DislikedI agree. But how do you ensure that? What's the right time? That's probably the big question here. I'd like the market to tell me when to diversify. And one way the market conveys this message is by breaking SR levels - certainly not by retracing to my entries, which the market does not recognize.
I'm sure that in many cases, putting a SL at BE would turn out to be the right thing to do. In other cases, you'd be much better off with the approach I propose. Neither of us can tell a priori.
w.r.t your example: Unfortunately, I don't have...Ignored
Good question.
In market, there is no such thing as right time or wrong time (exiting, diversifying).
You are only wrong if you are closing your final position on a loss.
If you move your SL to s/r areas and have found success by closing your positions with profit then you too are winner.
I aim for something different to you. Also, when you become a position manager and your interest is not from 'just one or two positions' but groups of multi-layered positions across all pairs of currency, moving stop loss to s/r becomes irrelevant.
Perhaps you could try movign your stop loss to s/r and once you build a portfolio of positions you will understand that you dont have the time to worry about positions dying at BE or at s/r.
Below is something I put in alot of time to pass across. Highlighted purple is for your understanding. Please have a read.
"Diversification is the easier part of your trading. Its so simple. You look at current group that you are building.
1. All sell positions and growing rapidly? Excellent downtrend.
2. All buy positions and growing rapidly? Excellent uptrend.
3. Majority sell but few buy positions? Retrace
4. Majority buy but few sell positions? Retrace
5. You look at period of growth for the current group. 1-2 months is good for short/medium term growth. Preferably at least more than 1 to 2 weeks. Anything less than 1,2 weeks is ignored.
Anything less than 1,2 weeks of growth? Just let the positions on the correction die, not worth diversifying for.
When diversifying,
You can diversify @ point 1 or 2 or 3 or 4. No golden rule as to when. But you must be diversifying for:
1. To settle all loss accounted for establishing the current group.
2. To replenish your trade capital to before you started creating the group.
3. To add realized profit into your trade balance and increasing its balance. To ensure a smooth equity curve in the long run.
4. To acknowledge that danger has passed and all loss/risk accounted for on your remaining bigger legs for now infinite growth which is ofcourse at the mercy of the markets.
5. Psychological safety: You know its over and done with that group. Legs have been closed for profits and legs have been promoted to upper group. It gets it off your mind.
Sincerely,
Graeme
