Advice on taking profits on Daily/Weekly Timeframes

Hello,

I have been trading demo for over 7 months now purely on price action (only on Daliy and Weekly timeframes) and I have averaged 3.5% a month on my account risking no more than 2% a trade so far. I would say my win rate is between 60-65%.

The problem that I seem to have is that I very rarely take profits over 1:1 risk reward. I take my profits at next the next again support or ressistance zones which I tend to fine are around 80-100 pips and as I trade from the higher time frames I have to risk between 80-100 pips. I would say out of 10 trades I trade I only tend to catch a couple that make a ton of pips but a majority of the time my next again zone holds and If i had moved to BE I would have alot more BE if you get me.

I have tried to trail stops on lower time frames 1hr/30mins/15mins once in trades but I find that doesnt give them enough room and you end up making not alot.

Now before everyone saids take entry from a lower time frame, I just dont have the time to sit and look at a chart all day. Thats why I like the Daily so much. I can just check them once a day for 15-20 mins.

Any ideas?

Thanks,

Jack

As I have done, you could use the weekly to plan your trade and start trailing the stop using Low/High of previous positive daily (or even hourly) candle ...

Note: The Weekly might not give us a lot of trades, but we’ll get “stronger” setups as we will be using “stronger” S/R in determining our entry and initial SL ...
Please be warned that in using the weekly, we have to prepare an average of 300pips-Risk for each trade ...

I'm not sure if you noticed but the past several months...depending on which pair you are looking at...have been ranging between 100-250 pips. This is typical of the "summer doldrums" and does require a bit of patience for taking profit. or trailing your stops. As well...it has always been my practice to "engage at the edges" of any range. That means entries AND exits. so while the market remains range bound you can continue to make profitable trades by "engaging at the edges" of the range.

It also sounds to me like you don't have sufficient data to make a determination on where to place your take profit orders. This data can be gathered while you are waiting for these frustrating ranges to resolve. Here are some questions that you will need to answer to gather your data:

1. Based on your entry (the method and style you use to enter)...how far does the average positive move go before a significant pull back (greater than 50% of profit)...How far in pips.
2. How long does that usually take (on average)...10 candles, 15, 20? Remember each candle is time so this tells you how much time you will likely hold your average trade
3. Based on where you place your stop, does that 60-65% of trades that finish positive render only 1:1? Is there a point that gives greater? How often do you see, 2:1? or 3:1? or more...what percent of of those positive moves?
4. What is your average drawdown on an entry? In other words: does your entry go negative for a time then go positive? Or do you see quick profits that then errode after a time then come back? This can help you determine better stop placement which then translates to risk-to-reward.
5. Knowing at least these data can help you determine where to place your stop and your limit on your "typical" entry.

You will find that collecting this kind of data on your trades helps make your trading more effecient and will also give you a good idea how long to wait before seeing profit (on a typical trade) and where/when to bail out if things just aren't going you way. I've found in my own data that 2.8 to 3 (xR) is the magic number. My typical stops range between 80-100 pips. And the average winner lasts around 3 weeks. Some longer, some shorter.

It will take some time to collect this kind of data and if you find it helpful...you will never cease collecting and analysing. This is probably the most important step you will take in your trading and will very quickly put you into the 5% of traders that consistently take profits. If you know HOW you trade and what you do when you see the market changing you will have a HUGE advantage over the rest of the retail crowd.

Best of luck

Congratulations on a 60-65% win rate!
With that win rate a 1:1 r:r would continue to be profitable. The question is can you maintain that win rate. Most cannot.
1:1 necessitates winning a minimum of every other trade just to break even given a steady lot size.

It is customary that one finds a trading method first before considering r:r. I believe that understanding r:r is even more important than one's trading style.
Random entries/exits or undisciplined entries/exits without regard for market structure or r:r is likely to lead to lack of profit.

I personally use 3:1 as a minimum r:r. So I must achieve 3x my SL to take profit. I will move to breakeven in certain conditions but I never take profit early. A 3:1 r:r means I can lose 3 trades before losing the profit on just one trade. For me this is much less stressful than having to win every other trade.

Hi Jack,

I think you are doing well so far.

Fundamentals are responsible for the large market moves. If you look at professional trading firms and banks they take position trades based on economic fundamentals.

Also risk reward is is discussed as being the be all and end all of trading which is certainly not the case.. Many trading professionals have negative risk reward strategies which are very successful.

Whats important is your average win to average loss ratio in $ terms and your's is working for you at the moment. We are coming into the summer holidays for the US and Europe so we should see less volatile markets over the next month.

In my opinion your should not look to move your stop loss or take profit levels or adjusting your current trading strategy but rather look into researching fundamentals of the currencies likely to really move over the next 12 months. This can help you catch the 300 pip + moves. Obviously with Trump in office we could see much greater moves in the CNH and exotics.

Hope this helps.

Clinton

Allo boss can you corroborate or verify your statement by writing that many professionals are successful trading with negative RRR?
Ofc I am speaking of successful and not money making per se. A mediocre method can easily make money by taking 10-20pips profit with 200 pips SL or no SL as advocated by the likes of many guruish traders like your goodself in this forum. Also how many professionals do you actually know?
Please answer my question truthfully and no slinging match please.

Cheers

I will let you all chew on this....(I am talking 3+ years)

 

1. It is a failed strategy if you define TP exits based on risk per trade (in pips or dollars).
2. It is a failed strategy if you define TP based on entry setups or conditions.
3. It is a failed strategy if you define your SL/TP based on price setups
4. It is a failed strategy if you rely on your account performance based on market variability.
5. It is a failed strategy if you rely on calculations (like currency strength) for your entries and exits
6. It is a failed strategy if you rely on calculations (like currency correlations) for your entries and exits
7. It is a failed strategy if you define risk (in pips) based on price alone. Risk is NEVER a constant in trading. Price is never a constant in trading. Trading on variabilities will only result in inconsistent outcome as in up/down/ziggy/zaggy equity (hint: I said equity and not balance) curve!

EDIT: I am not here to discuss... "take it or leave it" is my deal with the Factory going forward....

Sure, I am happy to expand on average win to average loss ratios. I work for a proprietary trading firm and to validate a strategy we take a sample size of trades with specific features i.e market reactions at (big figures on major pairs, asian ranges, previous day highs, large market profile areas). Then it comes down to the numbers. For example we may trade the previous day highs with a 10 pip stop and a 7 pip take profit if the data shows this is a profitable strategy. Other methods which are similar involve a 10 pip stop loss and taking 70% of profit around 7 pips which effectively funds the remaining position to target a larger move.

The important take away is that we adjust our strategies according to market conditions. It can be difficult to target 300 pips + consistently with Donald Trump moving the markets from twitter. I think many new traders go backwards in their development trying to target big moves when the market conditions may not be favorable.

I personally know about 70 professional traders, obviously don't know all of their strategies. Of these I know 3 who's sole strategy has a negative risk reward. These guys are scalpers. I know about 7 who implement negative risk reward strategies as a part of their day trading models. I also know a few programmers with negative risk reward models on their mean reversion algorithms.

Managing risk scaling into a position, slowly shifting to profitability.
Getting stopped out will keep your from adding to the wrong ones, but stack the lots on the few good ones

Cheers~