Quote:
Originally Posted by Grob
What is your opinion on entering when the stochs are already in the overbought/sold regions. I went long EUR/GBP yesterday at 0.7436 with 200 pip stop. This is based on the very strong trend as the driver and the fact that the stochs on weekly and monthly are very tight and still rising whilst the daily stochs are rising and tightening again.
Doing very rough analysis of past data, when a strong trend starts, the stochs can stay in overbought/sold for quite a sustained period. Therefore possible scope to still jump on (even if we've missed the initial burst).
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While maybe a good trade, I won't be trading these setups just for the sole fact that they don't follow any type of "system." Sure, it could be a profitable trade, but you never know. I think there will be plenty of setups using the hard rules of Ingot's system, so that's where I will throw my (play) money in.
One could make a counter argument that E/G is so high that a correction/retracement is possible anytime now and you'd be buying in at the very top right before a fall. That seems to be the problem in this business, when people trade on instinct/hunches without a
solid reason, or years of experience with one pair.
Quote:
Originally Posted by Grob
Another question for you is - given Ingots comments on stops - are you moving stops when testing this strategy. For example not reducing the 200 --> 250 pip gap but moving it as you (hopefully) generate large profits on trades. Especially interesting as the NFP data tomorrow could cause a bit of turmoil and the two conflicting arguments are:
1. keep original stop and possibly make a loss if hit by big movement (but conversley stay in the long term trend if it reverts back to that); or
2. move stop to break even or above so increase chance of getting stopped in the volatility but at least keep the profit already made
i'm going for 1 at the moment on this demo account but will see how it goes!
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When I'm ~200-250 pips up, I will be moving my stop to break even. Also, if that never happens (say, an exit signal at +100p profit), here is my overall profit taking/stop moving strategy:
Initial position will be 3 whateverlots (in the case of my current demo account and most likely my first real account, micro lots), exiting one on a normal exit signal, moving the remaining stops to break even, exiting a second lot once we have another 100-200p profit depending on local S/R and what stochs are doing, and trailing the third 100-200p until it gets stopped out. I will exit a position with all three lots if there is an exit signal before my stop is hit and I am negative or breakeven profit.
I think the important thing to take away from Ingot's post on stops is to keep them WIDE, wherever they are. The question is, if I'm up 60p or so, and there's an exit signal, is it better to:
- exit all three lots (+180)
- exit one or two, move stops to BE (+60)
- exit one or two, move stops to 200p away (-220)
- exit one or two, leave stops untouched (-340)
The number in () is worst-case profit in total pips (pips*lots). I'd appreciate anyone's input on that that feels they would like to weigh in. I think moving the stops to BE when only 60p away is most likely a bad move...not enough room. I think I will be closing all three lots out then. There will always be more opportunities to trade, and positive pips are always better than chasing pips "that could have been" yet ended up nothing.