 10 pips (tp 10 pips) and then after 20 pips drawdown (tp 20 pips). Continue adding buy limit orders every 20 pips. (huge drawdown)

IF TP for any of the buylimit orders is reached re-enter the buylimit order.

(see graph)
TP is always at the next level. So say you are at -105 pips (level6) and you tp level 6 three times (+40pips) you have +15 pips profit and can close all open positions.

Drawdown could be 1000s of pips, but because you keep adding and selling you avoid huge drawdown.

My friend claims he does this for years and had 2 intances where he had a drawdown of over 1000 pips

Though of sharing to get feedback and ideas.

Attached Image

#2
Sep 28, 2017 2:37am Sep 28, 2017 2:37am

dagoods
Joined Nov 2007 | Status: Trader | 3,060 Posts

sounds like you are using something similar to a fractal model to hedge sorta...specifically you are using the doubling sequence initially... so 5,10,20,40,80 etc.

so if price moves against you 5 pips you average in at -10, then not again until -20 then not again until -40 etc. kinda thing

the idea being you will eventually sooner or later have at least a 50% retrace and therefore a recovery of the loser at break even. The winning trades will be all profit and the losing trades will all eventually recover. so long as price eventually retraces 50%. is this what you are saying? in theory it is perfectly fine.... i've looked at it...there are very few charts where there isn't a 50% recovery.... the challenges 1. those recoveries are HUGE when they are necessary, i.e huge drawdown 2. it is possible to never recover 3. it is possible that recovery takes a decade or more to happen
in other words you are hoping that if you get caught the wrong way (going long and price goes short that a retrace is enough to recover....
but what you are saying sounds like you are putting hedges on as you go? i'm not clear on what you said or how that would affect things.... maybe that helps so that you only have to recover 5 pips rather than 50%??? can you please clarify. Ty

re-read what you wrote... i see now... you are doubling the TP rather than the lot size, a variation of martingale....

i like the idea better than martingale because price can move to make your tp pretty easily.....But after you go 5 layers your stop is 5 pips? 20 pips? and you tp is 160 pips.... a few more layers and your stop is 5 or 20 pips but your tp is now 320 pips... not likely to happen..........

i'm not sure if that is what you meant

#3
Sep 28, 2017 2:57am Sep 28, 2017 2:57am

bmcgowra
| Joined Apr 2014 | Status: Trader | 270 Posts

I try to write little to avoid confusion. :-)

No increase of lot size. As you said.
No Stoploss

Every buy limit order has its tp.

TP of is equal to 5,10,20,40 etc.

Suppose we are at level 5. the pending buy limit order of 40 pips is executed. If this order reaches 40 pips take profit. Once tp, re-enter pending buylimit order again at 40 pips. It could tp several times before moving back up to the other buylimit orders.

Would be easier if I could find the Excel sheet he send me.. Will have a look.. :-)

#4
Sep 28, 2017 4:03am Sep 28, 2017 4:03am

Torontoman
| Joined Jul 2017 | Status: Trader | 89 Posts

Thanks for your system BMC. But I still don't quite understand. It seems like you are hedging. Could you please write the hedging details?
Thanks

#5
Sep 28, 2017 4:26am Sep 28, 2017 4:26am

bapakjason
| Joined Apr 2014 | Status: Trader | 1,900 Posts