Thoughts on TakeProfit, anyone? | Forex Factory

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Thoughts on TakeProfit, anyone?

  • #1
  • First Post: Nov 24, 2016 4:32am Nov 24, 2016 4:32am
Hi,

I would like to hear others opinions in regards to TakeProfit, please. I'm struggling with this concept of MM and it's driving me crazy, not knowing when to quit.

Let's say you have a strategy, let's say your trading more than one pair, say, five pairs, let's also assume you are now 200 pips in profit, some trades are losing but the other compensate so you are still in profit.

For the sake of discussion, as I'm interested in the TP and not the SL, let's assume you don't use any SL on any trade, once you get signals, you open trades, some win some lose you let them run and you are now in profit.

Overall SL for the entire account is 50% of the equity to preserve some way of surviving, that should be enough for the SL for this discussion, I hope.

What do you do?
Treat the profit as one entity and put a SL on it?
Trail it?
Decide on a level after which you close everything regardless of all the pips you might (or might not) make?
Disregard the overall profit and manage the trades per pair? Even though you might end up closing the winning trades that might have compensate for the losing ones?

I guess it's more of a basket approach versus singular trade approach.
I don't trade baskets, can't seem to be profitable on a C5 offline chart but I have often saw my trades go into profit and didn't know how to manage the profit itself. Following strategy rules left too many pips on the table while the losing trades ate up what little did the winning trades had made, treating the profit as a basket means I have no "known levels" I can compare the "price" (profit) to and see where I should be cautious about letting it run more or bail out.


I'm not trying to discuss strategies, just profit handling. some trades win, some lose, days you are in profits, days you are not. Same as always.




Thanks.
  • #2
  • Nov 24, 2016 5:18am Nov 24, 2016 5:18am
I traded basket before, now focus exclusively on pairs trading.


1. Before opening any trade you should consider doing a correlation analysis between assets

Ex. long EUR/USD and short USD/CHF simultaneously is roughly the equivalent of double shorting on USD in normal market condition

http://www.prudentnetwork.com/pruden...sk-management/


2.Opening and closing all pairs at the same time=basket trading. Enter or exit any of the asset prematurely is single pair speculation; IMO, trading single pairs in accordince with their own idiosyncrasies gives you more control on overall P/L
No Highs? No Lows? Must be Bose!
  • #3
  • Nov 24, 2016 5:26am Nov 24, 2016 5:26am
Quoting Tardigrade
I traded basket before, now focus exclusively on pairs trading. 1. Before opening any trade you should consider doing a correlation analysis between assets Ex. long EUR/USD and short USD/CHF simultaneously is roughly the equivalent of double shorting on USD in normal market condition http://www.prudentnetwork.com/pruden...sk-management/ 2.Opening and closing all pairs at the same time=basket trading. Enter or exit any of the asset prematurely is single pair speculation; IMO, trading single pairs in accordince...
Thanks for replying.

1. Don't care much about the strategy as I'm more concern on understanding the TP handling but thanks for the link.
2. trades are opened when a signal comes along, some are opened simultaneously some are hours or even days apart, in the meanwhile the TP is fluctuating but remains positive so what do you do in a situation like this? Chop of the stem of the profit or let it grow and weed out some losing trades in the process?

So, if I understand you correctly, you don't care for the overall profit, just the trades overall profit hoping it would be enough to accumulate account's growth?
  • #4
  • Nov 24, 2016 5:50am Nov 24, 2016 5:50am
Quoting Reamasesa
{quote} Thanks for replying. 1. Don't care much about the strategy as I'm more concern on understanding the TP handling but thanks for the link. 2. trades are opened when a signal comes along, some are opened simultaneously some are hours or even days apart, in the meanwhile the TP is fluctuating but remains positive so what do you do in a situation like this? Chop of the stem of the profit or let it grow and weed out some losing trades in the process? So, if I understand you correctly, you don't care for the overall profit, just the trades overall...
1. TP handling & correlation analysis goes hand-in-hand if you have multiple positions open; fail to plan, planning to fail

2. Disregard the overall profit and manage the trade per pair; if it is a complete trading system, take profit criterion should be included. I don't know your system so it's up to you as a system designer to select the proper way to take profit.
No Highs? No Lows? Must be Bose!
  • #5
  • Nov 24, 2016 6:04am Nov 24, 2016 6:04am
Quoting Tardigrade
{quote} 1. TP handling & correlation analysis goes hand-in-hand if you have multiple positions open; fail to plan, planning to fail 2. Disregard the overall profit and manage the trade per pair; if it is a complete trading system, take profit criterion should be included. I don't know your system so it's up to you as a system designer to select the proper way to take profit.
1+2. I understand what you're saying but that's the thing, there's no system. You might think of it as a compounding or something like that, trades are opened when a moving average is crossed, for example, like the Flying System that was discussed here a few months ago, and trades are being added to an already existing trades so not so much of an entry and exit strategies, just the profit in itself.

