I thought I'd share this approach I've recently added to my arsenal. It's not a system or method, but more of a way to manage trades. I trade a few mechanical systems that do well for me, but also like to place discretionary trades during certain times of the day.
I've started grouping these trades into "Vaults". A Vault is essentially a cumulation of pips from short term intra-day trades. All pips gained under this approach are assigned to the current Vault. For instance, I am currently building what I label as a "40K Vault". Each pip gained or lost under this approach will be assigned to this Vault, trades place via my mechanical systems are not associated. The number 40K is associated with the lot size for each pip in this Vault.
The goal for any new Vault is 1000 pips, and when this target is reached the Vault is considered "matured". So once the Vault has matured each pip in my current vault will be recognized as having a 40K lot size, ending up with a balance of $4,000, or $4 per pip. This doesn't mean that I have to enter each trade at 40K lot size, although I normally do. What I cannot do is enter a trade with more than 40K lot size. I can enter anything under though, I often open half size positions if I am having a good day and don't want to risk losing my winnings.
A matured Vault is open to a few options. Below are the list of options I give myself:
1. Cut it in half and start creating a larger Vault. For instance, if I finish the 40K vault, an option would be to turn it into 500 pips to allow me to be at the half way mark on at 80K Vault. So each pip will now be worth 80K.
2. Use all or a portion of it to buffer the start of larger entries from any of my strategies. For instance, if I have a system based on EMA crossovers, and I want to start increasing the size of my entries without incurring larger losses, I will use this vault as a buffer.
3. Similar to number 2 above, but with a twists. Split it up into a certain number of stop losses. Say my strategy averages about a 1:3 risk/reward ratio and I want to significantly raise my lot size, let's say I want to double or triple my normal risk. What I can do with my Vault is split it into 3 so that each part is equal to what a potential loss would be for the specific strategy. What this does is accelerates the snowball effect that can happen when lot sizes reach higher levels.
I do have a few rules that I must adhere to, and they are listed below:
1. All trades must be closed by end of day.
2. In regards to trading for the Vault, all trades are to be treated as their own entity and not be associated with any other system I am trading.
3. Once 150 pips is reached must not go back under Zero.
4. A Vault cannot be split or adjusted until it has reach maturity of 1000 pips.
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I will likely have additions to this, but this covers most of the approach. Not sure how well I've described this approach, so let me know if you have any questions.
My current status on the 40K Vault is around 250. The key for me is to trade at the same time every day and get in and out quick. The average profit per trade is about 10 pips. It is reasonable for me to have a goal of completing a vault anywhere between 1 and 3 months. You can imagine the scale this can get to if the first option above is selected, and you continue to split the matured vaults. Slow and steady can get you places quicker than you think.
I've started grouping these trades into "Vaults". A Vault is essentially a cumulation of pips from short term intra-day trades. All pips gained under this approach are assigned to the current Vault. For instance, I am currently building what I label as a "40K Vault". Each pip gained or lost under this approach will be assigned to this Vault, trades place via my mechanical systems are not associated. The number 40K is associated with the lot size for each pip in this Vault.
The goal for any new Vault is 1000 pips, and when this target is reached the Vault is considered "matured". So once the Vault has matured each pip in my current vault will be recognized as having a 40K lot size, ending up with a balance of $4,000, or $4 per pip. This doesn't mean that I have to enter each trade at 40K lot size, although I normally do. What I cannot do is enter a trade with more than 40K lot size. I can enter anything under though, I often open half size positions if I am having a good day and don't want to risk losing my winnings.
A matured Vault is open to a few options. Below are the list of options I give myself:
1. Cut it in half and start creating a larger Vault. For instance, if I finish the 40K vault, an option would be to turn it into 500 pips to allow me to be at the half way mark on at 80K Vault. So each pip will now be worth 80K.
2. Use all or a portion of it to buffer the start of larger entries from any of my strategies. For instance, if I have a system based on EMA crossovers, and I want to start increasing the size of my entries without incurring larger losses, I will use this vault as a buffer.
3. Similar to number 2 above, but with a twists. Split it up into a certain number of stop losses. Say my strategy averages about a 1:3 risk/reward ratio and I want to significantly raise my lot size, let's say I want to double or triple my normal risk. What I can do with my Vault is split it into 3 so that each part is equal to what a potential loss would be for the specific strategy. What this does is accelerates the snowball effect that can happen when lot sizes reach higher levels.
I do have a few rules that I must adhere to, and they are listed below:
1. All trades must be closed by end of day.
2. In regards to trading for the Vault, all trades are to be treated as their own entity and not be associated with any other system I am trading.
3. Once 150 pips is reached must not go back under Zero.
4. A Vault cannot be split or adjusted until it has reach maturity of 1000 pips.
________________________________
I will likely have additions to this, but this covers most of the approach. Not sure how well I've described this approach, so let me know if you have any questions.
My current status on the 40K Vault is around 250. The key for me is to trade at the same time every day and get in and out quick. The average profit per trade is about 10 pips. It is reasonable for me to have a goal of completing a vault anywhere between 1 and 3 months. You can imagine the scale this can get to if the first option above is selected, and you continue to split the matured vaults. Slow and steady can get you places quicker than you think.