well, yes, it's hard to say. i was only giving an example of tp/SL. i got home today. i had 7 pairs open. 2 of them were big winners. 3 were flat. 2 were losses. i was in profit by a couple of hundred pips (this is demo though). one appeared to be a runner on the BB. i closed it. so i would not have waited for -100 SL. it's no longer a good trade. discretion must be used ultimately i think.
i was only giving an example. one thing you must do, if you have not thought of it already, is assuming that there is an edge (there really must be, otherwise, bob's methodology would have shut itself down long ago), you must trade more. the more, the better. like a casino, the more money being gambled, the more your % edge begins to kick in. i.e. if one person walked into a casino and bet 100 billion (you can't do, this is theory only) on red in roulette, even though the the casino has an edge, but it's hard to say for one hand only what will happen, regardless of edge. but if that 100 billion is spread out into 100 billion different bets, since the casino games have a mathematical edge....they will win for sure, long term. just like a superior basketball team vs. an inferior one.....for one game only, who knows with certainty what will happen, but give them an 82 game season, the odds will pan out accordingly...
therefore it is ALWAYS better to trade 40 half lots rather than 20 full lots. it would be even better to trade 200 single mini lots (0.1) rather than 20 full lots.... this is very important. however, since you won't be able to get into 200 trades simultaneously, you have to find a threshold where you maximize the strategy. i.e. how many instaneous trades have you been in? 10? 15? take the maximum of that and utilize the lot range to it's fullest, without taking into consideration 2.4.2. because if you do consider 2.4.2, your probably going to have to take the previous calculation, and divide that by 10, just to standby and brace yourself for what it will take to break even through 2.4.2. again, i know 2.4.2 will work, it makes complete sense. bob gave 3 examples of where a pair can move a 1000 pips without retracing at least a little....i.e. a gov't going bankrupt (extremely unlikely). so it's not that i disagree with 2.4.2, all i am saying is that your money can be better spent elsewhere.
bob mentioned 70% of the time, it will bounce off the BB and retrace, 20% of the time, it will stay in the general area, and 10% of the time, you've got a runner, which by using 2.4.2, in all likelihood you can make that runner into a BE or small profit. this is great. the only problem is, in anticipation of those inevitable runners (which as bob said is 10% of the time) the lot size of the other 90% of your trades, is diminished mightly, so that money management-wise, you can survive the DD that those runners will potentially bring you, until you finally make that one single trade BE or get a small profit from.
i was only giving an example. one thing you must do, if you have not thought of it already, is assuming that there is an edge (there really must be, otherwise, bob's methodology would have shut itself down long ago), you must trade more. the more, the better. like a casino, the more money being gambled, the more your % edge begins to kick in. i.e. if one person walked into a casino and bet 100 billion (you can't do, this is theory only) on red in roulette, even though the the casino has an edge, but it's hard to say for one hand only what will happen, regardless of edge. but if that 100 billion is spread out into 100 billion different bets, since the casino games have a mathematical edge....they will win for sure, long term. just like a superior basketball team vs. an inferior one.....for one game only, who knows with certainty what will happen, but give them an 82 game season, the odds will pan out accordingly...
therefore it is ALWAYS better to trade 40 half lots rather than 20 full lots. it would be even better to trade 200 single mini lots (0.1) rather than 20 full lots.... this is very important. however, since you won't be able to get into 200 trades simultaneously, you have to find a threshold where you maximize the strategy. i.e. how many instaneous trades have you been in? 10? 15? take the maximum of that and utilize the lot range to it's fullest, without taking into consideration 2.4.2. because if you do consider 2.4.2, your probably going to have to take the previous calculation, and divide that by 10, just to standby and brace yourself for what it will take to break even through 2.4.2. again, i know 2.4.2 will work, it makes complete sense. bob gave 3 examples of where a pair can move a 1000 pips without retracing at least a little....i.e. a gov't going bankrupt (extremely unlikely). so it's not that i disagree with 2.4.2, all i am saying is that your money can be better spent elsewhere.
bob mentioned 70% of the time, it will bounce off the BB and retrace, 20% of the time, it will stay in the general area, and 10% of the time, you've got a runner, which by using 2.4.2, in all likelihood you can make that runner into a BE or small profit. this is great. the only problem is, in anticipation of those inevitable runners (which as bob said is 10% of the time) the lot size of the other 90% of your trades, is diminished mightly, so that money management-wise, you can survive the DD that those runners will potentially bring you, until you finally make that one single trade BE or get a small profit from.
Dislikedchiba,
Ok, your idea is to trade larger lots with a hard SL and TP. I'm thinking a 50SL, 50TP may be safer than 100/100, I don't know. Let's say you only take #1 trades when you get perfect setups. I agree, this would work nicely if there was an edge (maybe 60-70% win rate). The only way to know is to manually backtest each pair which is difficult with Bollinger bands moving with price all the time. When you look at a chart after the fact, you might think price touched the BB at a certain price but in real time it touched at a different price. And...Ignored
I am more cautious than Bob, he makes a lot more pips and his money management is also more aggressive. He also has a lot more experience with currencies (I trade mostly futures) and he will pour money into the account if necessary. I like to just leave low drawdowns, low stress and easy money scalping on a 4HR chart!