Staggered StopLoss

[SuperDriveGuy]

Hi All,
Not sure if this has been discussed before..

I read many posts on multi lot trades where the Profit Target is X points, X Points + N, X Points + (multiple of N) away, basically taking a small profit on a small target so as to remove risk on the trade, move stop to breakeven and ride the trade.

Anybody have similar similar strategy for StopLoss, as in the above example, so have a StopLoss at X, X-N, X-(multiple of N) away.

I have a tendency to average down, not acknowledge that I got the trade wrong and move on to the next trade. Even though I have good success rate, its the unavoidable bad trades that end up causing more pain than they should. I will try to defend the trade at all costs, mostly it works but when it does not it causes GREAT suffering. So I was hoping a strategy like this might help me. Never read it being discussed before, so thought lets get the opinion of the traders on this site, see what they think!

Any feedback appreciated.
Regards,

SDG

 

[BSD]

Hi there SDG,

hmm, very difficult question as I'm sure there are as many ways of doing this as there are profitable traders.

My personal take - and I'm aware this isn't the only "right" one - is that I have wired my brain to pretty much disregard the outcome of individual trades, ie I don't get all depressed when I lose, but don't start thinking I own the world in a winning streak either, I just focus on monthly results, on the big scheme of things where the single trade is just pretty irrelevant.

So, being wired like that, I like going for excellent risk / reward ratios.

I buy pullbacks, so unlike breakouts you'll know straight away if your pullback was a retracement, a retracement going on a bit further than you'd anticipated, or a reversal, and because of that you can place really tight stops.

But as long as averaging down is part of the original plan, if i's done as a way of scaling in, rather than entering all at once, or as a way to improve win %, if it's that then the way you do it is a perfectly viable strategy also.

At the end of the day I don't think scaling in or out is too important,what's important is if your method, it's hit rate and average risk / reward ratios provide you with a positive expectancy or not thats of supreme importance.

There are so many ways one can skew those variables that one should do what suits ones personality most, and as the way you do it is definitely going to provide you with a higher winning percentage than that's what you should do if you like that.

Can't really give any concrete examples as I don't know your strategy, but if I were doing this with mine I'd enter an initial amount where I think the pullback ended, and ride that if it takes off, but give the trade a second chance if we're gonna be making an ABC retracement, ie a second lower low, and enter another amount right there.

Wouldn't enter any further trades after two tries though as that wouldn't be buying pullbacks any more then.

Hope this helps.

Good trading

 

[elitejets]

Hi All,
Not sure if this has been discussed before..

I read many posts on multi lot trades where the Profit Target is X points, X Points + N, X Points + (multiple of N) away, basically taking a small profit on a small target so as to remove risk on the trade, move stop to breakeven and ride the trade.

Anybody have similar similar strategy for StopLoss, as in the above example, so have a StopLoss at X, X-N, X-(multiple of N) away.

I have a tendency to average down, not acknowledge that I got the trade wrong and move on to the next trade. Even though I have good success rate, its the unavoidable bad trades that end up causing more pain than they should. I will try to defend the trade at all costs, mostly it works but when it does not it causes GREAT suffering. So I was hoping a strategy like this might help me. Never read it being discussed before, so thought lets get the opinion of the traders on this site, see what they think!

Any feedback appreciated.
Regards,

SDG

I know someone that scales out of losers the way you are descibing for that very reason. (I don't, I scale out of winners to pay for my stops). Then he is not tempted to double up and he adds back if the position comes back onside.
Try it, if it helps you not do stupid things then it can only be a good thing.

Is it possible you are using too much risk, and thats why you are having trouble with the losers?

 

[SuperDriveGuy]

I know someone that scales out of losers the way you are descibing for that very reason. (I don't, I scale out of winners to pay for my stops). Then he is not tempted to double up and he adds back if the position comes back onside.
Try it, if it helps you not do stupid things then it can only be a good thing.

Is it possible you are using too much risk, and thats why you are having trouble with the losers?

Hi EliteJets,
I don't think I am taking on too much risk, I usually trade 2 contracts at a time. So as in the example above I could trade 3 contracts but effectively have the risk of 2 contracts, given my stoploss policy. Also instead of adding contracts as my stoploss is hit, I would have to wait for the final stoploss to be hit, before I enter my next trade(this is me being in the mode of revenge trading)

If I stick to my strategy then everything is OK, win a couple of trades lose on one etc.

Appreciate your feedback!

Regards,

SDG