3 things about the $Trillion strategy that need answers
Posted: Thu May 10, 2007 4:44 pm
Hello,
I've been reading all the threads related to this strategy. It seems a simple idea, but 3 important questions have been raised and are unanswered.
For me, the strategy is theory only until they can be satisfactorily answered.
Your comments are most welcome.
1. STOP LOSS
Using the TRO Money Management tool, using a profit limit of 10 pips and a SL of 30 pips does not make good sense.
So:
I intend to place my orders ahead of time, as I do not watch the screen all day. These orders are:
i) A buy order at a level
ii) A sell order at level + 10pips
iii) A stop loss at level x <<<- yet to be determined
While a 30 pip SL does not make sense, there are also problems with small (eg-5-10pip) SLs. Very often there is whipsawing around the entry level, eg: buy at 1.9000, price goes up to 1.9003 then down to 1.8980 then up to 1.9007 (an example). You can get massacred on a smaller SL worse than using the larger SL values - ie. your SL gets hit a higher % of the time.
So for those of us that don't monitor in real-time, what is the solution? I could reduce my stop profit to 3 pips, but after commissions I make 1 pip - hardly worth my effort. And at this minute level, we are likely to get hit by spread alterations.
2. WHAT ACCOUNT % TO USE
Some people say risk no more than 2% of your account on a trade. This is independent of the SL level, and is used to guage how many lots to buy only.
What do people use?
3. AND WHY OPEN OR CLOSE?
Why are people waiting for the price to reach previous daily O/C levels?
Why not place two orders 10 pips from the current level? Surely the chance of reaching these is higher than waiting for the price to reach a higher/lower O/C value?
I agree, there are the same issues in that the price may reverse once the order has been opened before the profit target is reached, but this is no different than orders around the O/C values.
Alex
I've been reading all the threads related to this strategy. It seems a simple idea, but 3 important questions have been raised and are unanswered.
For me, the strategy is theory only until they can be satisfactorily answered.
Your comments are most welcome.
1. STOP LOSS
Using the TRO Money Management tool, using a profit limit of 10 pips and a SL of 30 pips does not make good sense.
So:
I intend to place my orders ahead of time, as I do not watch the screen all day. These orders are:
i) A buy order at a level
ii) A sell order at level + 10pips
iii) A stop loss at level x <<<- yet to be determined
While a 30 pip SL does not make sense, there are also problems with small (eg-5-10pip) SLs. Very often there is whipsawing around the entry level, eg: buy at 1.9000, price goes up to 1.9003 then down to 1.8980 then up to 1.9007 (an example). You can get massacred on a smaller SL worse than using the larger SL values - ie. your SL gets hit a higher % of the time.
So for those of us that don't monitor in real-time, what is the solution? I could reduce my stop profit to 3 pips, but after commissions I make 1 pip - hardly worth my effort. And at this minute level, we are likely to get hit by spread alterations.
2. WHAT ACCOUNT % TO USE
Some people say risk no more than 2% of your account on a trade. This is independent of the SL level, and is used to guage how many lots to buy only.
What do people use?
3. AND WHY OPEN OR CLOSE?
Why are people waiting for the price to reach previous daily O/C levels?
Why not place two orders 10 pips from the current level? Surely the chance of reaching these is higher than waiting for the price to reach a higher/lower O/C value?
I agree, there are the same issues in that the price may reverse once the order has been opened before the profit target is reached, but this is no different than orders around the O/C values.
Alex