Showing posts with label positions management. Show all posts
Showing posts with label positions management. Show all posts

Open Positions Management ( or cut the losses and let your profits run )

Besides Money Management, the Open Positions Management is another way of making any strategy, a profitable one ( or more profitable ).

You can use PA's highs and lows or other tools, like Fibonacci Levels ( or Fibonacci Confluence Areas ) and move the initial SL, while PA is moving in the direction of your forecast, using the next formulas:

Initial SL = Previous High/Low ( Fibonacci Confluence areas )

New SL = Entry ± Spread ± few pips

Next SL = High/Low ( or Fibonacci Levels ) ± Spread
± few pips*

*few pips = 5p for 4H chart, for example.

And so on, until PA will form a bigger pullback and hit the SL ( in profit ). This technique is also known as Break Even ( BE ).

This strategy will increase most of your profits/trades, in no of pips, but sometimes will change the statistic for the whole strategy. Why ? Well, let's say your strategy have a statistic of 7/10 trades in profit. Using this way of changing the initial SL, might cause it to be hit near entry, most of the times, with few pips in profit ( or the next swing with a small amount of profit ), before continuing the initial direction forecast by you.

So, your initial strategy, could have 5/10 trades in profits, only. But, if you consider that those 5 trades in profit, might have more than 3 x SL as R:R Ratio, you might like it. ( Imagine you can catch the whole trend or 80% of it / trade ).

This way of managing the open positions, might help you to add new trades / same trend, since all open trades are running in profit ( ONLY if your MM Rules allow you to open more positions ).

For example, I use initial confirmation of the new trend, by entering with 1 lot ( for "testing the waters" ) and when this is in profit and I receive the second confirmation, I add 5 more lots. On the next high/low confirmation ( or Fibonacci Confluence Areas ) I add a new trade of 5 lots and so on until I'll find a "possible wave 5" ( Elliot Wave ) or an important Fibonacci Confluence Area on higher TF. In that moment I look for exit for all positions ( or move the SL, closer to the PA and let this last SL to be hit, eventually ).

Now, let's do the math:

- initial entry lot = for example, 80% from the whole new trend
- next entry lots = for example, 50% from the whole new trend
- next entry lots = for example, 30% from the whole new trend

And since I trade on higher TFs ( H4, D charts ) and trends could have from hundreds to thousands of pips...hope you understand, now, why I like to name this: " milking the pips" ( or "cut the losses and let your profits run" )

Best Regards,