No SL No Leverage Strategy - working so far | Forex Factory

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No SL No Leverage Strategy - working so far

  • #1
  • First Post: Apr 1, 2012 6:30am Apr 1, 2012 6:30am
Hi all,

I want to share my strategy and get your opinions comments and views.

The strategy I'm using is very simple and has been very succesfull so far.

My rules:

1. NO leverage
I have a 1000 eur account and I'm trading only 0.01 lots right now. I will start to trade 0.02 lots as soon as I reach 2000 eur margin and so on (or you can decide to go even slower by trading 0.02 lots only when your account has 3000 eur margin etc.)

2. SMALL TP
I have a set TP of 15-20 pips on every trade, trading only pairs with low broker spread.

3. NO Stop Loss
I do not set SL, so basically trades close only when TP is reached. (I'll explain later why)

4. No more than 5 trades open at the same time.

Entry Condition:
LONG when H4 PA closes above 5EMA
SHORT when H4 PA closes below 5EMA

That's it!
I have been testing this method for 3 weeks now,

Opened 29 trades in total
Closed with TP 27 trades
Still pending open trades: 2 (TP not yet reached)

Making money trading 0.01 lots makes it really slow, but I'm slowly building account margin so I can start trading bigger lots.
I dont use SL for this method, and that has been the key of success:
Even when the trade reverses on me and goes -200/-300 pips against me, the fact that I'm not using the leverage, makes it affordable (you can whitstand such a reversal with no leverage and still open other trades!)
The only bad thing is that a trade can stay open for days or weeks before reaching TP. But as I could see by testing, more than 90% of trades reach TP within 48 hrs.

I try to compensate for the negative rollovers by entering in trades with positive rollovers (for example long on AUDUSD)

What do you think of this strategy?
  • #2
  • Apr 1, 2012 6:45am Apr 1, 2012 6:45am
Stoploss is normally preferred over take profit. Stoploss prevents blowing your account, take profit prevents profiting 100 pips instead of 30.

It's going to succeed until it doesn't and then you will lose all your profits and even more because of spread. If you wait and wait and wait you will not make any profit during that time because if you expose more capital you run the risk of busting your account despite not using leverage.

Long story short: put your money in the bank. It's more profitable then this.
  • #3
  • Apr 1, 2012 6:54am Apr 1, 2012 6:54am
Quoting Pipsgeek
Stoploss is normally preferred over take profit. Stoploss prevents blowing your account, take profit prevents profiting 100 pips instead of 30.

It's going to succeed until it doesn't and then you will lose all your profits and even more because of spread. If you wait and wait and wait you will not make any profit during that time because if you expose more capital you run the risk of busting your account despite not using leverage.

Long story short: put your money in the bank. It's more profitable then this.
thing is that risking that little, I could afford a drawback on a single pair of more than 500 pips without needing to close the trade. I have to be very unlucky for having 5 pairs going all 500 pips against me . I agree that it could happen though.
But for example, I have 2 trades still pending now for several days already. But the other trades I have closed with TP already compensate for these two.
Plus, I can still manually close those trades that look to be going beyond control.
  • #4
  • Apr 1, 2012 7:17am Apr 1, 2012 7:17am
Hi Nacho,,

Sorry to burst your bubble. You are not the first person to think of this method. Many other have thought the same before you.

And to this day, the veteran traders will tell you that your money is safer in the bank.

There is truth to the saying that the wise focus on managing the risk. The fools focus on the profit.
  • #5
  • Apr 1, 2012 7:21am Apr 1, 2012 7:21am
You can see a 7000 Pips upwards move on EURUSD for example (click on monthly timeframe and zoom out, then you can see it).

You say that you can close a position which goes too far into drawdown,
but that is not how real life works.
Because you always hope that price will turn around ....

I trade a different method, somebody called it lock-unlock.
I freeze a floating loss with a position in opposite direction, same lot-size.
Therefore I will never get a margin call like you and I never have
to watch the floating loss getting bigger and bigger, hurting more every day or week.

With my method , price can go 100000000 Pips against my initial position and will not hurt me. I will finally close the whole thing at breakeven or in profit, even if it takes days or weeks or months.

