Viable way to trade or just too greedy?

j'ai

Trader
Nov 10, 2011
14
0
17
Hi,

I placed this trade on a demo account at the time but as I was learning the trading method I never bothered with anything else. However I've noticed that this signal seems to appear immediately prior or during a ranging market, as in the example. (For chart see attachement)

In the example it shows a trade on USDDKK Daily 30/5/11 starting @ 5.20411. My method is to split 1 std lot into two 0.5 lots. Then take some profit at a predetermined position and let the second lot run.

In this case after the first candle I increased my stop loss to 150 pips. When the price retraced 150 pips the first stop loss kicked in @ 5.17094. The second lot was left to run, hopefully to catch the trade as it turned positive again. But just in case a 5 pip stop loss is placed just above the original price
line, to cover commissions. but as you can see it never recovered until the next day.

My idea is to cover both sides of the price line. Using a similar method. placing two trades one buy and one sell. As the price falls the first stop will kick in gaining a small profit, while the second is placed as before 5 pips from the line. Then as price goes through the line the opposite trade will kick in.

In the example although candles 1,2 & 3 are very small they actually represent 25, 34 & 12 pips, and as the spread is only 5.9 pips then that means three free trades if nothing else.

Is this viable way to trade or am I being too greedy?
 

Attachments

Enivid

Administrator
Staff member
Nov 30, 2008
16,673
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Odessa
www.earnforex.com
In my opinion, keeping two positions on the same currency pair in the opposite direction open at the same time is a waste. Closing positions partially is also a waste. Both techniques are unnecessary crutches that make your trading look better than it really is.
 

j'ai

Trader
Nov 10, 2011
14
0
17
Right Enivid. Although I think understand about opening currencies in opposite directions. Why is closing positions partially a waste? Just so I understand what you mean.

Thanks anyway
 

Enivid

Administrator
Staff member
Nov 30, 2008
16,673
947
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Odessa
www.earnforex.com
Pretty simple. If you believe that your position is going to be profitable (there's a trading signal for it), there's no point in closing any part of it earlier than the target. If you believe that your position is going to lose (trading signal failed or an opposite signal appeared), you better close whole position. Explained in details here:
http://www.earnforex.com/blog/2011/11/partial-profit-taking-in-forex-does-it-work/
 

Easy Trader

Master Trader
Sep 17, 2011
240
4
59
I agree with Enivid on the psycology of taking the partial profit prior to your target and how it will ultimatley effect your equity curve. You can in my opinion place your inital trade and let it play out, taking 3/4 profit at your 'original' target and letting 1/4 remain for a runner. BUT! the key is to lock in the 1/4 profit with the stop-loss to secure the profit of the original full order. This is a little method that utilizes the proper psycology that Enivid is describing but also leaving room for a runner. The idea is to not meddle with the original trade.