Why not treat the entire profit? Why treat singular trades? We already have 200 pips in profit, do we close a 250 pips trade and leave 5x10 losing trades to reach some SL and maybe lose even more?
If we take, for example, recent GBP price drop, while it was a huge drop, it would have been cushioned by other trades, while if we would have treated it singularly, we might have closed other profitable trades too soon and suffer more loses.

I hope I'm able to explain myself. I'm not pushing toward any method in particular, just trying to learn and understand and evolve.


Thanks.
  • #6
  • Nov 24, 2016 6:46am Nov 24, 2016 6:46am
Quoting Reamasesa
I'm not trying to discuss strategies, just profit handling. some trades win, some lose, days you are in profits, days you are not. Same as always. Thanks.
I've had exactly the same mental issue as you about this and I've tried a few ways of handling it. I'm still not completely satisfied with what I'm doing, but so far its been working well.

Previously, I used to try to limit the number of trades open for a pair, and close off the lowest and keep adding a new trade once the current high (or low) trade is in at least X pips profit. (Graviton is one specific forum member that follows a plan along these lines and has posted great stuff about how he trades.)

What used to usually happen was that the trade trend would stall and back off...either a strong retrace or potential reversal...and I would quickly see my trade 'group' head toward BE, or lower. This is because you're essentially pushing the BE point closer and closer to the current price as you close the furthest/largest trade. This keeps the trade group a bit 'top-heavy' and when the market becomes more volatile, it can sink quickly into an uncomfortable red zone far quicker than it took to get the initial trade group into a reasonable profit. If you end up closing it off at below BE, then this can seem to be a 'painful' way to trade, even though you are really only eating into the profits you'd realised previously, which will still is (or should be) a decent net profit overall.

Currently, I've decided to go for pulling in regular profits by reducing the trade group at the 'front' of it, which may include eating a loss from the first trade. A rough plan is working toward 3-5% per week, but willing to add 10-15% for the weeks trades as realised profit and let the rest of the trade group run. This provides a lot more 'potential profit liquidity' in the current trade group, but obviously you can then 'lose' that potential profit as well. The benefit is that you have a load of room for the market price to drift, without any real threat at all of the overall remaining trade group.

For example, I'm sitting on a chunk of pips for UJ (roughly 3k), with a BE for the trade group around 109.3 (and had been 108.4 until i'd added another top trade) and therefore I don't need to panic or squirm when the price moves 50-100 pips in a range while it decides where to go.

So, for next week, I will probably peel off another few trades from this group (lets say 2-3 from UJ as I have 9 on) and one from EU or my single UC trade and add another 5-20% to my balance. 5% to match my desired minimum increase for my plan and up to 20% or more if I see indication of a turn or a trade stalling, with the rest coming off when a strong turn signal is triggered or looming.

If there are no profits to be had (i.e., either due to no trades on or in any real profit, even in the red), then so be it. I will just wait for the weeks when there is profit to be collected, without a worry that I have to be profitable every day/week.

For your example of 5, I would leave the lowest #1 as long as possible, consider #2 to be its own trade and maybe set a reasonable BE for it of X% of the current pips and the mid/front 3 trades as a sub-group, which I would calculate a rough mental close price (or set a real SL for them, if you want) to close them together at a combined level of roughly -30 to 30 pips overall, as preferred. Staying in is more 'fun' and gives a chance for profits, so if I've already collected some profit for the week, I'm always willing to let things run a bit longer. And if I take that sub-group of 3 trades off for anything below BE, I can just bump up my PSL (profit SL) by the same amount on trade #2..or split it and bump #1 and #2 up a bit, thereby creating a future offset for my minor loss.

Summary:
Manage your trades, with reasonable trade size and no set SL or TP.
Let trades run.
Collect some profits to always keep adding to your 'realised' profit.
Decide where your BE will be for a trade group, or group(s) which can (should?) be at least 5-10 pips higher than the real BE.
Push aside thoughts regarding your 'potential' unrealised profits showing in any trades. <--- This is a KEY item.
Diversify to more than one pair, but realise you are 'doubling or tripling' exposure to one or more currencies, which can amplify changes in account equity (e.g. trading on UJ but then also trading EJ or EU as well)


I'd also like hearing what others do about it, as obviously adding more to the balance earlier compounds your trade potential, but I'm just focusing on a slightly longer term, steady growth plan.


P.S. I think that for the amount of SL/TP calls and calculations there are around here, many traders wouldn't really have a idea of what you're dealing with or how to suggest handling closing or scaling in/out of groups of trades (or a diverse set of trade 'groups' on different pairs).
  • #7
  • Nov 24, 2016 6:57am Nov 24, 2016 6:57am
Just practicing philosophy here:

You Mother-In-Law called you and said she was going to visit within 2 hours and it's approaching dinner time. You, the sitting duck, had no time to shop but to scrape what's left in the fridge to cook her a presentable meal. (No offence to MILs, we love ya and wanna impress ya!).