Since you play with smallest lot-size, you can survive with your method
for many months, if not years .... but you could lose your account or at least a big chunk of it next week or next month when you are on the wrong side of the trend in one or more pairs.
  • #6
  • Apr 1, 2012 7:42am Apr 1, 2012 7:42am
Quoting fxtr51
You can see a 7000 Pips upwards move on EURUSD for example (click on monthly timeframe and zoom out, then you can see it).



With my method , price can go 100000000 Pips against my initial position and will not hurt me. I will finally close the whole thing at breakeven or in profit, even if it takes days or weeks or months.

Since you play with smallest lot-size, you can survive with your method
for many months, if not years .... but you could lose your account or at least a big chunk of it next week or next month when you are on the wrong...
Thanks for yr comments. I am aware of these shortcomings, and I'm looking for ways to make this strategy feasible.

As I heard many times, being succesfull requires you to have the hedge of probabilities in your favour. Aiming at 15 pips TP after a PA cross of 5EMA on H4 seems to me a very likely event to happen.

This doesnt mean that one or more trades could be a failure. In order to avoid huge drawbacks of 7000+ pips like you pointed out, I could then use your lock-unlock method or set a hard SL, say 1000 pips per pair.
SL/TP ratio will still be far unbalanced, but this is compensated by the fact that probabilities should be in my favour.
  • #7
  • Apr 1, 2012 7:51am Apr 1, 2012 7:51am
Quoting Nacho
Thanks for yr comments. I am aware of these shortcomings, and I'm looking for ways to make this strategy feasible.

As I heard many times, being succesfull requires you to have the hedge of probabilities in your favour. Aiming at 15 pips TP after a PA cross of 5EMA on H4 seems to me a very likely event to happen.

This doesnt mean that one or more trades could be a failure. In order to avoid huge drawbacks of 7000+ pips like you pointed out, I could then use your lock-unlock method or set a hard SL, say 1000 pips per pair.
SL/TP ratio will still...
To raise your probabilities, make sure you are on the right side of the 5EMA on the daily chart.
  • #8
  • Apr 1, 2012 7:55am Apr 1, 2012 7:55am
Why don't you use the old historic high/low idea? Use a monthly chart and when price comes near a historic high or low for a pair and then starts moving away then take a trade in that direction. You should be able to hold the trade open for a few thousand pips rather than 15 and your downside risk is only as far as the historic high/low or as far as it goes on it's trip into uncharted territory. This doesn't mean you won't have drawdown and sometimes for a good few hundred pips but your upside potential is a lot greater. I still wouldn't recommend trading this way but it's an idea that crossed my mind once.
  • #9
  • Apr 1, 2012 8:08am Apr 1, 2012 8:08am
No leverage means your trading 1:1
For a 0.01 lot long position eurusd you need 1000€ margin if trading without leverage
So you are still using leverage if you can open several trades
  • #10
  • Apr 1, 2012 8:16am Apr 1, 2012 8:16am
Quoting Hugh Briss
Why don't you use the old historic high/low idea? Use a monthly chart and when price comes near a historic high or low for a pair and then starts moving away then take a trade in that direction. You should be able to hold the trade open for a few thousand pips rather than 15 and your downside risk is only as far as the historic high/low or as far as it goes on it's trip into uncharted territory. This doesn't mean you won't have drawdown and sometimes for a good few hundred pips but your upside potential is a lot greater. I still wouldn't recommend...
Thanks for the suggestion, I could add this to the existing strategy, I guess that PA approaching historic high/lows is a quite rare event. Similarly, I try to enter trades on support and resistance bounces.
  • #11
  • Apr 1, 2012 8:17am Apr 1, 2012 8:17am
Quoting iwjw
No leverage means your trading 1:1
For a 0.01 lot long position eurusd you need 1000€ margin if trading without leverage
So you are still using leverage if you can open several trades
umm yeah, you are right but at the moment thats the only thing I can do having just 1000eur margin and being the smallest tradable lot 0.01

I think I will still trade 0.01 if and when I reach 2000eur margin.
  • #12
  • Apr 1, 2012 8:18am Apr 1, 2012 8:18am
no SL for ur kind of primitive technical system?

