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How to Compound with High Leverage with Minimal Risk

  • #61
  • Jun 7, 2015 12:02pm Jun 7, 2015 12:02pm
Quoting pjxtan
{quote} Well, even if you have the mindset that a loss of unrealized profit constitutes an "actual" loss (which I don't entirely disagree with, to be honest) I guess the idea is to reduce the probability of winning the trade in exchange for greatly increasing its profit potential. Kind of like a baseball player "swinging for the fences". {quote}
Yes, i think this idea is nothing new. What i am not sure is whether high leveraged scale up method is better than normal leveraged extream RR (ex. 1:10, 1:20, ...) method (without scale up)... Anyway, money management is the key in both cases, rather than win rate.
Simplicity is the ultimate sophistication - Leonardo da Vinci
  • #62
  • Aug 4, 2015 5:22pm Aug 4, 2015 5:22pm
PD.

Just wanted to post a question on your compounding.

How exactly do you handle your lot sizing.
Let's say your balance and desired s/l allows you to enter a trade size of .1 lot which constitutes a 5% risk to your account.
Now at some point you want to add another position...do you add another at .1 or do you "add" the profit from you floating position to your balance...still risk 5% but not your addon position will be, say, .12 lots because of you higher equity?
  • #63
  • Aug 4, 2015 8:41pm Aug 4, 2015 8:41pm
Quoting spyderman
PD. Just wanted to post a question on your compounding. How exactly do you handle your lot sizing. Let's say your balance and desired s/l allows you to enter a trade size of .1 lot which constitutes a 5% risk to your account. Now at some point you want to add another position...do you add another at .1 or do you "add" the profit from you floating position to your balance...still risk 5% but not your addon position will be, say, .12 lots because of you higher equity?

I usually compound in the same size, so, let's say my trade is 100 pips in profit, i will add the same size and move the s/l to be, which at that point would be 50 pips away. The goal is always to build a large, risk-free position. However, when momentum is extremely strong, I will add more aggressively. Today, for example, I shorted GBPAUD and added very aggressively as momentum was extremely strong. I love GBPAUD, it moves 300 pips a day even when market is slow.
  • #64
  • Aug 4, 2015 9:26pm Aug 4, 2015 9:26pm
Great tip

GBPAUD has been trending up since May

Thanks
  • #65
  • Aug 5, 2015 6:55am Aug 5, 2015 6:55am
Quoting Profit Daily
{quote} I usually compound in the same size, so, let's say my trade is 100 pips in profit, i will add the same size and move the s/l to be, which at that point would be 50 pips away. The goal is always to build a large, risk-free position. However, when momentum is extremely strong, I will add more aggressively. Today, for example, I shorted GBPAUD and added very aggressively as momentum was extremely strong. I love GBPAUD, it moves 300 pips a day even when market is slow.
Trying something similar.

I entered U/Cad at 1.2640 for .01 lots. At 1.3210 added another position but this time at .02 lots with a 115 s/l
So compared to first entry size I had 230 pips at risk, so I moved s/l on 1st position to +460 pips. So even if trade reverses, I've locked in 50% of my profit.
My plan is to continue adjusting lot sizes using 50% of my locked in profit as my position size base.
  • #66
  • Aug 5, 2015 8:48am Aug 5, 2015 8:48am
Quoting spyderman
{quote} Trying something similar. I entered U/Cad at 1.2640 for .01 lots. At 1.3210 added another position but this time at .02 lots with a 115 s/l So compared to first entry size I had 230 pips at risk, so I moved s/l on 1st position to +460 pips. So even if trade reverses, I've locked in 50% of my profit. My plan is to continue adjusting lot sizes using 50% of my locked in profit as my position size base.
This is exactly what I've been trying to explain to folks. This is the benefit of high leverage, it is NOT YOUR INITIAL RISK, but the ability to compound with the free margin high leverage allows. I know you understand, but I need to re-iterate:

I buy 1 lot of USDJPY, in the US, I need approx. $3,000 in margin, my broker requires $200. That only affords a 20 pip s/l, so I'm going to use $400 to allow a 40 pip stop. The trade goes 100 pips in my favor, so now I want to add another lot and move the stop to b/e (50 pips). With a US broker, I cannot add to this trade because of margin requirements EVEN THOUGH IT IS A RISK FREE TRADE. With my broker I can add 20 lots if I want to.

