Senior members ( Mike , jarroo , Ghous ) , Help me out with this thing I am having trouble with ...
Look at these charts , How do you deal with the situations like these where a Pin bar is formed , as in the case with EUR JPY Daily , Or a outside bar is formed , like in EURNZD H4 and NZDUSD Daily , and in the process of forming , they break through some strong PPZ's ... Would you tend to keep your stop behind these PPZ'z now or still you would keep your stops behind the swing's until the FTA is reached ??????? I had a couple losses recently...
ok you say your stops has been hit and then price bounce into the right direction. i had a similar problem last night on CHFJPY because price hit my tight stop moved to BE and then continued in the right direction as you can see now. i usually lock my profits very quickly (after 30-40 pips in profit) on daily trades, moving my stop to breakeven (as jim does), BUT i'm realizing this method might not be so good in the long run (at least it doesn't suit me, i don't like to be stopped out this way). most of the times i move my stop to breakeven too quickly and i kill the trade before it goes in huge profits. the problem is to find a stop moving strategy which is a compromise between reducing risk as soon as possible and give to the trade enough room to resume or bounce and then run in the right direction.
my actual trade management doesnt adapt very well on every market conditions, and doesnt have a fixed R/R ratio for stop moving or profit taking. on volatile markets very conservative breakeven stop is wiped out very quickly and profit taking doesnt always give a decent R/R.
so i found this priceless backtest study by Josh (http://www.forexfactory.com/showthre...45#post2651145) which tests 13 exits strategy over some pairs for two months. some exit methods are dirty simple and some other are more complex. at this point i found out a nice pattern. as you can see if you donwload the results, even very simple exit strategy like "move stop at BE after 0.5 R/R and close all of your position at 1 R/R"* are very profitable while still incredibly simple to manage. backtesting these simple exits strategies over my chart have shown that even a risky method like "taking full profit at 1 R/R (WITHOUT moving stop to BE)" can be very profitable in the long run (of couse if you are still picky on your entries as we all should be).
i know some of the senior memeber use different entry levels and differend stop moving strategies, but im looking for a fixed trade managing strategy usable on all trades with decent results.
exit management depends on your overall trade strategy but by now i'm looking to change my actual trade strategy which is:
- moving stop @ BE after 30-40 pips in profits and taking 1/3 of my trade in profits managing the rest moving my stop behind last PPZ after next PPZ is hit. if a strong S/R or PPZ level is near, i usually take my whole profit at these levels.
with this new trade management strategy:
- moving stop @ BE after 0.5 R/R in profits and take 2/3 of profits at 1 R/R, then trail the last 1/3 moving my stop behind last PPZ after next PPZ is hit (to catch the long run trades) or take out the last 1/3 at a higher R/R ratio in proximity of a strong PPZ or S/R (however you still trail the stop).
if you backtest this strategy and compare it with other managing methods, you will find this might be one of the best solution for price action traders for some reasons:
- moving stop @ BE after 0.5 R/R (and NOT after a little fixed amout of pips) in profits grants you to reduce most of risk giving at the same time enought room at your trade to breathe and aim for your take profit.
- taking 2/3 of the trade at 1 R/R allow you to get out nice profits most of the times (80-90% of price action trades reach at least the 1 R/R target and then choppy or bounce). of course you can adjust a bit this profit taking area if a PPZ or a S/R is near this point to adapt it to each new situation.
- trailing the last 1/3 of your position moving the stops allow you to catch bigger moves with the confidence of having already took out some profits out of the market.
- look at the strategies tested by Josh and the results. looking at the strategies that gave the best profits, we can define two different types of strategies: the ones who takes out all of the position at 1 R/R (strategies n° 12 and 13) and the ones that split the profit taking at 0.5 then 1 and then 2 R/R (strategies 8 and 9). so taking out 2/3 at 1 R/R and trailing the remaining 1/3 for bigger R/R (like 1.5 or 2) will allow you to take out the best from these two types of strategies, squeezing out maximum possible returns on every trade especially if you dont miss big moves with your last 1/3. this way the average R/R on trades should be about 1 or more with a success rate of more than 80%. of couse stop moving have a main role in managing the remaining 1/3.
- after all consideration, this method is far more simple and easy than managing a tight stop with the fear of get stopped out, or having to trail the stop of your whole position. taking 2/3 (or 1/2 you decide) off the table at 1 R/R is a good way to ensure high success rates and decent R/R ration on your trades. the remaining 1/3 is to catch bigger moves.
i think this would be a good mananing strategy. some would say that this sounds too mechanical and im sure some senior memebers would do better with tight manual stop placing (to get higher R/R), but this might still be a good starting point to manage a trade in almost every market condition.
just to share my thoughts. comments are appreciated.
* moving stop at breakeven after 0.5 R/R in profits means that on a pin bar trade with a initial 100 pips stop you move your stop @ breakeven after 50 pips in profits (100 * 0.5 = 50)
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i know there is a lot of profitable way to trade. i'm optimizing mine. 
