Disliked{quote} If you have tried bouth and then you can say its ok, but otherwise i can use the same argument that you never know how long a trade will last so take the 2 r that you got before it turns on you. For this strategy and for forex maybe your reasoning is true but when i played with stocks the trailing stop was giving lower performance compared to target. I used a trailing stop as a test for stocks. Best regardsIgnored
Also, you may have overlooked the information I gave in Post 112. I'll copy an paste it some you don't have to go look for it:
One of My Favorite Money Management Strategies
1. Always initiate a trade with 3 units. 1 unit is defined by you, and can be things such as: 100 shares, 1 lot, 1 contract, 100 pips or 1,000 pips, etc.
2. Using the Set-up Bar (usually it's the bar immediately preceding the Entry Bar) you measure the length of the Set-up bar in pips, pennies, dollars, points, etc. and this defines your Initial Risk Amount.
3. The total length of Set-up Bar (in pips for example) + 10 pips defines your Profit Target basis.
------------
When Trading the Forex for Example...
Stops
Long Trades:
1. Place your Stop Loss order 10 pips below the low of the Set-up Bar
2. When the pair appreciates by an amount greater than or equal to your Initial Risk Amount, exit 1/3 of your position and move your Exit Stop on the remaining
2/3's to 5 pips above your entry price. (Break-even + 5 pips)
3. Place an order to exit your remaining position when the price appreciates to 3 times your Initial Risk Amount.
Short Trades:
1. Place your Stop Loss order 10 pips above the high of the Set-up Bar
2. When a pair appreciates by an amount equal to your Profit Target basis, exit 1/3 of your position and move your Exit Stop on the remaining 2/3's to 5 pips below your entry price. (Break-even + 5 pips)
3. Place an order to exit your remaining position when the price appreciates to 3 times your Profit Target basis.
------------
Why I Like It If You Win on All 3 Units:
For Example, Using a Long Trade
Set-up Bar length: 40 Pips
Initial Risk: 40 Pips + 10 Pips = 50 Pips
Exit 1 Unit at +50 Pips
Exit Remaining 2 Units at 3 x 40 Pips = 120 pips x 2 units = +240 pips
Total Profit: 50 Pips + 240 Pips = +290 Pips
OR
You could exit the 1st and 2nd unit as described above and let the 3rd unit run until you decide to exit.
------------
Why I Like It If You Lose on All 3 Units:
Set-up Bar length: 40 Pips
Initial Risk: 40 Pips + 10 Pips = 50 Pips
Exit 3 Units at -50 Pips x 3 = -150 Pips
Total Loss: -150 Pips
------------
Why I Like It If You Win on 1 Unit But Break-even on the Remaining 2 Units:
Set-up Bar length: 40 Pips
Initial Risk: 40 Pips + 10 Pips = 50 Pips
Exit 1 Unit at +50 Pips
Exit Remaining 2 Units at +5 Pips. 5 pips x 2 units = +10 pips
Total Profit: 50 Pips + 10 Pips = +60 Pips
------------
There are many other possible ways to exit using a 3 unit strategy, but you have to figure out which way appeals to you most.
Hopefully I have all the math correct, but if I don't let me know and I will correct it (I'm really tired from a long 3 day Memorial Day weekend entertaining guests).
I'll talk about using Trailing Stops in another post.
Always a Student, Never a Master - Emulate What Works
3
