Minimize risk, maximize profit and ride a trend

Let me show you one more thing. Now I came back to the platform and I found GBPUSD in very small profit and price stuck between MAs. So I decided to give it a try and enter with a small risk of 10 pips. It is just a coincidence as I don't like to trade before NY close. But as I found it irresistible I entered. Most likely it will be a loss but if not, I could make much more with a very small risk. This trade does not follow any rule and it is very discretionary but I am sure you'll get the same feeling very soon.

Dear AdamO,
Thank you for the detailed answer.
I understand the point of "a signal generated far from EMAs" and then to wait for a pullback but it would be very interesting to look at some subsequent entry examples. I like the idea of equity millipede with many entries following the trend, I'd like to understand better your system

best regards

I used to overtrade a lot in the past because I was too focused on getting as many trades as possible in the trend. When you move SL to BE and let it run for a longer period of time, you must expect that your positions are going to die on the way. Therefore, more positions usually bring you more stress.

Since then I open position only when there is a signal. I should theoretically add to the position at every pullback in the trend as I trade when the price crosses MA.

My next post will describe the biggest challenge of this system.

Great Thread Adam ,

Thank you for going out of your way to help other Traders!

Could you maybe talk more about the risk you are using usually?

As you said in an earlier Post "small risk of 10Pips" I would assume that you are using same/similar lot size independent on SL size (unless thats just because you are trading a small account currently)

So back to the intial question... how do you decide how much you risk on your trade? Do you take more risk on the first? etc.

-Chris

Hi Chris,

thank you for your warm words and a question.

It is a very good and important question. I consider a risk appetite a very subjective matter. I am not a big risk-taker. I prefer risk relatively small because my system generates many losing trades and sometimes even weeks without hitting any TP area and I hit BE after BE and few losses on the way.

Hitting a DD of 10% is not a game I'd like to play because money-wise it is not a pleasant situation. I really like to keep it as simple as possible. I like to open 1 lot per every 100K EUR. So, it is 0.01 lot per 1K account. On this "show it" account I also open 0.01 just because I can not open less. But I wanted to trade the same amount I used to trade when I was learning.

I do not change my position size on the way. I just increase it as the balance grows. All my positions are the same size. If my SL would be 10 pips I would open the same size as using 50 pips SL. When I use 50 pip SL my chance of hitting it is pretty small and I can get it to BE in most cases. When I use 10 pip SL, it gets hit almost always if I do not move SL very aggressively to BE. But, as I wrote before, when I trade smaller timeframe I use to overtrade and make many mistakes. I am not a good short term trader. Therefore, I try to avoid it as much as possible. I have always traded H4 charts, in some periods when I have more time I switch to H1.


I can imagine that my risk approach might be too conservative for you and many traders prefer taking bigger risks. It is always up to you. My recommendation would be starting with small risk and then increase it if you feel comfortable.


Good thing about this system is that it is quite easy to keep your balance almost always in profit because you'll generate money in equity and you can easily close some trades in profit and keep it up. Sometimes you have weeks where market is not decided where to go on most pairs and then you generate more losses than usually. It is OK if you do not overtrade because markets always start to move.

Trading as a business

I believe you have heard it many times. Treating trading as a business sounds like a perfect idea. It has just one catch. If you do not have a business you won't be able to treat trading as a business. Or maybe you will, but I was not until I have got the experience of running a business.

Running a business sounds very easy but believe it has its challenges you don't have to face as an employee. Therefore, I believe it is very easy to say what we should do and how we should treat it. In business, you have an idea that you change into reality and sell it to the customer. In trading, you have an idea, you change it into a trading system and you keep doing the same over and over again.

There is something that we like to ignore. Costs. Emotional and also financial costs that we need to cover on the way to become successful entrepreneurs or traders. When you start trading you see all patterns that work and you'll be very successful at ignoring those that do not. So you start trading a system. It could be a very primitive system as mine is. You experience few winners and you start counting millions in your pockets. Then first streaks of losing trades come. You'll start doubting your system because you overlooked signals that were not successful. And yeah, there will be so many of them.

So you'll keep looking for a new system that works better. You'll read many new threads in forexfactory and try a new approach. You'll do it just because you do not treat it like a business.

When there are costs in business you just pay them and hope that you'll make more than you've paid. Sometimes you pay more than you earn. It happens. If you are lucky it does not happen so often, but it definitely happens in every business and you do not think about selling chairs when you are already in financial business. It just does not make any sense. And still, you'll be prone to do that in trading.

If you have found something that suits you emotionally and does not make you nervous and wakes you up in the night then keep developing the idea and improve money management to make it even more profitable. Stop changing your focus after every week you feel tired or disappointed from the results you've achieved. In the last 2 weeks, I haven't caught any good trade that would become a trade I'd like to talk about. It does not mean that my trading sucks and I should look for another system. It just means I have to pay the cost. Financial and emotional that this business brings.

Are you really treating your trading as a business?

I was waiting for this trade for some time. NZDCAD on weekly reached huge support and I waited on the signal on H4 so I could take the trade.

I still did not place SL as I find the level very interesting and I feel comfortable just keeping it open as it is.

Also NZDUSD, AUDUSD and AUDCHF are running nicely.

I hit today 2xSL and one trade was closed in a loss. 7 other trades are in small opened profit. Let's see if we catch finally some good movement. I've just opened USDCAD. I came late to the screen, so entering at a worse price.

My balance is around 1.8% in loss counting from the deposit at the beginning of the month. Counting equity, the account is in profit around 1.5%.

The price gets to the right levels from time to time...

I started to get many signals as markets started to move. At the moment there are 16 open trades. I was hitting too many SL as the price started to act heavily on my levels. Therefore, I entered without SLs as I was able to open position on strong supports and resistances.

I'll start moving SL to BE once the price moves further from my entries as I would not like to be stopped on quick spikes that might appear.

EURJPY also moving up

My biggest winner so far is USDCAD, unfortunately, there is just one trade. I'll wait for a pullback to scale in.

Nice pullback on EURUSD, GBPUSD and USDCHF

I woke up to 23% open profit and is still growing. I have accumulated a 7% loss on the way. So the account is in profit around 17% since the beginning of the month. It is how building equity works in practice.

I hope seeing this method in real-time helps you to decide whether you like or not building equity. It might be psychologically difficult because you are not taking a profit very often, but once you do, it is a huge profit that pays you for all losses on the way.

excellent!

New screenshot from the platform. Balance is basically on the deposit level again + equity is in decent profit now. 19% to be specific. I am not entering with high precision, I am taking many losing trades on the way and still make a profit. I'm sure you'll find a way how to do it better, with higher positions and less risk if you want. This is something that many traders here on FF tried to show us but were not giving us data so we were sceptical. But it works, guys.

I took profit on NZDCAD so my balance is replenished and I have bought ammo for the next trades.

HI AdamO,

first of all I think you manage to properly read the trend of the pairs, the "trick" of the millipede is to open many small positions rather than a one all-in trade, so that they are all important but not all "hopes" only rely on one and this let you close unprofitable positions with nonchalance and let profit run on good ones... but only because your trades are not random but wisely chosen.

I need to look better into the signal that triggers your trades, I like your strategy