This is a very short-lived trade that again, got STOPPED OUT because my stop loss is too tight. I don’t learn my lesson, now I paid the price. Luckily this is only demo.
Perhaps I should pay attention to average pip movement to guide my stop loss?
For the right plan, the Average True Range (ATR) can be a very useful guide placing your stops and profit targets. Of course, as with any indicator, you need to make sure the settings are relevant to your particular strategy.
Hi there,
Thanks for the advice! Definitely thinking on the same lines here, one my FX colleagues @Radoo actually recommended Average Daily Range (ADR) to measure the volatility, it sounds similar to ATR but their plots seem to be different.
Maybe they are the same, but the ADR is calculating all bars on the day, whereas ATR is controlled by the number of bars on the parameter?
Pretty much. If you are not trading the D1 or higher, the ADR is misleading because you care about the volatility on a much shorter timescale.
If I’m on the M15 in the middle of the London session I don’t want my indicator looking at the much quieter Asian session. Nor do I want it looking back to yesterday’s news inspired volatility. I just want to know what the market has been doing for the last few hours.
Perfect,
So maybe what I will do is incorporate ATR to my strategy, and set my stop loss to the nearest S / R levels of the price level + / - ATR.
This way, it will prevent me from setting my stop losses too tight.
Thank you!
So I got too overconfident on USDJPY after my first win, so I entered at market again, and only got STOPPED OUT
Perhaps I should’ve noted down the loss of momentum on the indicator at the next bar and exited from there instead of sticking to the stop loss, that way I would’ve cut my losses sooner.
At 10PM yesterday I entered a sell trade to ride a momentum… a couple of bars after the signal.
I missed the signal because I was dancing salsa out in the city… The momentum died down the moment I jumped in and started reversing.
I’ve not been stopped out yet, but I’m thinking I should close this position to cut losses. I’m thinking now of setting up alerts to notify me when momentum dies down, activating the alert once I’ve entered a position
Result: LOSS
I cut my loss here because I understand the reason why I didn’t cut earlier - missed the momentum loss on the trend
A squeeze alert on EURUSD triggered last night, so I entered and I forgot about it. Momentum faded and another buy alert triggered this morning. The position is still open but I’m getting really antsy to close it while my open profit is still positive.
Should I move my stop loss? Shall I close?
EDIT:
So I took @Drekieyja’s advice and tried to draw a fib extension on the nearest swing highs / lows when I would have taken my trade, not sure how accurately I drew it (or if I’m using it correctly) but I can see some reaction on levels like 1 and 0.618. Maybe I will use these levels as my retracement tolerance on my trades.
By the way my long position has completely gone against my favour, at the moment it doesn’t phase me but I reckon with real money, I will be more frustrated than I am now.
Result: WIN
This trade retraced beyond my entry, but then it skyrocketed back up, triggering my take profit. This win may be more down to luck.
I shorted USDCHF at midnight and this morning it just missed my take profit zone again! now it seems to be reversing…
I am putting my zones on s / r zones bang on, perhaps I should adjust my take profit zones nearer to the price action, but not on top of the s /r lines? Maybe this is psychology thing
Result: WIN
It seems the uptrend is just a minor retracement, it was within my risk management plan so instead of cutting the profits I let the trade play out, and soon after it hit my target at 11:30!
You should have a clear idea of what the movement is going to look like before you enter the trade. Once it becomes clear that you were wrong about the way the price action would play out, you should get out of the trade.
It’s not that price can’t still hit your profit target. It’s that you are no longer trading, you are gambling. If your profit target is hit it will be luck rather than foresight.
When in doubt, get out. Capital preservation is king. Or at least it is for me.
Hi,
Thanks for the insight,
Just to understand, you mean foresight on how the price action is going to play out?
I think an issue I have with the current system right now is that I focus too much on getting the right entry points that I neglect on setting alerts for exits and rely too much on take profit levels.
Because my indicators rely on riding a trends, I noticed that my past couple of trades I did not exit straight away once the momentum seem to be losing momentum.
I think I will need to refine this strategy either today, or end of the week during my retrospective.
At 10:30 UTC today LTCUSD triggered a squeeze alert, normally I would just enter but I noticed it’s having a hard time breaking a key resistance point.
Also one of the other indicators I have on the system Wavetrend, is showing overbought conditions.
I will observe this closely in the next hour or so to look for any clearer signs to jump in.
Pretty much. We know that price does not move in straight lines, but you should have a reasonable idea of how it is likely to behave. If you don’t you probably shouldn’t be in the trade.
As an example, let’s say I’m a trend trader with an open bullish position. I should have a pretty clear idea from my past experience and my trading plan how much of a pull-back I am willing to wait out before getting out of the trade. If I wait too long, and that pull-back becomes a true reversal, then I will have lost a great deal of profit, or even taken a loss.
Don’t let greed keep you in a trade when things are not going your way. ‘Hope’ is not a strategy. Protect your capital.
OK makes sense, so perhaps a good improvement I need to incorporate is to draw out retracement zones using something like Fibonacci or via past s / r lines to validate the trend.
Squeeze alert triggered on USDJPY, so I shorted. This time, instead of just firing a market order straight away, I tried to draw a fib extension and draw out a plan:
It turns out the price action did not retrace at all and it hit my tp after 2 bars!
Amazing! Interesting how my balance is now 5+ USD up from 1000 USD deposit, even though I felt like I took so many trades that ended up losers.
Maybe it’s the trades that I took which I cut straight away before hitting my SL, I will check this on my end of week retrospective.
Wavetrend alert triggered an oversold crossover yesterday so I went long on USDCHF. As of now (the following day) the price action has been ranging below my entry, so I have been negative.
My mistake here is that although the wavetrend is oversold, I didnt pay attention to the squeeze momentum, which was at the time of the entry, still showing signs of a strong bearish trend.
Since I can see the squeeze momentum reversing, I will wait and see how this trade plays out.
EDIT:
I paid the price of this mistake. This trade has been open for two whole days, hovered below my entry price and finally hit my stop loss this afternoon.
My squeeze alert triggered at 08:30 and before I entered the price action is firmly holding on the 0.786 fib line, maybe I will short not now, but set a sell stop order just below the fib line to confirm the downtrend.
EDIT:
Interesting result, my stop order got hit, and my prediction was half right as the price action went my way, tested the next fib level 0.618 but started reversing, this time I sized my take profit to go 1:1 against my SL which I think in hindsight, I should have placed the TP on the fib line.
The reason I didn’t was because I thought the level is too tight, and it wouldn’t have been a 1:1 risk reward for me.
Anyway I will monitor and see where this trade goes
EDIT 2:
Although this trade looked originally good, the entry setup was good, and the price hovered just below the entry level (its a short, so this is positive equity for me), 2 days later the price spiked up and hit my stop loss.
I love pending orders. They are virtually the only kind of order I use any more. They allow you to play an if/then confirmation game with your trades.
If I am right, and price is going to do XYZ, then price will move through this zone, triggering my order.
Being wrong (ie, price does not punch through the resistance level but instead bounces off of it) typically costs you nothing. It’s fantastic risk management.
Definitely going to start using them more often after the result that I got!
I think one psychological hurdle I need to get over it is getting panicked when an alert triggers, thinking I should get into the action as soon as possible or I will miss the price.
Remember that profit is a function of price movement and position size. With correct position sizing you don’t actually need a large price movement to produce decent profits. In fact, the closer your profit target, the more likely you are to actually score a win.
As I develop more confidence in my system I have been pulling in my profit targets (and my stops, to maintain my R:R) to trade progressively smaller movements. Positions that I used to sit in all day are now typically finished within a few hours.