Crap!

rude but true

think it another way:

if ur way works, the whole population of this world is millionaires.
  • #13
  • Apr 1, 2012 8:24am Apr 1, 2012 8:24am
Quoting Nacho
This doesnt mean that one or more trades could be a failure. In order to avoid huge drawbacks of 7000+ pips like you pointed out, I could then use your lock-unlock method or set a hard SL, say 1000 pips per pair.
Yes, the only danger in your method is a big move finding you on the wrong side.

As I said, I would freeze the floating loss instead of taking a terrible loss
and there will always be plenty of opportunities to unlock the freeze and
make a breakeven or a profit from it.
But that is me and everybody is different and it would not fit their needs or preferences.
  • #14
  • Apr 1, 2012 8:32am Apr 1, 2012 8:32am
Quoting charvo
no SL for ur kind of primitive technical system?

Crap!

rude but true

think it another way:

if ur way works, the whole population of this world is millionaires.
charvo, the reasons why the whole population of this world is not millionaires is obvious:
1. they cannot understand the method and will never trade it
2. if everybody understood it, it would not work because there would be
no buyers or sellers on the other side of the trade.
3. Equity grows slow, now way to become a millionaire with 1k starting balance.

Your rude "Crap" on the other hand is the 100% guarantee that the strategy will work forever.

You belong to category 1 like 99.99 % of all traders and therefore
Nacho will always find the counterpart for his orders.

This is not rude but fact.
  • #15
  • Apr 1, 2012 9:27am Apr 1, 2012 9:27am
No risk = No reward. You'd make more money in bonds. No speculation necesary.
Time hides Nothing
  • #16
  • Apr 1, 2012 9:54am Apr 1, 2012 9:54am
it can just work until market is in range.....trend will blow up ur account.
two things required to be sucessful,patience and getting rid of greed.
  • #17
  • Apr 1, 2012 10:18am Apr 1, 2012 10:18am
Hey Nacho,
I like that you're going for the low risk strategy. I'm trying every day for the same thing.
If you're open to the possibility of opening an order with 0.02 lots you could have your TakeProfit (15 points) for 50% of your order (0.01 lots), and have the other 50% do a Trailing Stop (15 points) or a Step-Stop. That way you get the initial profit you're system would produce, and still get to trail additional profits will smaller risk (since you already have your profit from your TakeProfit).

I use the attached indicator for doing this automatically.

Hope this helped a little.
Attached File(s)
File Type: mq4 ManageTPv2-4.mq4   6 KB | 1,317 downloads
  • #18
  • Apr 1, 2012 10:25am Apr 1, 2012 10:25am
Nacho, you dont feel the pinch becos you are using 0.0x lots.Thus, you think you can tolerate 1000 pips SL. But, I assume you WILL increase your lot size eventually. Why dont you create a spreadsheet and tabulate yr win/loss based on 0.0x, 0.x, 1.x, 1x. You will be able to understand yr strategy better. Just my 2 cents...
Forex is my business
  • #19
  • Edited 11:40am Apr 1, 2012 11:27am | Edited 11:40am
Good luck.You are learning losing habits.
I rather not make money then learn terrible habits that eventually will wipe your account clean.
My advice learn to trade properly.
Here is my method which is combination of similar methods
I went 8-0 my last 8 wins

5EMA
12 EMA
21 RSI
and my favorite
TDI
My chart is self explanatory.I drew red lines when trades were taken.
I place 1/2 order and after 10pips place another 1/2 and if it goes further my way I place another smaller amount.I close one by one depending how trade goes.Idea is by placing 1/2 order at 1st your exposure is less if you are wrong hence less damage.I close all my orders if it goes more then 15pips against me.Another day is just around.No need to hang on to losing trade.
LOSERS AVERAGE LOSERS
Attached Image (click to enlarge)
Click to Enlarge Name: rubo method.gif Size: 17 KB
In trading, you have to be defensive and aggressive at the same time
  • #20
  • Apr 1, 2012 11:40am Apr 1, 2012 11:40am
Quoting fxtr51
With my method , price can go 100000000 Pips against my initial position and will not hurt me. I will finally close the whole thing at breakeven or in profit, even if it takes days or weeks or months.
There really is no way you can get a margin call like that? I figured that even when fully hedged you would still need sufficient margin to take the hit. Or do trades that are up actually give back margin?
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