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Author Topic: DIY Frequent Trader  (Read 7219 times)

Offline diyforexskills

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Re: DIY Frequent Trader
« Reply #45 on: July 22, 2021, 05:47:12 AM »
Entries vs Exits

As I have said before, I feel we often spend too much time on getting the entry conditions optimised and not enough time on optimising exits.

Over the past year or so I have been experimenting with using dynamic (ie indicator-based) exits to supplement the pip-based exit conditions - for both TP and SL.

Eg ATR-modulated pip settings, basket-based settings, MA crosses and time-based settings. And seeing some improvements.

My latest experiment is to use BB settings as the only exit condition for both TP and SL. Because these bands nicely reflect the dynamic market conditions. This makes for quite a dynamic and variable regime.

In the first two images below you can see how this works. It is obvious that when we have had a large move against a trade it will be some while before the trade is exited, either in profit or in loss.

The entry conditions are multi-indicator based and the strategies do employ re-entries whenever entry conditions are met whilst the initial trade is still open. So those are re-entries; sometimes they occur as if marty; at other times as if scaling in.

Results for the new portfolio using this approach are good to date (but only the second week), and although the closed gain is shown as 17% pm, the more important stat is the -14% return due to the open DD at the moment. Due in large part to the open Buy trades shown on the USDCAD chart and as explained above.

This unpredictability of what the SL or TP of trades will be makes the reward to risk consideration problematical; we can only really rely on back test results and then do some forward testing (as I am doing now on a live account) hoping to include some major market moves like we have had this week - so far we have survived reaching a peak open DD of some 25%. (Trading 11 different pairs with half of them also trading only within one of three time zones - so some 30 charts mostly all 0.01 lot sizing.)
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Offline diyforexskills

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Re: DIY Frequent Trader
« Reply #46 on: July 24, 2021, 06:22:56 AM »
Messy chart

Using BB for exits provides a bit of flexibility for manual intervention.

With the USDCAD trades for instance where we had a sharp sell-off followed by a very tight range, the optimised setting for the BB exit (coloured in red on the chart) would have resulted in all the open Buy trades being closed last night wiping out all the profits to date. But that would have been due to the unusually tight BB as the price ranged in a very tight band for several days.

Looking at the Daily chart my view is that price will rebound over the next few weeks since price is moving off a multi-year low and is trending up on the longer timescale. That means that I may be able to close these buy trades at a much smaller loss or even a profit if I have the patience.

To do that I have two options.

1. Temporarily change the BB settings as shown in orange as I did last night; or

2. Set BB exit to false and use the trendline exit feature of the Autotrader to allow price to climb and exit at any future drop below the trendline. Trendline as shown in red and I can move that around as required.

Worth a go in my view.
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http://www.diyforexskills.com

 

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