Inside the fridge you have:

A jar of pickle, some pasta, some cheese, one frozen steak, a dozen of eggs, a radish, two lemons, some flour, and a bar of choclate.

Now, let the real fun begins...I mean cooking.

In an almost gaussian world you'd made several proper dishes:

Pasta entree---pickle, cheese, pasta went together, boiled pasta for 30M, microwaved cheese for 2M, chopped & seasoned radish for 5M
Steak entree---defrosted steak, cook medium rare for 2M each side, boiled one egg for 10M, cook pickle for 2M, put sliced lemon in the dish with 0M cooking
Desert cookie---stirred flour with water, put them in the oven for 20M, microwaved chocolate for 3M, dripped choclate onto cookie when oven was ready

Your MIL looked farely impressed and pad you on the back when she arrived.

In an alternative timeline, you didn't really give an F and put all the ingredients into microwave for 20M and guess what??? A giant wad of ultimate abomination

You MIL arrived, she didn't say a word a pulled an M16 Carbin out of her A and...you know the drill.
No Highs? No Lows? Must be Bose!
  • #8
  • Nov 24, 2016 7:24am Nov 24, 2016 7:24am
Quoting Nefser
{quote}....
Sorry for cutting off your reply, Nefser.

I haven't thought ab out chopping off the "head" trades, this is actually an interesting approach and I will sure to test it.
I'm usually trading more than one pair and doesn't consider the exposure oo much, if I see an opportunity, I go for it.
Of course, it usually ends up in bitter tears but I'm learning.

I would like to be able to pull out some profits on a regular basis but this requires a huge change in mentality on my part.
At the moment, my mind set is leaning towards treating the profit as a basket and not as a per pair basket or individual trades grouped together.

I will need some time to digest what you and Tardigrade had written here.


Thanks.
  • #9
  • Nov 24, 2016 7:29am Nov 24, 2016 7:29am
Quoting Tardigrade
Just practicing philosophy here: You Mother-In-Law called you and said she was going to visit within 2 hours and it's approaching dinner time. You, the sitting duck, had no time to shop but to scrape what's left in the fridge to cook her a presentable meal. (No offence to MILs, we love ya and wanna impress ya!). Inside the fridge you have: A jar of pickle, some pasta, some cheese, one frozen steak, a dozen of eggs, a radish, two lemons, some flour, and a bar of choclate. Now, let the real fun begins...I mean cooking. In an almost gaussian world...
*LOL* Just so you know, back in the days when I had a MIL, neither of the options suggested by you would have passed. We would have taken her out to dinner in a fancy restaurant instead, she was not the kind to take head on lightly.
I've since divorced and had learned my lesson, if a potential MIL is not into drinking beer or such likes, than thanks but no thanks.


And as for your suggestions, I will think about it. I have treated trades as singular entities for a long time with not much success and now that I'm trying to view them as a single profit entity and it's working a bit I am again faced with the same questions I had when I was treating my trades individually.

Very frustrating but also entertaining and educational.


Thanks.
  • #10
  • Nov 24, 2016 7:56am Nov 24, 2016 7:56am
Quoting Reamasesa
{quote} *LOL* Just so you know, back in the days when I had a MIL, neither of the options suggested by you would have passed. We would have taken her out to dinner in a fancy restaurant instead, she was not the kind to take head on lightly. I've since divorced and had learned my lesson, if a potential MIL is not into drinking beer or such likes, than thanks but no thanks. And as for your suggestions, I will think about it. I have treated trades as singular entities for a long time with not much success and now that I'm trying to view them as a single...
LOL. Never had a MIL but I can certainly related to how you feel and do not plan to have one in the near future. But kudos for you, being a freeman again

Trading baskets certainly has it's merits, PM if you'd like to discuss.

Should you choose to trade the basket/market neutral approach, a tool developed by FXEZ will come in handy; it allows you to perform technical analysis in cluster of pairs.

Good luck
Attached File(s)
File Type: mq4 Pairs with Beta 4.mq4   3 KB | 394 downloads
No Highs? No Lows? Must be Bose!
  • #11
  • Nov 24, 2016 8:31am Nov 24, 2016 8:31am
Quoting Tardigrade
{quote} LOL. Never had a MIL but I can certainly related to how you feel and do not plan to have one in the near future. But kudos for you, being a freeman again Trading baskets certainly has it's merits, PM if you'd like to discuss. Should you choose to trade the basket/market neutral approach, a tool developed by FXEZ will come in handy; it allows you to perform technical analysis in cluster of pairs. Good luck {file}

Thanks, will sure do.

