Tom from Leeds's Journal

[tombacon89]

hi grant thankyou, i am trading live using the smallest lot size possible at the moment which = less than 1% risk for now. I seem to be choking out some really nice trades by moving my stop to quickly. I use an initial stop of 10 pips which I am confortable with, it's my eagerness to get to break even I need to control with a tm ruleset I feel confident in.

[immy]

The Problem with Pipwise/Fixed Stop Losses:

When you decide a certain number of pips to use as stop loss and you use it each time everytime, there is a problem. The markets volatility change from session to session day to day and even intra day. To be able to take advantage of the market you have two options 1. Use Variable SL and MM for each trade using "market generated information" to calculate your SL hence the MM (risk and position size) 2. Find an average level . The problem with the second option is that you will have to analyse the market whether the wave and volatility structure fit your risk and position sizing plan. If the wavelenght is lower than it then fine you can go ahead but if it is highly volatile i.e. it may be able to gain more pips but you'd require a bigger SL, then you have to filter those trades. They could some time be a little frustrating. So I suggest using the Red Line as your Cue during the start of the trend. when in profit the game changes.

There are 2 Kinds of Exits
1. Exit with Loss = Rent
2. Exit with Profit

Exit with a loss can be decided prior to or at the time of entering a trade and must be done at that moment. Never define your exit with loss level or plan after committing.

Profit Taking Techniques: If you're using fixed SL then you can always specify fixed 1:2 or 1:3 exit points and trail stop loss using a certain mechanism such as a. Trailing AIMS levels, Trailing last 5 candles high/low or the lines.

There are 3 Mechanisms that I use.

1. Trailing Behind AIMS Levels. (only downside is the Principle C. During Principle C it might force exit prematurely otherwise it brings in big profits, great technique)
2. Red and Green Lines:
Mentally using the Red Line during the start of trend/wave until divergence on AIMS Waves (before cross of zero line) and then moving to green line. This method is stop close only. So your hard stop remain behind aims levels but you watch and wait for the market to close on red/green line.
3. Fast Markets:
Both the above may be used as a combination or choose to use either one of them but the third option is also worth looking at, and its got to do with the changing volatility of the market during a trade. e.g. you're in a trade and its going normally into profit and price is relatively parallel to the gator lines. but all of a sudden you have very good few candles and then the price moves to far and too fast away from the gator line. When you look at the price and see that if it were to come back and close on green line that would mean giving back alot of realised paper profits, then you need to tighten your stop loss to lock profits, We don't want to give back easy profits do we? here comes the role of 5 consecutive green/red candles and/or trailing behind 3 low/high of the last 3 candles.

Fixed Target Points: Rigid profit taking levels require understanding of the markets and statistics. If you keep using those and fail to let it hit the TP you are doing a dis-service to your self. Everything has a bad side to it specially in Forex trading. So if you use TP's you might occasionally hit the tops and bottoms but you might also miss on potentially very big winners.

this is turning into an essay I must stop here.

cheers

I hope it helps.

[snorm]

That was a great setup Tom and Grant is spot on - some trades need a wider stop before they get going. As was the case in your trade, price broke out of a tight range then came back to test if that range is truly broken: old resistance to become support.

I always assume that the test of the just-broken-range will happen and try not to move my SL until it has, to a lesser or greater degree; after which you can move your SL below that test and the newly-formed support level.

This, IMHO, is price action at its best and one of the most often-seen laws of the charts.

In a nutshell ... unless you're locking enough pips to (at least) cover your initial risk, e.g. from a thrust move, avoid moving your SL until a new support/resistance level is formed from an old resistance/support level being tested.

cheers
Steve :-B

I see Immy has just posted as I was typing this up - hope we agree

[tombacon89]

Thanks guys really appreciate you taking the time to comment. I've just read through your comments a couple of times hopefully it will sink in over night! I will re-read them again before my mornings trading session. Thanks again!

[Herbert]

All excellent advice above. My one-liner?
I try to hide my SL behind some technical S/R level from start to finish. If i cannot, then 2nd thoughts or widen/lower risk, all said above.
Herbert

[tombacon89]

I took this long trade this morning looking for it to be the 5th wave with target of the 60min high 15 pips away. My exit plan was to follow grant's method and trail aims boxes. My hard stop was below the aligator at -13pips. After the trigger candle closed I moved my stop -3 pips below the trigger candle. We had a higher low but Ao started to turn dark green. I didn't move my stop I wanted to allow the trade to have it's room as recently I keep getting stopped out too early only to see price go the way I intended. (resistance becoming support - thank's snorm) Unfortunatley it didn't want to play and I closed the trade manually with with a red dot signal. -5.2 pips on this one. Did anybody else take this trade and what was the outcome? thanks. Next

[msk185]

Hi Tom
sorry about your rent. I didn't take this setup I took the one on GBPUSD that setup around the same time and exited for 7 pips.
I took the GBPUSD trade over the EURUSD one because the recent high was 7-10 pips from entry giving the trade some room to give me a t least a b/e exit if it failed to break through.

Cheers
Mike

[Topher]

I took the cable trade for the same reason Mike, however, you made the correct decision and got out at the 5min high. I for some reason didn't and took a break even on that trade. I think greed got the better of me this morning and didn't see the pa that was staring me in the face.

Richard

[tombacon89]

I didn't take the nice run down trade earlier as I wasn't keen on the 5min chart.

I took the break of the 60 low on a 15min chart a bit later, this trade went on past 1% profit, my target was 2% at the BRN. I moved my stop to break even when price moved 1% in profit. Only to watch it reverse and take me out, but still nothing lost on that one.

My 2nd trade was a cable trade looking for the 5 wave correction short. took a full -1% on that...

From now on I am going to set targets at 1% and let the trade do it's thing. I am done for the day and probably the week now with other commitments. I may get a session in on friday morning. Good luck with the rest of the week!

[tombacon89]

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