hi guys, I’ve been monitoring a few fx pairs and I’ve been making some small bets. Most of the time, I’ve been right about the trends and the momentum the pair is going (whether it’s heading up/downwards or reversing). The issue is that 8/10 of my trades ended up being stopped because of my S/L order (+1 ATR)
Is there anything wrong with my S/L strategy or if anyone has a neat S/L strategy for me to study?
Here’s an example of my recent trade on USDSGD. Shorted on a big red candle only to be stopped by 2 long candles, however momentum immediately swings back downwards.
Not sure if I’m doing it right or just really unlucky.
Getting stopped out for a pip or even pipettes will happen from time to time and it is just kinda unlucky but if you see that this happens very often you probably can change it. Have you tested all your previous trades what would have happened if you placed your stop loss at 1,5 ATR? Your win rate might increase but your returns might drop because you risk to return will drop a bit from having bigger stop loss orders or both could increase since you will win more, only way to find out is to check through your old trades and apply a bit different approach and see how it would affect things.
I think when you define your personal rules for entry, it’s even more important to define your rules for when to stay out even if entry conditions look good. It’s not about your SL placement being wrong or right and one (often) gets unlucky as @BBFx27 says, but for me in your example one of my ‘stay out’ rules would have said: don’t enter short right after an unusually large red candle, an upcoming correction is very likely. Of course sometimes that’s wrong and I miss out as the market will keep shooting south, but I beware of sudden large moves as triggers. FWIW.
Thanks. Yes, you’re right. I’ve read that more often than not, unusually large green/red candles are danger signs and most people should avoid. Personally I usually execute on the 3rd candle’s open on the 1H time frame. 1st candle being “signal”, 2nd candle being "confirmation. However I also found that this leads me with very very little profits since by the time the 3rd candle opens, the trend has already been confirmed and shifted towards the momentum.
Before opening every single trade, try to determine which trend the market is following. Whether it is uptrend and downtrend and then trade accordingly.