I'm not sure what's "neutral" approach means, from what I'd gathered, it's like trading the spread or arbitrage which I'm not so sure my broker would love.
Any instructions on using that indicator?
  • #12
  • Nov 24, 2016 8:39am Nov 24, 2016 8:39am
Quoting Reamasesa
{quote} Thanks, will sure do. I'm not sure what's "neutral" approach means, from what I'd gathered, it's like trading the spread or arbitrage which I'm not so sure my broker would love. Any instructions on using that indicator?
https://sites.google.com/site/market...-mt4-indicator

Instruction
No Highs? No Lows? Must be Bose!
  • #13
  • Nov 24, 2016 8:43am Nov 24, 2016 8:43am
Quoting Tardigrade
{quote}Trading baskets certainly has it's merits, PM if you'd like to discuss. Should you choose to trade the basket/market neutral approach, a tool developed by FXEZ will come in handy; it allows you to perform technical analysis in cluster of pairs. Good luck {file}
Never considered doing it myself, as I feel it just over complicates the process of trading. What we currently have is essentially amplified movements of very small changes between two currencies. By creating a basket, you are trading one set of variance against one or more different sent of variances...so the movements of spreads of spreads.

Dunno - makes my head hurt a bit to think about. I much prefer TA on a pair and trade it. Each pair, on its own merits - but just have to be aware of the fact that they all move in vaguely in tandem, albeit out of sync due to all the permutations of pairs.


And regarding MIL's - I've heard so many horror stories, but luckily my MIL is actually fairly nice and tolerable. :-)
  • #14
  • Nov 24, 2016 9:18am Nov 24, 2016 9:18am
Quoting Tardigrade
{quote} https://sites.google.com/site/market...-mt4-indicator Instruction
Thanks, I read that link, didn't understand much of it and how it could be put to good use.
  • #15
  • Nov 24, 2016 9:21am Nov 24, 2016 9:21am
Quoting Nefser
{quote} Never considered doing it myself, as I feel it just over complicates the process of trading. What we currently have is essentially amplified movements of very small changes between two currencies. By creating a basket, you are trading one set of variance against one or more different sent of variances...so the movements of spreads of spreads. Dunno - makes my head hurt a bit to think about. I much prefer TA on a pair and trade it. Each pair, on its own merits - but just have to be aware of the fact that they all move in vaguely in tandem,...
I, too, thought the stories to be just that, stories. Well, you learn glad to know yours is much better.

Took some time to read up but still can't figure out the neutral trading thingie.
  • #16
  • Dec 1, 2016 9:08pm Dec 1, 2016 9:08pm
Quoting Reamasesa
{quote} I, too, thought the stories to be just that, stories. Well, you learn glad to know yours is much better. Took some time to read up but still can't figure out the neutral trading thingie.
trade is not easy of course, but forex trading is more difficult than any other trade, and we have to have the mental and also have a bit of experience to be able to achieve success in forex trading
  • #17
  • Dec 1, 2016 11:34pm Dec 1, 2016 11:34pm
take profit i loves! i see profits? i take it! immediately i take it! it is easy! try it! you always win! 100% at takes profits! 100% take profits is win!
Maadik Hugiis. IQ 69.
  • #18
  • Dec 26, 2016 8:31am Dec 26, 2016 8:31am
Quoting MoneyZilla
take profit i loves! i see profits? i take it! immediately i take it! it is easy! try it! you always win! 100% at takes profits! 100% take profits is win!
And what do you do with losses? Just close the minute you are in minus? What about letting your winners run?
  • #19
  • Dec 27, 2016 7:46am Dec 27, 2016 7:46am
Thoughts on taking profit.....
do it if you can
do it when you can
do it as often as you can
never regret when you have done it
just keep adding it to your treasury.
What would you do if you knew you could not fail?
  • #20
  • Last Post: Edited 8:22am Dec 27, 2016 8:11am | Edited 8:22am
OK,

I could only upload one screenshot because I'm at work but this is what I'm talking about.
This is XAUUSD which is currently at 76$ in profit, as you can see, some of the trades are in profit some are in loss.
None of the trades has any SL and some of the new ones (I usually open two trades, one with TP and one without) have TP set.

This basket of trades is currently compensating/hedging an AUDUSD basket of trades which is currently at a loss of 30$.


So, for the time being, I got two suggestions here which I'm trying to incorporate into my trading.
The MIL suggestion, planning and all before hand.
And the MM suggestion of leaving the stem of the basket intact but trim some trades off the top.


Maybe now with a screenshot it would be easier to ask for thoughts on this matter.



Good times to be had by all, it's nearly a new year upon us.
Attached Image (click to enlarge)
Click to Enlarge Name: XAUUSDH1.png Size: 37 KB
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