Pro Trader wrote:
Looking at your recent posts where you show the "rules" I've been wondering how you manage losses. Say you go from 2 units to 4 units or more after adding and look to re-enter at another extreme, what if you get wiped out on that next trade?
From the image above it looks like you ensure that you don't lose more than 50% of your space on each trade which enables you to then double your space and reduce your lot size by half for the next trade to have another shot. Is that correct? It also looks like you monitor PA to see if price is closing higher/lower over/under something to give you an idea where to hold or fold. Is that how you do it?
If not could you share how one might avoid losing all the lots accumulated over series of trades?
There are no rules but there are "ideas" that guide our trading.
The image was only meant to show an aspect of space, it was not to say that that is how you should use it.
What happens if I blow up my space? Well sir, in that case, I would lose 0.08%; no matter how large my size gets, my risk is
normalized to 0.08% (or 0.8% or whatever your initial risk is) by reducing space.
But be of good cheer, if you can just secure 5 measly pips then your space will live forever; so long as you keep accumulating:
If you lose 35 of 40 pips at 2 units then you can still place another trade with 1 unit and 10 space.
If you start at 2 units, accumulate to 24 units, & then lose all but your last 5 pips then you have 2 units and 60 space or 20 more
pips than you started with! (24/2) * 5 = 60.
What if you wanted to start again with 40 space? (60/40) * 2 = 3, let's check it again: (24/3) * 5 = 40!
Ignore the multiple choice initial position sizing, just start with .02% of your account balance per pip according to the waypoint picture.
Ignore the fibonacci accumulation BS, just double your size or increase it by 50%; space is either cut in half or by a third, you can visualize that & see if it feels right to move your stop to that location according to the PA.
What if my pips are .80 instead of 1? ( 1/.8 ) * 40 = 50, you have more space but, with larger lot sizes, you can adjust it down to 40.
What if my pips at 1.2 instead of 1? (1/1.2) * 40 = 33.3, you have less space; hopefully you have at least 4 units so that you can adjust the space to a more favorable size, one in which you can easily secure 5 pips...
...something like (4/3) * 33.3 = 44.4 would be perfect
I look at H1, M30, & D1 and I will swap either the H1 or M30 for a compressed 5 minute chart.
When I place a stop on a chart, it is on the 5 minute but it is also on the H4, daily, weekly, etc; does the location of my
stop make sense to someone trading the H4 or daily chart? Keeping your stops with the big boys, that is what you should
be thinking about when trading small charts.
When you accumulate you move your stop closer to the current price; would you trail your stop to that location if you were
trading an H4 or a daily chart? Keeping your stops with the big boys, that is what you should be thinking about when trading
Act like you are going to trade a large chart, then don't
Here is why:
Starting at 2 units it takes 3 doubles + an increase of 50% to get to 24 units.
At 24 units 22% is less than 88 pips away or within range of a single daily candle.
Had you previously nuked your space 6 times for -240 pips, that loss is only 20 pips at 24 units: (2/24) * 240 = 20,
that means that your target is less than 108 pips away (<88 + 20)!
As bad as you could possibly trade, your target is within reach of 1 or so candles on a daily chart.
Now imagine if you were protecting those last 5 pips & continually snapping back from the brink of space death to inevitably
hit your 21.2% target.
Now imagine that each time you reached a target it added a cushion of 22 losses...you would have to be an unimaginably bad
trader to not succeed!
So how do we do it? Money management, position sizing, patience, & luck.
There are people who try to make this confusing, they admit that my way is "simpler" but they still prefer to do it their "advanced" way
There are people who claim to speak for me, as if they understood my innermost thoughts, and they are willing to sell you this wisdom for a price..."their time"...fk those people, they are just thieves.