Hi, I’d like some thoughts on a strategy I am running.
background: I will admit I have been trading a small account for 18 months with mixed success. I feel I fall in the trap that many amateur traders do and get beyond my expectations what I can achieve. All to often I have an over confidence on trades regardless if they are right or wrong and take a tiny bit of information as the crystal ball to the future when in reality anything can happen. 90% of the time I don’t make trades, I make bets. The bets might have an edge but that is what they are. I have a full time job and a busy life that does tot allow me to follow charts, read books and understand all the fundamentals let alone the technical side and that is where I like many other newbie traders fail. So this strategy will hopefully suit my trading style. Having a “punt”, “Red or Black”, cross my fingers and close my eyes for the thrill of it trading… (of course I do keep up to date on the news use charts and macd, stochastic, bollinger bands etc…). There are a few things I have read on here and other places that made me think this might work:
- traders get the market direction right more often than not (yet why do so many people lose the trade!)
- traders make trades based on potential profit rather than potential loss.
- traders convince themselves they are right and buy into bad trades.
- traders take profit to early. whilst letting losses run.
- traders feel the need to be trading everyday rather than have a need to trade when the trades are right (ie. place positions on a whim)
So I have opened a second live account and I am currently testing this with a small sum of money (and the strategy is aimed at using small back pocket sums only).
The basic idea as the title says is to [B]make single trades and use the Usable margin as the Stop Loss[/B]. So instead of setting the stop loss at 3-5% of usable margin (as often advised). I instead enter the trade using around 85% of the balance on a 300:1 leverage(so £200 account, I will trade 58 lots= £174). If its wrong the account closes the position with a loss of £25, if its right then I will put a moving loss on to it and let it run.
I’m on week 2 of the strategy and so far so good. By removing the human psychology where I add to trades, move the stop when it goes wrong, or even when I flip positions to eagerly, or get impatient and start making more reckless trades. This strategy so far seems to suit the style of trading (I mostly trade oscillation between bollinger bands), the stop loss generally sits comfortably outside where I would normally put it(downside of the trade is it is fixed(upside is it fixes it for you) although I do sometimes still use manual st inside the usable margin), whilst I always position the take profit. I’m trading with small amounts that I can afford to lose however so far the account has doubled in size and I’m withdrawing more frequently. I don’t plan on upscaling the strategy and I’m not sure it will work upscaled, just like at the casino loose change is one thing, life savings is another.
Feedback welcome!
[B]just appreciate this strategy is not aimed at trading but the having a punt style outlined above[/B]