Spot Forex vs. Forex Options

#1
Hello Traders :)

I have a strategy that has a strike rate of about 80% on daily time frame and has an average of 200 pip potential per trade when it is correct. Down side to this strategy is that it has a drawdown of 200 pips per trade on average before going in the correct direction. My back testing showed that trade can be off sight between 15 Days to 25 before heading to the correct direction. With the Spot forex I have difficulties managing a huge stop loss and the roll over fees.

With this strategy would it be a good idea to move from Spot Forex to Forex Options because then I don’t have to worry about a big stop loss and roll over fees?

P.S. – My Stop is about 200 Pips and my Target is also about 200 pips giving me a risk reward of 1:1, if I move to options what sort of R:R is am I looking at ?
Thanks.
 

WklyOptions

Well-known member
268 24
#2
Hi, SbradFX,

Having done literally 100s of back-tests myself - it seems that having a Draw-Down on Open FX Trades of 200 pips - "on average" - seems to indicate there is an opportunity for you to identify a better Entry or Setup set of scenarios (?). :unsure:

On most (if not all) of my setups - the asset MUST move in my expected Dominant Trend direction else I hedge it out quickly while waiting for the proper setup again (or exit entirely).

In any case - if you can provide more details of your setups and data/backtest points - unless it is TOP SECRET - I'm certain the numerous trading veterans in T2W can help identify ideas and insights to help you remove that undesirable 200-pip Draw-Down (esp if it is truly on average of every trade).

Good trading to you.

WklyOptions
 

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