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Using a 5x5 pip stop loss strategy

  • #1
  • First Post: Jul 12, 2013 2:21pm Jul 12, 2013 2:21pm
I expect many to disagree, however I am beginning to believe if your trading small timeframe charts with a small account its better and less risk to enter a multiple of trades with small stop losses rather than 1 x 25-35 pip stop loss I used to do before. Thing is once you’re in a trade a new pattern emerges and if it’s not the one you expect get out and look for reentry. Anyone use this way to trade?
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  • #2
  • Jul 14, 2013 8:49am Jul 14, 2013 8:49am
Quoting Pipanator
I expect many to disagree, however I am beginning to believe if your trading small timeframe charts with a small account its better and less risk to enter a multiple of trades with small stop losses rather than 1 x 25-35 pip stop loss I used to do before. Thing is once you’re in a trade a new pattern emerges and if it’s not the one you expect get out and look for reentry. Anyone use this way to trade?
I can't disagree with you because I have no idea what you are saying.
Please Do Not PM Me With Coding Enquiries
  • #3
  • Jul 14, 2013 9:07am Jul 14, 2013 9:07am
spikes in price will kill big parts of your position.
  • #4
  • Jul 14, 2013 9:29am Jul 14, 2013 9:29am
Totally depends on your system. Lets say if you are trading of 1M momentum patterns it enables tight SL's and your idea might just work. However, if you are trading multiple timeframe supply and demand areas you might want to cover those areas and therefore you would still need 25-30pip SL's. Timeframes do not specify your SL, unless, you are trading of specific patterns that are being created beneath higher TF candles.
  • #5
  • Jul 14, 2013 10:09am Jul 14, 2013 10:09am
Quoting Gumrai
{quote} I can't disagree with you because I have no idea what you are saying.
It means he wants to lose many times not just once
  • #6
  • Jul 14, 2013 10:18am Jul 14, 2013 10:18am
Quoting Pipanator
I expect many to disagree, however I am beginning to believe if your trading small timeframe charts with a small account its better and less risk to enter a multiple of trades with small stop losses rather than 1 x 25-35 pip stop loss I used to do before. Thing is once you’re in a trade a new pattern emerges and if it’s not the one you expect get out and look for reentry. Anyone use this way to trade?

always great to be reading some mind farts / half baked ideas...
  • #7
  • Jul 14, 2013 10:23am Jul 14, 2013 10:23am
Quoting Custos
{quote} always great to be reading some mind farts / half baked ideas...
He he you should be encouraging them keeps the thread going and its funny
  • #8
  • Jul 14, 2013 11:17am Jul 14, 2013 11:17am
Quoting Pipanator
I expect many to disagree, however I am beginning to believe if your trading small timeframe charts with a small account its better and less risk to enter a multiple of trades with small stop losses rather than 1 x 25-35 pip stop loss I used to do before. Thing is once you’re in a trade a new pattern emerges and if it’s not the one you expect get out and look for reentry. Anyone use this way to trade?
you need 100pips or more TP , a must for recovery , if your SL hits 4 times
  • #9
  • Jul 14, 2013 6:11pm Jul 14, 2013 6:11pm
Thats the thing guys usally we are right in our direction of the market in our analysis however bad market timing and not reading the pattern/wave sequence correctly gives us a loss. If that order you placed is a good or excellent entry it will hold and the market will move in your favour. Its likley you will be stopped out frequently, but I guess thats the cost of having a small account, most novice traders hold on to losses I used to be the same and use 35-40 pip stops now only use 5-10 pip stops. Thing is each time you enter you will get a better price.
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  • #10
  • Jul 14, 2013 7:39pm Jul 14, 2013 7:39pm
It's easily done.. I use a mechanical mm method like you.

10pip SL/30pip TP.
5min timeframe (would work on 1m)

Looking for stoch's & RSI at extremes
Price @ good s/r. (trendline/fibs/ma.. etc)

I find trading like this prevents me from holding positions too long and moving stops because of my long term bias.
  • #11
  • Edited 7:43pm Jul 14, 2013 7:42pm | Edited 7:43pm
Quoting Pipanator
I expect many to disagree, however I am beginning to believe if your trading small timeframe charts with a small account its better and less risk to enter a multiple of trades with small stop losses rather than 1 x 25-35 pip stop loss I used to do before. Thing is once you’re in a trade a new pattern emerges and if it’s not the one you expect get out and look for reentry. Anyone use this way to trade?

I'm one of those who disagrees.

