Optimal risk/money management method - fixed stop-loss

[Turveyd]

Yes, but unfortunately there is no way of knowing in advance if we are indeed joining a strong trend or a fake "trend" (reversal)...

Correct, but you can enter at a point where your risking 10pts for the chance of making 30pts+, but when you crack this ( I have ) next issues.......

1. How to hold long enough to get a good enough relative to SL profit.
2. Not holding too long, that you actually end up giving a lot back.

I find most reversals start from an over extended spike, so I exit on that with a view to getting back in on a pull back and consolidation, not wanting to catch a falling knife.

Keeping SL not too far away, but not too close, incase of a reversal.


For every damn solution for Trading, you just run into another problem, which makes the previous issue seem easy

 

[Tradex]

1. How to hold long enough to get a good enough relative to SL profit.
2. Not holding too long, that you actually end up giving a lot back.

I solved that problem a lot time ago: I just put a stupid moving average on the chart and exit if the bar closes below that moving average (for long positions, vice versa for short trades).

This technique will allow you to milk the trend until the end, in most cases. It will also protect your capital if the market reverses almost immediately (fake trend) after you initiate your position.

And remember, you can always re-enter the trend later if the exit was premature.

I tried tons of exit strategies and this one seems to be the best, so far.

 

[Turveyd]

I solved that problem a lot time ago: I just put a stupid moving average on the chart and exit if the bar closes below that moving average (for long positions, vice versa for short trades).

This technique will allow you to milk the trend until the end. It will also protect your capital if the market reverses almost immediately (fake trend) after you initiate your position.

And remember, you can always re-enter the trend later if the exit was premature.

I tried tons of exit strategies and this one seems to be the best, so far.

Not far off my method, it works with a good trend, why I've moved to GOLD just as the Trends are stronger/longer, but the run 20pts in 2mins stall and reverse which looked like it was going to Trend, your MA hasn't moved so tricky.

 

[vincentnyc]

I solved that problem a lot time ago: I just put a stupid moving average on the chart and exit if the bar closes below that moving average (for long positions, vice versa for short trades).

This technique will allow you to milk the trend until the end, in most cases. It will also protect your capital if the market reverses almost immediately (fake trend) after you initiate your position.

And remember, you can always re-enter the trend later if the exit was premature.

I tried tons of exit strategies and this one seems to be the best, so far.

you swing or day trade? What moving average you use to exit? 20 days?

 

[Tradex]

you swing or day trade? What moving average you use to exit? 20 days?

I does not matter, this simple technique works for day-trades, swing trades and long term positions.

The value of the moving average must be determined by the backtest, of course, I cannot give you a one-size-fits-all value.

 

[Tradex]

but the run 20pts in 2mins stall and reverse which looked like it was going to Trend, your MA hasn't moved so tricky.

Here is another exit strategy : if you are long and the market prints 2 lower highs and 2 lower lows, on the smaller time frame, get out and reconsider (same thing for short positions, only in reverse).

See, nice and simple, yet effective...

Trading does not have to be complicated, I like to keep it simple.

Simple systems with very few trading rules/parameters are extremely robust, meaning they work in many market conditions and do not depend that much on the financial instrument or timeframe that the trader is using.

 

[Turveyd]

I does not matter, this simple technique works for day-trades, swing trades and long term positions.

The value of the moving average must be determined by the backtest, of course, I cannot give you a one-size-fits-all value.

I run off ( for a Long ) a 12LWMA LOW with a few extra points added on for my exit.

But also a 24LWMA HL/2 and in some cases I go out to 24LWMA LOW with also some points added.

If the 24L or 24 L Low is too far away, then I get out at the 12 Low as I don't want to take the loss, but if there near then I move out for more wiggle room.

 

[Tradex]

I run off ( for a Long ) a 12LWMA LOW with a few extra points added on for my exit.

But also a 24LWMA HL/2 and in some cases I go out to 24LWMA LOW with also some points added.

If the 24L or 24 L Low is too far away, then I get out at the 12 Low as I don't want to take the loss, but if there near then I move out for more wiggle room.

Sure, that's fine too.

You should also consider moving the stop to break-even as soon as the market moves in your favor (by some percentage or points).

 

[Turveyd]

Sure, that's fine too.

You should also consider moving the stop to break-even as soon as the market moves in your favor (by some percentage or points).

I do loads of different things, trying to leave it and let it out trail by those rules, be more hands off catch more of the trends. That and getting in same trade 3 times cause 2 just hit SL wipes out most of the profit of the 3rd.

Just changed my tactic to slower, was more scalpy before 5pt SL and moving to profit ASAP, but taking a lot of small losers way too stressful then losing the plot.

That and Slower I can trade, walking around the town or in the gym with my tablet, do get a few looks walking around the gym with a 10.5" tablet mind LOL ( Too slow to move SL on tablet, PC just graphically move line, tablet type the SL level, which required remembering it and being to read the small chart numbers )

 

[Tradex]

but taking a lot of small losers way too stressful then losing the plot.

If you have backtested your system and it's profitable then trading should be virtually stress-free, even boring.

You simply execute the trade, pocket your winnings or take the loss, and wait for the next trading opportunity.

There is zero emotion in that process, win or lose.

Stress only appears when the trader does not know what he is doing, and is basically making random calls and placing arbitrary stops and targets (or even worse, no stops at all). This type of trading generates tremendous stress, physically and mentally, not to mention crippling losses sooner or later.