The problem is this one: if you yake some simultaneous trades, for example 5 trades and you put a risk of R in every one of them, and look for a 5R profit… in the H4 chart the losers can be realized in hours, BUT the winners take more time, 1-2 days (you let run until you reach a 5R)… THEN… before a winner is realized in your account you may accumulate a coleccion of losers.
For example if you put 5 trades, 4 are losers (-4R) and the 5th is still developing… you know you will have probably a 5R in a couple of days or a week depending on volatility. BUT you see the -4R result in your account and don’t know if you need to close the 5th trade just for puting some realized profit to balance the drawdown…
Do you understand my problem? If a losing trades takes 2-3 hours to realize and the winner 2-3 days… i don’t see how to avoid the accummulation of losing positions, even If i know that in the long term I will have a positive balance.
The only method I see for avoiding this is trading just 1 pair. Then you have a sequence of trades, and no simultanous ones.
if you trade long-term, do you have this problem? how do you handle it?
I don’t quite understand why it’s a “problem”, if - as you say - you [I][U]know[/U][/I] that in the long term you’ll have a positive balance? Why isn’t it just a position-sizing issue?
I never have more than one trade open at a time.
That’s partly because I do quick, intraday trades. If I did longer trades, I’d probably resolve the “problem” by using small enough position-sizing for it not to be much of an issue. That would be a way of reducing risk-exposure. (But I’m not altogether clear exactly what the risk is that you’re trying to avoid, if you “know” that you’ll have a positive balance anyway? If the overall method has a proven positive expectancy, then shouldn’t it just be a matter of selecting the position-sizing appropriate to your acceptable risk-exposure?).
I trade long-term and this does happen. My advice is to anticipate it.
e.g. in the same pair - take the first position in XXX/YYY: if you get another entry signal in the same pair, ignore it until the first position has at least reached break-even: I’m not saying move your stop to break-even, but its risk must have been neutralised: the second position is then of the same capital risk as the first. Likewise the third etc.
e.g. with different pairs - only take positions that do not directly correlate with your first position, even if it has reached break-even. For example, if I am prepared to have max 5 positions open, only 1, maybe 2 at most will be long on particular currency / short on particular currency.
Planning is everything. Once you’ve got 5 long positions on the GBP, even if they’re each modestly sized, you’re in too deep.