Quoting Pipanator
Thats the thing guys usally we are right in our direction of the market in our analysis however bad market timing and not reading the pattern/wave sequence correctly gives us a loss. If that order you placed is a good or excellent entry it will hold and the market will move in your favour. Its likley you will be stopped out frequently, but I guess thats the cost of having a small account
If something "correctly gives us a loss" in the majority then something is wrong with trader or method/system.
Further, in FOREX the size need not matter. You can risk X% of your account no matter.
If you're trading some method/system shouldn't you start small and if successful, keep trading
the same method until you've "grown" ?

Most disagree with "size doesn't matter (in FX). Please explain why.
When the Joker is in the deck.. fear not and play it well
  • #12
  • Jul 17, 2013 8:41pm Jul 17, 2013 8:41pm
You have to agree that once you are stopped out the reentry will be a better price than your previous entry reguardless if price moves in your direction or not. Its like saying only have 1 shot at the bullseye on a dartboard rarely will u get it. Why not give it 3-5 shots will small risk with a cool head.
Find your Favourite Pattern
  • #13
  • Jul 17, 2013 9:20pm Jul 17, 2013 9:20pm
"I made money every time you place your Stop loss too close to ME"
  • #14
  • Jul 18, 2013 12:23am Jul 18, 2013 12:23am
Quoting Pipanator
You have to agree that once you are stopped out the reentry will be a better price than your previous entry reguardless if price moves in your direction or not. Its like saying only have 1 shot at the bullseye on a dartboard rarely will u get it. Why not give it 3-5 shots will small risk with a cool head.
Instead of debating, why don't you just backtest that idea over the last year or so and then compare that to your old approach and then show us the two equity curves. Maybe one equity curve is declining at a slower rate than the other.
  • #15
  • Jul 18, 2013 1:01am Jul 18, 2013 1:01am
Quoting Custos
{quote} Instead of debating, why don't you just backtest that idea over the last year or so and then compare that to your old approach and then show us the two equity curves. Maybe one equity curve is declining at a slower rate than the other.
That the best approach, back test it then forward test it
Let it turn and find your entry.
  • #16
  • Jul 18, 2013 3:24am Jul 18, 2013 3:24am
Quoting Pipanator
You have to agree that once you are stopped out the reentry will be a better price than your previous entry reguardless if price moves in your direction or not.
I wish this was true. So often you'll be ticked out by a shadow not going more than a few pips beyond your SL just to see the price rocketing beyond your entry. Your SL was at a S/R level that perfectly reacted! Not only you get a loss but your only chance to re-enter is now at a worse price, with a bigger stop. Either you risk more with the same lot size or the lot size is lower and the winner may not cover the little losses. Or even worse you keep a 5 pip SL which has not reason to be at that place just asking the market to get you out one more time.

Also the spread will be your worse ennemy. You turn a 25+2=27 pip loss into 5 losses summing up to (5+2)*5=35 pips. +30%!!
When 2 ridiculous pips of spread become a major concern I think there is a serious flaw in the idea.
No greed. No fear. Just maths.
  • #17
  • Jul 18, 2013 4:15am Jul 18, 2013 4:15am
Quoting Pipanator
I expect many to disagree, however I am beginning to believe if your trading small timeframe charts with a small account its better and less risk to enter a multiple of trades with small stop losses rather than 1 x 25-35 pip stop loss I used to do before. Thing is once you’re in a trade a new pattern emerges and if it’s not the one you expect get out and look for reentry. Anyone use this way to trade?
My 2 cents....

Slippage may, will detract the system. A friend has tried a similar approach.

If your entry is slipped by 1 pip, you reduce your profit by 1/5 = 20% . Then, on your stop loss side, if you slip 1 pip, you loss 20% more of your calculated risk. So if your risk is 100$ then , your are risking 120$ to get 80$. Sure if your winning rate is great than you may win. but you don't put all the chance on your side. Risking 100$ to get 180$ or 200$ mean that your failure rate does not need to be higher than 50%.

In my view, stop loss should not be at a fixed place, nor has a fixed value. For a long, it should be below a support or a demand area. If the expected demand fail then stop loss would be hit. determining a fixed stop loss value, mean that your placing it at maybe an irrelevant place, in the middle of natural move of the market.

Good luck
  • #18
  • Last Post: Jul 18, 2013 5:51pm Jul 18, 2013 5:51pm
The whole point of this strategy is to give the end user the flexibility of getting in and out the market at various price levels and patterns through the move to optimize there probabilty of there trade going that way. It works for me. Usually when a trade goes against you majority of people stay in hoping to recoup their losses but major of the moves are 9 - 13 bars in length in all timeframes before reversal.
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