The System II (Yes with irony)

feb,
i think i can handle the entry of a trade quite well.
the problem and the next to learn is the exit.
looking at the trade i dit in eurchf, at what time should one leave the trade?
wait til the stoploss , even if it looks like this? look at the picture

lookin' to short G/U here

yep, with 'ya....EU gaining momentum north..

GU short filled 9895.

stick around...I am going to write something about units and I am going to include some ways to skin the cat - stop-loss wise...

be aggresive with G/U

don't let the profit slip out of the sleeve!!!!

G/U is a beast!!!!

no mercy with it!!!!

G/U smells like a loser to me

Let's wee what happens!!!!

ok...whatever.....

I am going to start writing about units and some hints on stops

might take me awhile

don't U dare to trun that dial !!!!!! LOL

GU -20. No chance to trail stop towards entry....looking forward to Feb's next installment.

In EU long now, let's see if this one delivers....

...bosh! +21.

stopped out EU +10 ticks

cool thing about units

FYI 10,000 units is equal to = 1 pip

let's assume you have 1k for trading capital and you establish the all-praised risk limit (HA!) of 2%

so that would be 1000x2% = 20 bucks

but there's a problem

there's a trade but your stop is way over 20 pips...the pullback is 48 pips...(even a shallow one could be that high)

so what would you do??

the risk of 20 bucks in units is equal to 200,000 units

so you divide 200,000 into 48 pips = 4166.66 - This is the figure you need to trade to keep the risk on 20 bucks

so you can still take the trade, take your 48 pips risk and still be risking your 2%

but ( why is there's always "but" in almost everything huh!?)

you're risking 48 pips to get 20????..something is not right

There's three choices
1) don't take the trade...it's a valid position

2) Adjust your units, move the stop aggressively up to break-even and let the market hit your profit target

3) Adjust your units, move the stop aggressively up to break-even liquidate half of your position at 20 ticks and let the rest ride....

This is the crux of every trader in my opinion

Ok now we get to the trailing part which has been my beacon for many years

Trailing the stop has a disadvantage - will make your hit rate (# of winers) in a low %..sometimes in the vicinity of 50% if your lucky...mine is lower than that

See, it doesn't matter

You will have more often than not a runner. You will even lose many times, but that very runner - 20 ticks or more...will even out the equation in terms of winners.

I lose a lot...Yes baby

But if you look at my monthly statement, I am always in profit.

I take many trades with an unbalanced risk/reward, but because I move my stop aggressively, I even-out the position fast

I use 1 pip trail stop and I am assuming that won't work in the spot.

Apparently momentum differs from the spot and futures...I sincerely speculating here...remember I have nil experience in spot forex.

One solution to this problem is to go to a lower time frame - and trail your stop manually above/below every bar

or

use an ATR stop like some of my guru's friends do. In this particular, I have no clue whatsoever as I don't use ATR well. the other day I did for fun and seems like it works



you need to read this post and digest it. Do it several times until it makes sense to you

Hope it helps

correct me if i'm wrong.

perfect trade would be swing for 50 (or whatever) pips and pullback for 19 pips?

probably..it all depends

If you start any session , the market has been flat or in the opposite direction form the freshly future swing . All of the sudden the market goes high/low over 30 pips, that's a fresh swing to me.

If the market has been trending the past session - like cable today, and that trend goes over the next session, I will be careful, cause someone (banks ) could be on the lookout to take profits off the table.

swing examples
a-b
b-c
c-d
d-e
correct?

Feb and others.

My pending order was triggered long and I was at b/e using the trailstop EA by Skyline. I left the profit target @ 1000 pips because I wanted to ride the trade but I closed the trade with a 28+ pips gain because London was ready to close and price action tends to slow down after noon time(est). A.T.M as I write this post price went up another 15pips or so but I think that I have to let go of that notion. I know this is a demo account but this is the type of discipline that I would like to be consistent with.... trade the overlap of London/NY until noon time (est) and get on with my life.

Thanks again Feb

yep

from c to d I see a looser...I mean, can't read the charts very well..sorry

but from d to e and beyond I believe you had a winner.

good trade moneda!!!!!

Just want to say thanks to Feb and everyone. Have read both of Feb thread and trading naked now. My goals are to make 1% per day risking 1% per trade so 20 pip stop 21 pip target, three trade max per day, if first trade winner quit for day and do something else. So far have 4 days in row winner. Will adjust percentage every week to balance of account. Will post charts after my son show me how.

kiss
john

Hey,

Please do not hesitate to offer advise on my thinking process....My main purpose for posting is so that you and other more experienced trader can help me become a better trader.

that's an excellent strategy in my opinion