Trading EUR/USD Daily Hi & Lo
- Thread starter JSSPMK
- Start date
When making a decision which way to initiate a trade common methods look at either trading with a trend or countertrend. The problem with directional methods is that they neglect vested interests of the ones on the other side who may well be positioned to trade in the same direction as you are about to, but they still want to trigger stops below common stop loss levels, at times they run way below our stops which in itself creates range expansions. So instead of watching my stops being triggered when trading in one direction, I go with the bigger wave.
Now that dreaded, by most, point concerning doubling after a loss. Obviously nothing is guaranteed in this life. For instance, do you consider a trader that doesn't increase position after each loss will not suffer from a major streak of consecutive losses that may slice trading capital by 10,20,30,40%? It may happen as the future is an unknown variable & no matter how sophisticated one's methodology may be it will never be perfect. So let's assume you don't double up upon each loss, but trade strictly risking 2% of trading capital, because risk of a loss of an average trade is limited to 2% you commit more capital to your trading activities, say you got $100,000 you commit it all. If I have $100,000 I will commit 1/5 of that. By incurring bigger risk to that capital I am at the same time positioned to obtain higher ROI when compared to a trader that risks 2%, because realistically speaking the lower the risk the lower the return. Say a trader returns 6% (each average winning trade), yet a limited loss is 2% a time, 3 losses and that gain is gone. Now you need another 3 trades to get back that 6% and more so considering operational costs.
I am probably one of the worst people on this planet to organise my thoughts in a proper logical way, so just ask if the above created a big black hole
Now that dreaded, by most, point concerning doubling after a loss. Obviously nothing is guaranteed in this life. For instance, do you consider a trader that doesn't increase position after each loss will not suffer from a major streak of consecutive losses that may slice trading capital by 10,20,30,40%? It may happen as the future is an unknown variable & no matter how sophisticated one's methodology may be it will never be perfect. So let's assume you don't double up upon each loss, but trade strictly risking 2% of trading capital, because risk of a loss of an average trade is limited to 2% you commit more capital to your trading activities, say you got $100,000 you commit it all. If I have $100,000 I will commit 1/5 of that. By incurring bigger risk to that capital I am at the same time positioned to obtain higher ROI when compared to a trader that risks 2%, because realistically speaking the lower the risk the lower the return. Say a trader returns 6% (each average winning trade), yet a limited loss is 2% a time, 3 losses and that gain is gone. Now you need another 3 trades to get back that 6% and more so considering operational costs.
I am probably one of the worst people on this planet to organise my thoughts in a proper logical way, so just ask if the above created a big black hole
I did mention it b4, when a trader scales into a position he expects price at some point to start going in his expected direction. This method, due to the doubling strategy, is also a scale in technique, an accumulator. The difference is that instead of depending on direction, it banks on range expanding in either direction.