Hi,
I have received an email that says:
Hi Jose !
Here I have another idea / observation, but may be you have already tried my simple idea and it does not work at all.
So, watching the trading behavior of the ESW it seems to me we get in trouble during stronger trends caused by open trades which are left after a trend running first in one direction properly – but unexpected trend reverse is our enemy.
May be I could explain it using an example. I watched this situation often: the price is running “north” and the is successful opening + closing buys earning green pips ! Well done ! BUT: at the same time one, two or even much more older sells are sitting in the button of the chart and of course they generate a growing loss if the price is going up “north” further. So wouldn’t it be better in this situation NOT to close any buys until they at least compensate one (or more ?) of the nasty sell losers ? After closing of buys together with a nasty sell the EA must open immediately a new buy (buy series) for “catching” another old sell. So step by step these “old” sell trades causing losses would disappear. (Sudden reverse to opposite would cause the same behavior at opposite price zone)
In any case the buys would hedge the account like described above. It is important not to close the buys with small wins having at the time open loosing sells.
I agree very much with this email, but I think that grid trading only one pair will cause ever some inevitable and durable DD. My solution is to trade a minimum of 5 pairs and that they cooperate to diminish the global DD of the account. How ? First, identify the max loss trade of the account, Second, is the direction of this trade against the actual direction of the trades of this pair ?. If so, evalute if the open profits (sum of trades in profit) of the other (and the same) pairs can compensate this max loss trade and also obtain a profit. If so do it. Search for the second max loss trade, and repeat.
I have developed this management inside the Mango Cooler EA and also corrected some bugs..
I am trading it live in the 5 min timeframe and the pairs: EURUSD,GBPUSD,USDCAD,USDJPY,AUDUSD,GBPJPY, with 0.01 lots for every 1.000 euros. You will need the indicator HGI 16.07.
The entries are determined by the HGI indicator, but the important here is the management of the operations
Regards and good trading.
José Luis
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