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| Another concept about riscmanagement https://www.stevehopwoodforex.com/phpBB3/viewtopic.php?t=244 |
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| Author: | mandolin [ Wed Jan 11, 2012 6:16 pm ] |
| Post subject: | Another concept about riscmanagement |
I never trade using SL. Why and how do I still protect the trading? Why? Because the SL too often cuts of the position when the graph is just at its deepest or highest and the closing hurts the most. I think SL does not fit into our time any more, our time of onlinetrading, internetbanking and onlinemanaging of our trading account. 30 Years ago there was no internet, internet wallets at the brokers and all that. There also was no Leverage of 200 or maybe 1000. You had to have an account of at least 10.000$ in order to buy a few stocks and of course in that situation you needed a tool to save your capital. At that time a strikt SL was absolutely necessary. But today we are online with the market itself. Just with a mouseclick we can chance the TF, the sice of the chart, we can use hundreds of indicators, we even can use robots to support our trading. So stone age is over. Even the dumbest of us know more about a chart just by looking at it, than 50 years ago a math professor could possibly know about the chart after2 hours of calculation and drawing dots on paper. Why and how do I still protect the trading? Lets first look at any currency chart: (On te bottom i guess) We can easily see and we all know of course that any Chart always moves within a certain channel. Pink: MA-middle line, yellow: ADR (average dayly range), red: AWR (weekly), AMR (monthly). The Chart quite often hits the yellow envelope, quite seldom hits the red envelope and only a few times a year hits the green line but comes back soon and always comes back to the middle line(pink). That gives us all the information we need to never again waist any money in paying a SL to the broker. We just have to calculate how big the lot sice of posititions in one direction may be, that we still can cover the DrawDown before the graf comes back and the balance relaxes. If we also want to be backed up against very extreme moves we could additionally place an insurance EA maybe at the green /monthly range line. In that case the insurance robot would open a hedge position in the direction of the trend and close it automaticle if it touches the green line coming back that way it can cover the extreme DD of our trading. Just such an EA always waists a lot of money by opening up and closing several times before the graph finally crosses the green range line. What I do: I accept that shit happens in this world of trouble and choose the red range-line (AWR). This way I can input my money more aggressive, generate a greater win and about every second month I have to face the fact that the graph is trending too strong and the I have to accept a loss. In that case I wait for the graph to retrace about 30% and than I close manually. But since we watch a TF of 1H and a huge range that closing has to be done within hours, not within minutes. Using that way of MM I generate a huge win in my Demo-account, so maybe its something to think about. http://www.myfxbook.com/members/mandoli ... on-1/96863 |
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