Good morning all.
I’m Richard, I’m in the uk and have been trading /investing for about a year. I’m into crypto, forex and gold. I stopped losing money about 6 months ago and I’m now ever so slightly in green. I have live accounts and several demo accounts where I test strategies.
I’ve been demo trading gold for a short while and I think I’m about ready to go live.
I did however have a scare recently when it dipped from 1550 - 1490, burning the account (demo of $1000 lev x 500) (Sounds greedy but it’s a demo account so it highlights problems earlier)
Since then I’ve adjusted the (new) account to $1000 lev x 100 and I’ve added what I think could protect me from the kind of movement that burned the previous account. I hate stop losses as they always get hit, so I’m looking for another approach.
Here’s the idea, let me know what you think.
1 - I only trade long (for the moment, as the daily chart is bullish) and I trade using the 1d 1hr and 15m charts. I allow myself a total trading pot of 0.1lot, at least one of which must be a short (so say 9x long trades of 0.01 and one short) . I first open the short (at as higher price as possible) and I open a long at the same time. The other trades I open as I see fit, hopefully at a lower entry, if possible. So in one basket I could have a bundle of long trades equal to 0.09 lots and a short of 0.01
The two trades opened at the same time (one long, one short) are not designed to turn a profit, the short is there in case the price crashes, the long is there to balance the short if the price goes up as hoped, both eventually being closed at the same time. The profit is designed to come from the remaining 8 trades.
My thoughts with this is that for an account to be burned there needs to be insufficient funds to cover further losses. But, if the account holds a trade which is in profit (that’ll be the short) then the possibility of burning the whole account is vastly reduced (I presume it’s not removed completely but it would be reduced substantially).
2 - I set tp’s which are achievable within a short time frame and I plan to close all trades simultaneously by the end of the week.
I don’t like stop losses as they always get hit before the price reversing and leaving me out of the market, so I’m hoping this strategy gives me some protection whilst keeping my trades alive.
I’d be very interested in any thoughts.
Many thanks and I wish you well in your trading.
Sounds like a discretionary trading strategy so i cant give no advice as you’ll do as you feel. Let us know how you get on. You mentioned no stop loss. You must be a pro or you’ll soon blow your account. Just my humble opinion. Good luck otherwise.
Hi, thanks for your reply.
I’m not a pro, but I am now making money.
I know all the talk about stop losses, and I know how dangerous it is not to use them. But for the way I trade SL’s are more of a hindrance than a protection. I’m pretty hands on with my trades so I if something goes against me I can (and do) act to cancel trades if I feel the price has reversed (and not just stop hunting). I don’t mind a bit of drawdown, so long as my reason for entering a trade hasn’t changed, I’ll keep it running. As I only allocate a small percentage of my account I can hold drawdown for quite a while if necessary.
In fact, my early trades were blighted mainly by SL hunts, since I’ve stopped using them I’ve been in profit. That said I know it’s not a strategy for everyone.
I will let you know how I get on, the plan is to withdraw profits on a weekly basis keeping my account balance at roughly $1000, and if I have a losing week I’ll top it back up from the profit taken. I’ve just started my second week and I have $70 profits in the bank so far, let’s see what this week brings.
Hi Peroli,
There is nothing wrong with trading without stop losses provided your leverage ratio is 1:1. That may sound like stating the obvious, but the thing to remember about always getting your stop loss closed out is that if it is too close to the price action, it always will get stopped out. Part of a trading strategy is to be realistic about the risk/reward ratio. And to understand which timeframe you intend to trade in. Best of luck and hope you keep in the green.
Sage words indeed, can’t argue with that.
The account described is my most aggressive with regards to leverage, hence keeping allocation down. I have other accounts I use to trade forex where I use a lower leverage of 1:25, but I’m more aggressive with regards to allocation (25% instead of 10%). I do not use stop losses here either but I do look at where I might put a SL and set an alert on my tradingview charts. If the alert is hit I take another look at the trade before decking whether to close or not. It’s like having a stop loss but keeping in control of it, and not visible to brokers. All this has turned my trading around. I’m more profitable, calmer and I sleep better.
I used to struggle with risk/reward when using a SL, as wherever I wanted to put a SL out of harms way meant looking for a reward that was just not achievable. Timeframes I use are -1d to look for direction, 15m for entry and 1hr for confirmation of both.
Good luck to you too, thanks for your comments.
Well, so far so good. I opened my long trades as discussed, along with my safety short. Gold then crashed this afternoon, presumably after some news. If I had used a SL I would now be out of the trades and suffering losses. Without the safety short I would be perilously close to burning the account. As it is, my available margin (still at over 60%) feels at a safe enough level, and I’m still in the trades. Time will tell if gold has found a floor and will recover (I’m still bullish so this is my theory) or if it will take another drop. I’d hope to see some recovery this week, if not I’ll be facing the dilemma of closing in red, or keeping over the weekend. I’ll let you know.
So, to sum up, I’m happy that I’m still in the game despite being in drawdown.
Great to see your coming up with systems all by yourself
The only thing that I would say and this is from experience many many years ago… Don’t go long and short at the same time on the same asset. Have conviction and go in one direction-you seem to have a sound technical foundation so I would spend some more time on staying abreast on gold news maybe even looking at gold and silver spreads as potential signals for entry.
Hope that makes sense
If your trading during set periods if the day then SL are not needed as you will be closing trades when you leave your desk.
Hi Simeon, thanks for your comments.
I agree, trading in two directions seems bizarre to say the least. But I only open 1 small trade (no lore than 10% of the total basket of trades) in the opposite direction purely as a means to keep the account alive if the price goes against me in some kind of stop hunt. I balance that trade with an equivalent trade in the target direction, the two designed to cancel each other out when I come to close. The main trades are the ones I look to for profit.
There will be times I’m sure when this idea gets tested to the hilt, I’ll be honest and let you know if and when it fails.
Thanks mate, appreciate the support.
The easiest way I reckon to avoid them is to put an alert on your charts where you might have put a SL. Then you can decide whether to close manually or not. It’s just a bit harder to keep emotions out of the decision. You do learn though.
