ok, how did you backtest your startegy?
This is consistent with my rule 28: Concentrate on how much a trade can lose, not how much it can win.
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Yor RR is to high. Use 1:1. We are not big players and our accounts are small, so 1:1 is totaly fine. Better hit more small wins than waiting for the big 1:5 move (which surely will happen once in a month but hard to handle for small acoounts and most minds) 
where do you place your Sls? those big player love to hunt our SL when they are placed obviously so why not trying to set a stop loss by an ATR-Indicator? ATR was a game changer to me.
Happy trading!
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@tommor
Indeed… so far best tricks I have learned is by experience rather than in books or tutorial. I’m trading with a small capital so my current loss are the cost for training myself.
@ProfesorPips
I have done a backtest on paper… so quality might be poor
I plan to do an automated backtest based on historical data.
@Mondeoman
Thanks, I will test this approach
@this_is_ando
Agree, I need to have smaller gains but higher win rate. My SL are placed beyond bullish/bearish tails and I think it is obvious. From all the feedback, ATR indicator is worth to try combined with a lower r/r.
Happy trading too !
I will keep you updated of the outcome !
please do, also you can’t achieve high win percent from trend following strategy usually it is between 30-50%
For argument sake, maybe you should try the exact opposite of this?
The mantra behind most trend systems is “let your winners run and cut your losses quickly.”
This results in a system characterised by a low win rate but a small % of huge winners that more than make up for the small losses over time. You end up getting a distribution something like this:
60% small losers - 20% breakeven - 15% small winners - 5% huge winners
The reason I bring this up is because if you are in fact a trend trader, than you should EXPECT your stop loss to be triggered more often than not. Too many times I see traders get hung up on their winning %. Remember it’s positive expectancy you seek, and winning % is just a part of the formula.
This realization can be a key turning point because it changes the way you approach system building.
One last thing that most here will probably disagree with me on is setting a fixed r/r.
If your chasing trends, why cap your potential upside? Especially if your TP has no technical reasoning other than being a fixed multiple of your initial SL. Let those winners run! Let the market tell you when to exit.
Other than that, it looks like you have a solid foundation already. Best of luck to you!
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You might want to think about widening your stop loss to cut down on those annoying premature triggers. Also, try tweaking your risk/reward ratio to around 1.5 or 2. It could help you win more often. Give it a shot and see if you can find a sweet spot between taking risks and getting good rewards.
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Anyone saying risk/reward is garbage is someone you should ignore. It is the key. It is pure math. If your risk is consistently bigger than your reward, you will en up losing. I agree with @Emi.s that between 1.4 and 2 is a good range. Also, in addition to ATR, recent price action, learn the pair you are trading. What influences it? How did it behave last time an event occurred? Sometimes events not directly related to your pair will affect, learn which. I consider ATR, I consider support/resistance, I look at trend/pattern/big moves previously, and at what levels. This comes from learning the behaviour of the pair, which is why you should focus on a few pairs and not try to trade them all.
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I have the same problem everyday… I finally realized I’m not checking the higher time frames for FVG’s (Fair market Value Gap’s)… that helped me, try that out?
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i dont know which strategy do you use but i would suggest you learning more about smart money traps and inducements. They tend to take out SLs of a lot of type of traders (SMC,breakout traders, etc.)
i also suggest watching waqar asim YT channel, he has some good analysis of market structure,liquidity,etc.
watching these type of videos help a lot with understanding the market a little bit
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Hello!
I had ecactly the same mistake.
What helped me was setting ATR based stop loss (trading daily chart) so I’m out of the volatility range, this way my stop loss is hitted really rare and I close the trade at opposite signal/structure break/7 bar time-based stop loss.
3 x daily ATR from 20 period.
2:1 Reward to risk target mostly closed by trailing stop.
This way I’m also keeping trades for min. couple of days/weeks and open new positions less often.
Hope it helps and sorry for my english.
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To address this, I suggest:you as bellow:-
- Reassess risk/reward targets: Consider reducing the target to a more realistic and achievable level, allowing for a wider stop loss.
- Adjust stop loss placement: Instead of a tight stop loss, consider using a percentage-based stop loss or a volatility-based stop loss to give the trade more room to breathe.
