My pro friend Hal, passed on his P/L tips to prevent him from blowing you out of a trade. He’ll attack any of you who trade the majors - mainly GBP/USD, EUR/USD & USD/JPY.
When entry trading breakouts, reversals, don’t follow the 85% of the herd who place their S/L at the top or bottom of the first candle. That’s easy-peasy money for pros.
Instead, place the S/L at the top or bottom of the third candle.
To cater for minor retracements, and wave action movements choose a wide S/L to guard against being stopped out of otherwise a profitable trade. Which could mean lowering your lot size & or leverage to prevent you risking too much. My daily limit is a max 5% for open trades.
The larger your account size the greater your leeway when opening and running a trade, as you’ll find out when trading a $10k demo account. Trying the same on a $300 live account would be a fast track to a likely blow out.
Let me know if you try it out and how you get on. Cheers.
Another tip if your emotional control is as bad as mine - change the candles to ONE colour apart from RED.
Your mindset is then focused on a ongoing picture of candle price movement.
You would find newbies do not have the discipline and patience to manage small accounts, be it demo or live. Most come into trading to make a sackful of easy money. Making a few dollars here and there is not on the agenda.
That’s one reason why 85% fail. (percentage taken from a 150 years of USA backtesting statistics).
Okay, I apologise for not making it clear. In an upward ‘trend’ that reaches and encloses a S&D or S&R zone, which you consider is still suitable for a continuation your new trade entry should place your stop loss underneath the third highest candle below. Most traders are taught to place the S/L at the bottom of the last highest candle - see a couple of responses here which is not understood properly.
This applies to many entry situations and is why pro institutional traders know exactly where these S/L are placed and they could cause a small downward move which wipes out the one candle S/L and makes a nice new low to begin the upward trend again.
While I am no expert in the pro world, the latest servers used by traders are able to trade on ticks, which if you’re trading in billions is a serious edge.
Okay. So where exactly are you going to place your S/L? Or is it a random entry around the S&R level? Bear in mind there are probably millions of traders that are doing exactly the same which attract the pro sharks who will wipe out most.
Hi. For example, on an upward trend, If every losing trader closes their account at a given spot or gets stopped out, the price will weaken. In which case, it’s best to close your winning trade earlier.
Pros would wait until the price drop attracts buyers, and then it’s an easy entry to add to their positions. The rationale is that unless there is a huge spike, trends tend to continue rather than reverse.
However, with current market conditions, anything could happen.
What’s even better is to use PSAR balls (my setting 0.09, 0.50) which show every candle price move on the charts. So it’s easy to place a new T/P and S/L matching any previous movement for every TF.
