By Forex grid trading I mean opening one at 30, opening one at 40, opening one at 50, etc., and rarely closing them, and selling lots in the reverse direction too so you get a bunch that are open all at once with the idea that as price increases and decreases you make a lot of money over time as trades close.
You are using an out of date browser. It may not display this or other websites correctly.
You should upgrade or use an alternative browser.
You should upgrade or use an alternative browser.
Trading Winning Positions - The optimal approach
- Thread starter mschey
- Start date
Do you think these would no longer be problems if you started with 2, then added 1, then added 2 and proceeded that way? That way your stop out at +1 would still be a winner but not break even.@tomorton I have used the exact same idea years ago and then discarded it
View attachment 182711
as you can see on paper it looks very good ...but you have to capture 2 grids before becoming profitable..
As the entry condition does not matter the system depends on continuous price trend without retracement by 1g.
the problem is price action very frequently moves/retraces by 1g regardless of what you choose as g.
After a sample number of trades
what I observe is roughly 45% trades are -1g and 25% trades are 0g
so 70% trades end up losers
And 10% trades are 1g which returns 0
rest 20% trades will capture 2g to 7g ...anything beyond is very rare.
and with each additional g the % number of trades will reduce...
Having it this way requires good entries.
Do I think we could do it with scaling and adding to losing positions? Probably.
What about buy some, it goes against you, buy more, then it goes in your favor, buy more.
I see one concern with this. You have to be sure about identifying bottoms.
I only open and only add to trades that are with the trend, if there is one. I don't have as much faith in top-picking and bottom-picking as I do in recognition of an uptrend and a downtrend. I also don't put as much faith in a young trend that's just come off a reversal and inherently has no TA characteristics of its own as I do in an established trend that has printed a smooth consistent progression.
I understand. The comment I made was based on bpr's intelligent post and I'm trying to uncover a way to make this better. This way works if you can pick trends that aren't going to drop on their way up. I rarely see a trend that does that. What about just using OTM options instead? Same idea, low cost that will result in a loss or a big win if it keeps going up potentially.I only open and only add to trades that are with the trend, if there is one. I don't have as much faith in top-picking and bottom-picking as I do in recognition of an uptrend and a downtrend. I also don't put as much faith in a young trend that's just come off a reversal and inherently has no TA characteristics of its own as I do in an established trend that has printed a smooth consistent progression.
I understand. The comment I made was based on bpr's intelligent post and I'm trying to uncover a way to make this better. This way works if you can pick trends that aren't going to drop on their way up. I rarely see a trend that does that. What about just using OTM options instead? Same idea, low cost that will result in a loss or a big win if it keeps going up potentially.
I've been a trend-follower for several years but found that there were two reasons why I started losing money a little while back -
1) I started being selective about only taking strong trends: I make money when I take every trend that fits my basic criteria. I don't know of a way to pick trends that will be consistent and smooth in the future.
2) I cut down my initial entry signals to a very few very closely defined candlestick patterns: this meant I was late getting into the "strong" trends or missed them completely: I now take any price that's not a new high in an uptrend / new low in a downtrend.
Ironfist determined similar conclusions in this thread, legitimately that you have to take every opening to make money in a trend following system. Additionally, that's the only thread I've ever seen someone give a complete definition of a trend and how to identify it in real time. I ponder if you could use your entries and his guidelines to make an entire system.
With proper management one can enter on about 95% of the bars. At anytime. On any bar and make money. Every bar has bulls and bears playing it all day long. Management trumps entry almost all the time. Most traders focus their concentration on entries. What is far more important is context and management. I too use setups and context for entries as there can be a slight edge there, however, if it goes against me soon after entry I focus more on context and the behaviour of the adverse move to determine if I exit with a loss immediately or add to the position, which at that moment is a losing trade.
There are no perfect entries when taking one. Never have been and never will be although in “hindsight” we sometimes see perfect entries..mostly luck...most definitely not skill or we would execute them nigh everytime.
Context...management...win rate...average win bigger than average loss...these are the important issues to me, at least. Context and management implies the ability to read PA well enough to achieve the above two metrics consistently.
There are no perfect entries when taking one. Never have been and never will be although in “hindsight” we sometimes see perfect entries..mostly luck...most definitely not skill or we would execute them nigh everytime.
Context...management...win rate...average win bigger than average loss...these are the important issues to me, at least. Context and management implies the ability to read PA well enough to achieve the above two metrics consistently.
With proper management one can enter on about 95% of the bars. At anytime. On any bar and make money.
This sounds like you're talking about money management being the factor here. Are you holding when it goes in your direction for many bars?
Both Risk and PT management. As to how many bars I would hold before taking profits, it is, never (at least for me) set in stone (although I will set an estimated initial PT) but the actual PT and even the SL are both subject to the dynamics of the market in the context in which I place the trade. In other words, I do not say I gotta have a 2:1 reward to risk or 4:1. If market dynamics after entering the tells me i can probally go for. 6:1 I’ll wait for more bars and more profits. If, on the other hand, my initial target may be 3:1 but after entry the subsequent dynamics tell me I will be doing good to get 1:1 then I do not like to hesitate but will grab what the market gives me , regardless of my initial PT.
My PT and my SL have initial settings but are ALWAYS SUBJECT TO subsequent price action as it unfolds. Thus I trade with what I call dynamic SL’s and dynamic PT’s and they are based upon PA context over the last several bars, volatility, and subject to adjustment depending on the more immediate context of the present bar and last 2 or 3 bars.
That is just the way I trade. I see the markets as very fluid and dynamic. I try to capitalize on the fluidity and the dynamics as they unfold. The market is full of uncertainty, and always will be, but that is part of the challenge. I am a strict daytrader so I am always flat by the close so I get my report card every day that I trade, by the close, at the latest.
My PT and my SL have initial settings but are ALWAYS SUBJECT TO subsequent price action as it unfolds. Thus I trade with what I call dynamic SL’s and dynamic PT’s and they are based upon PA context over the last several bars, volatility, and subject to adjustment depending on the more immediate context of the present bar and last 2 or 3 bars.
That is just the way I trade. I see the markets as very fluid and dynamic. I try to capitalize on the fluidity and the dynamics as they unfold. The market is full of uncertainty, and always will be, but that is part of the challenge. I am a strict daytrader so I am always flat by the close so I get my report card every day that I trade, by the close, at the latest.