mob wrote:MO, I would like to trouble you again for some insight / guidance....
I seem to get a hang of the entrance at extremes (preferably H4 but mostly H1) and made 300% in last 4 weeks...demo account though. As I consider this crazy gains, I think I might not follow proper / safe money management. My aim is to risk no more than 2-4% of capital but have a mental issue to reconcil this with your no-stops approach....
I normally enter with market order once price action leading to extreme is slowing down, add a limit order 40 pips beyond initial entry plus a limit order 30-40 pips away in anticipated direction (ie rebound from extreme), target profit is 50% retrace between previous and present extreme. I normally use a total of 5 lots, lot size calculated as max risk 2-4% with inital 40 pips SL divided by 5 (sub-lots) for placement / adjustments.
I usually trade 2-3 currency pairs concurrently
1a. You mentioned before that you work with 90 pips / 4(?)% risk on weekly basis - how would calculate this if you have one pair position (multiple entries) up for total of 500 pips and another down 600 pips - close all because combined total is minus 100 pips?
2. Multiple entry position moves in anticipated direction, combined total for 500 pips, than falls to
a. average entry, ie. zeroed
b. falls below mental stop loss (40 pips) below average entry across all positions but is still well above initial entry
Would you close positions in either case?
With a five spread of 5,000 to 25,000 currency, your initial entry has a 45 pip pincushion (opposite of profit cushion).
With a ten spread of 5,000 to 50,000 currency, your initial entry
has a 90 pip pincushion.
I consider both pincushions to be roughly the amount that I am willing to lose.
The dollars required to control the position is calculated by dividing the maximum currency size by leverage:
The dollars required to trade the 5 spread is...
25,000/50 = $500
The dollars required to trade the 10 spread is...
50,000/50 = $1,000
25,000/20 = $1,250
50,000/20 = $2,500
25,000/10 = $2,500
50,000/10 = $5,000
As you lose money your maximum lot size suffers but YOUR INITIAL POSITION SIZE STAYS THE SAME until it can be increased (you never open a position for less than the last trade).
Your profit/loss is always calculated from your AVERAGE price after multiple entries.
The larger your position the more your average price acts as a "no touch" wager.