Place order after a realized delay. - Implement a “trailing stop loss” strategy: This allows the stop loss to move in the direction of the trade, locking in profits while minimizing losses.
- Consider using a “break-even stop loss” strategy: This involves moving the stop loss to break-even once the trade has moved in your favor by a certain amount.
- Analyze and refine entry points: While the entry points may be correct, there may be room for improvement. Look for ways to optimize entry points to reduce the likelihood of stop loss triggers.
- Manage emotions: Develop a trading mindset that accepts losses as a natural part of the process. Focus on the overall performance of your trading system rather than individual trades.
- Consider using a “max stop loss” strategy: This involves setting a maximum amount of stop losses allowed within a certain time frame, helping to prevent over-trading and minimize losses.
By implementing these strategies, you can reduce the frequency of stop loss triggers and improve overall trading performance.
Best of luck!
Many of us who have actually researched it carefully consider this one generally to be pretty bad advice (albeit superficially appealing) for all the kind of reasons explained here.
This (though similarly superficially appealing) can also be quite counterproductive, for some of the reasons discussed in this recent thread.
Simple man just give your trade more room to breathe. Move the stop loss further down if your getting stopped out too early.
Wait for your SL to be triggered by liquidity sweep, then enter. Simple.
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Keep that in mind - they are not bad bets - just bad entries / exits
You’re right - you need to win about 2 to 1 loss because of the spreads and commissions
Oh yes ! - I think almost all of us do
You could try NOT taking the bet but instead put a “buy order” at around 10 pips above where your stop loss would be - so it gets triggered just before your stop loss would have been - and place a stop loss - a good way below that.
Some will not get triggered of course and the dot will just continue to move up (or down if a short) - that does not matter - you lose nothing except a little time - but those Losers which should have been winners of which you speak will get a much better entry price and therefore earn a lot more money.
Whaddya reckon ?
Consider market volatility and price action before setting stop loss. For example, when the market volatile, I use stop loss in close proximity according to my trading capital. However, when the market is calm, I consider setting stop loss afar.
@Elliotrades08 is right, be aware of volume and sessions. I was in a trade on USDNOK, with a wide SL but as soon as the NY session closed the spreads got insane, and I was stopped out hundreds and hundreds of pips away from my SL. Due to the spread. I am not at all saying drop using SL, but if I am in a trade overnight (I am in Europe) I do not use SL. It is of course risky, but the spreads can get pretty insane during the Asian session, especially for pairs not involving Asian currencies.
My comments.
- Reducing target should not widen your SL, as that means a worse Risk/Reward. I agree with reducing target, as many have to high hopes. Risk/Reward should always be on the level you have decided.
- I am not a fan of percentage based levels, as they don’t reflect recent behavior. Use recent price action levels or acceptable loss levels based on your account size.
- Trailing stop. I use this, when price has moved significantly in my favor. The big guys will target SL regardless whether it is trailing or not. Try to place it (this goes for SL in general) at non-obvious levels. Avoid obvious support and resistance levels, try to anticipate the levels big guys will target. This requires studying the pair in question.
- I also do this on occasion, nothing wrong with this. Your main goal is to secure your gains. If you cannot monitor your trades at all times, this is ok.
- Entry points. The holy grail. This is one of the most important aspects of your trade. It is crucial for your potential reward. It will (most likely) never be prefect, but reading the chart, studying the chart and back trading can help. There is no correct answer to this, it has to be found case by case, by studying the pair in question.
- 100% agree. Mindset is often more important than all else. FOMO, hope, “it should”, “it has to” are more dangerous than reading a chart wrong. Trust me. Chasing a bull ride, thinking you are missing out, is deadly. Make a plan, and stick to it.
- Again, agree. The best day traders always have a max loss. If reached, they walk away. Do not get tempted to do just one more trade, hoping you will get it all back. Walk away, tomorrow is another day, another trade opportunity.
Anyway, these are my 5 cents, all the best.
The problem is that 2:5 risk reward ratio will lead to approximately 71% trades triggered by stop loss. I would suggest to change ratio to a lower one
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