{quote} i know you are an experience trader judging by your style of trading and so i need your insight on position management. how do you manage positions when price turn against your positions because i know sometimes it can get bloody. do you use option for protection against major hit. i am asking this cos i also trade in one direction without stop loss when there is clear trend and both direction when there is no clear trend which comes into play when price goes against my initial directional play above certain level i will start to cover the...
Let's start off by saying. Getting into a trade is the easy part, getting out of a trade is the hard part.
Position management is very crucial for me if I want to trade longer-term, more especially with GbpUsd. This pair can have wild up and down swings before it starts trending. Here's the good thing. 2 Years ago I decided to trade a difficult pair like GU which in my opinion is a scalpers paradise, because of its frequent up and down movements, but I wanted to use this pair as a challenge to see if I could hone in and improve on my trade management skills which is primarily what I have been focusing on. It has been an evolution over 2 years but well worth it because it has taught me a great deal. Of course, it makes trendy pairs much easier for me to trade following the same rules. I don't share those trades on FF, maybe sometime in the future depending on the spare time I have.
I have to follow a strict set of rules:
-If my 1st trade is close to daily support/resistance and a round number I use a 25 pip s/loss.
-If it is close to my daily pivot or further away from a round number I use a 50 pip stop.
-If for example in a downswing price crosses over my daily pivot or gets close to support I will move my stops and lock my trades in with few pips profit.
-If I get a good hunch that we will continue ranging for a while I close my trades for the day for some profit.
My job is done and I walk away from my trades.
In rangy periods the chances are very good that my trades will get taken out for a few pips profit but as time goes you will see that price forms lower highs or higher lows for the day and it is in those gaps that my trades survive. This also forms a strong barrier for the protection of my trades and I move my stops in just below for that particular batch. I have highlighted it in green on the 1hr chart below.
You will see that besides the small little trade closures I have accrued over 1700 pips in 8 days in strongly protected areas.
Now, should we have a wild swing to the upside due to a news event or whatever. My trades are fully protected with stop losses and I live to trade another day. Of course, it will be very disappointing if it happens, but better than going into deep drawdown.
My 1Hr chart
Festive greetings.
Cheers.
Trade to trade another day
I plan on investing long-term, though like you advise, I'll need to study and research a whole lot.