Still do not understand why some folks just cannot grasp this.
  • #67
  • Aug 5, 2015 10:49am Aug 5, 2015 10:49am
Daily Profit,
What margin level are you using with your broker? BTW, I'm using the same broker now; I just funded my account.Thanks again!
  • #68
  • Aug 5, 2015 4:03pm Aug 5, 2015 4:03pm
Quoting Profit Daily
{quote} This is exactly what I've been trying to explain to folks. This is the benefit of high leverage, it is NOT YOUR INITIAL RISK, but the ability to compound with the free margin high leverage allows. I know you understand, but I need to re-iterate: I buy 1 lot of USDJPY, in the US, I need approx. $3,000 in margin, my broker requires $200. That only affords a 20 pip s/l, so I'm going to use $400 to allow a 40 pip stop. The trade goes 100 pips in my favor, so now I want to add another lot and move the stop to b/e (50 pips). With a US broker,...

Exactly. Not only is the leverage level itself an issue, but the way they figure your margin. Most (if not all) US brokers will not count your floating profit (locked in or not) towards your margin. They only count closed balance. So you could potentially have a $100K in floating profit but if you only have $500 in balance, that's what they figure your margin on.
  • #69
  • Aug 7, 2015 9:03pm Aug 7, 2015 9:03pm
I don't think high leverage trading is possible with low risk , when you use high leverage your account is at high risks. You can blow it any time . leverage selection should be medium or low . Leverage is good supporter as well as it can be an illusion for a trader. He forgets how much money he is using in trading . He can not turn it in low risk trading.
  • #70
  • Aug 8, 2015 12:09am Aug 8, 2015 12:09am
Leverage is an opportunity in business. You blow your account because overtrade or wrong side of the market, your capital can't handle it. When you lose/win 1 pip, it's same lose/win 1 pip. It doesn't matter with leverage. Why don't people think the other way to determine the risk: If one cent (100pips) of currency moves = how much your money moves ?
BullShit BearShit
  • #71
  • Nov 20, 2015 8:02pm Nov 20, 2015 8:02pm
Are moving up all the stops on all of your open trades to the same price level? Do all of your open trades have the same SL price?
  • #72
  • Nov 27, 2015 8:02am Nov 27, 2015 8:02am
Quoting Profit Daily
I've decided to start a thread dedicated to showing how to use high leverage to truly compound gains while still keeping risk at a minimum. First off, before attempting, you need a good system which is already producing a positive expectancy as this is not a trading system, this is simply a way of making a lot more money with your current winning strategy. Second, you need a high leverage broker, which means if you are in the US, you must go offshore. I have used several and now use one exclusively as spreads, commission and execution are far superior...
You mean like this?
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  • #73
  • Nov 27, 2015 8:17am Nov 27, 2015 8:17am
Very interesting ! i'm using this strategy and it is very profitable....anyway is there any script which can set X numbers of pending orders with stop loss and take profit?
i would like to use something like that to pyramide the trades.
  • #74
  • Last Post: Apr 20, 2016 11:08am Apr 20, 2016 11:08am
Quoting TerryTibbs
I dont understand how you say you add a second position and then suddenly you move stops to BE? i mean how are you moving the stop to BE if you have just added your second entry? sure your first entry could be moved to BE but how are you instantly moving your second to BE too???
I'm gonna bump this thread because I have been using the search feature and was not getting a real solid answer to my question. This guy (Terry Tibbs) has a similar question so I thought I would share a video I found on Youtube. I have no affiliation/relationship with this guy but he explains everything quickly and makes it pretty simple.

Using his method (it's not his as it has been around for a very long time, just his video) you can see how you could add to your position and move the stop to break even.

Inserted Video
Everything easy was hard at first
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