String of losses
- Thread starter AttoCEL
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I agree up to a point. I never calculate r:r either before or after a trade. its a useless metric that will send new traders chasing the wrong solutions to the wrong problem.
We focus on both.
We reduce our risk per trade quickly but we compensate for the reduced profit by extending trade runs and by trading many currency pairs.
The risk of ruin can be managed in many ways and 2 of the methods we use are ORM (Ongoing Risk Management) plus TLSR ( Total lot size reduction).
All of our trades have a distant SL and if a trade is caught in a long trend moving in the wrong direction then ITP kicks in ( ITP=Incremental Trade Partitioning) (which means that each losing trade starts to be partially closed as it becomes more and more -ve.
The losses from the partial closures are being offset by the daily profits from other currency pairs so they will not hurt us much but IMO these trade closures are essential because we release account margin and we also bring the Break-Even distance of the remaining trades closer (our aim is 100% recovery).
We focus a lot on trade recovery because when we combine it together with Trade offsetting ( a technique where we use the profits of a profitable trade to offset the loss from the partial closure of a losing trade), then magic happens
We can progressively bring down our TLS (total lot size) (therefore reducing our risk) plus recover 100% of the -ve trade balance.
A 100% recovery is a big boost to our equity.
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Extending TP allows losses to pile up, this is how most people trade. I've hinted and even listed the rest of the ways a string of losses can be paid for. Your TLSR reminds me of what I call LightCore (introduced in this thread), its very popular yet suboptimal. I generally stay away from it, reserved for special use cases.
You lost me with your distant SL theory... seems counterproductive. Also, target systems should not rely on trades in other products to make them work. They should be self sustaining.
The SL dictates the TP, together they dictate the max loss count for your entry method, which is the basis for sizing. I've combined these parameters in every way imaginable and honed in on the most profitable solutions. If you can reverse engineer my "Payment Methods" post, you will have developed a rare power. Imagine being versed in every single way something can be done, what that does to your conviction. As usual, the game can be mastered as the options are finite.
Your inability to master something does not make it an impossibility. You are not the smartest person in the world, the standard by which everyone is measured. So stay humble and allow new ideas to flow. Leaders optimize indefinitely.
You lost me with your distant SL theory... seems counterproductive. Also, target systems should not rely on trades in other products to make them work. They should be self sustaining.
The SL dictates the TP, together they dictate the max loss count for your entry method, which is the basis for sizing. I've combined these parameters in every way imaginable and honed in on the most profitable solutions. If you can reverse engineer my "Payment Methods" post, you will have developed a rare power. Imagine being versed in every single way something can be done, what that does to your conviction. As usual, the game can be mastered as the options are finite.
Your inability to master something does not make it an impossibility. You are not the smartest person in the world, the standard by which everyone is measured. So stay humble and allow new ideas to flow. Leaders optimize indefinitely.
Yes they can do, this is why we have to make sure that the long term trading direction of each instrument is correct.
Often my -ve trades become +ve by themselves but by then I have already washed them down (reduced in size) 1 or more times.
I could have held -ve trades intact and wait for them to become +ve but I have low risk tolerance and I want my -ve trades reduced in size so that they don't become a liability plus so that they are easier to recover.
Mine is a bit different in that it is done at instrument level and the process is largely automated, we just keep an eye on things and sometimes intervene to take advantage of situations.
This distant SL is different for each instrument and is not counter productive because it achieves its aim which is to manage the risk of ruin.
For example, on GBPJPY the ITP gets activated a few times per year but full SL hit is rare because trades will recover well before the SL is reached.
After the Brexit vote there were a couple of SL hits but only suffered small losses because these trades had already been washed (reduced in size) a few times.
Since the majority of trades recover early you might think that the SL is not needed but it is needed for account protection
We don't mix different intruments in trade recovery, for example, all -ve EURUSD trades are recovered using +ve EURUSD trades.
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I appreciate when my methods are argued against in a convincing manner. It motivates me to think deeper, in case Im missing something. Solutions are animated when a team engages in objective debate. Emotion fuels accuracy.
I found the post, it could be interpreted in a number of ways and I'm not going to speculate.
There are many ways to trade and some strategies are more profitable than others but at the end of the day, it all comes down to 1 thing, our own risk tolerance.
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