Topic: Closing trades...when movement reverses...

Hi
Since I am new I made some strategies and put them for testing. One issue that I am facing is that if the direction reverses my trades do not close. They stay there and eat out the profit. Please see attached screenshot. The direction reversed the EA opened sell position but the buy position did not close and so net effect is ZERO. Being new I used SL and TP and so this is happening.
Please advise on what I should do to manage such reverses. I would be happy if such trades closed and would make a decent return. So far EA is doing good except for such trades wiping out my profit on a daily basis.

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Re: Closing trades...when movement reverses...

Hello Araza,

This is the key part of your exit strategy.  SL & TP will only exit a position when either the Stoploss or Take profit is hit.

You could use an indicator to exit  (i.e a when a moving average changes direction down,  or an indicator changes its direction down).

Or you could use a trailing stop (adjust the stoploss as the position gains in profit.  You choose if you adjust it fast or slow).

These questions depend on your trading objectives:

1)  Do you want many small profits
2)  Do you want very big , multi times your risk wins.

The setup of both these objectives above are different.   

Many small profits often have a tight take profit or a fast moving trailing stop / exit logic.
Big wins need a loose trailing stop or very big take profit.

Keep developing smile 

PT

Re: Closing trades...when movement reverses...

Right now looking at lots of very small profits. With my current strategy...the profits for each trade come in around $2.5 and then one trade goes in the opposite direction and wipes out profit of 4 trades.

So a trailing stop. This is in FSB pro right...not EA advisor.

Thanks

Re: Closing trades...when movement reverses...

Hello Araza,

You will have options for trailing stop in both FSB Pro & EA Studio.

In FSB - you have to change the exit rules (they could be set to bar closing) to Trailing stop.  Then choose the number of points you wish to trail by.

Trailing stop limit is another way - which puts in a take profit (at a specific level) combined with a trailing stop.  More info: http://forexsb.com/wiki/strategies/demo-05-trailing-stop-limit

Re: Closing trades...when movement reverses...

Life saver....thanks for hand holding on this journey. Much appreciated.

6 (edited by Irmantas 2017-09-05 10:06:18)

Re: Closing trades...when movement reverses...

Hi,
You can choose from few different risk reward, win ratio profiles.

There are trend following systems - few big wins, lots of small losses. These strategies tend to enter on break outs, and when market sits in ranges, they generate loss. But when trends happen they should make all money back and make some money for profits. These strategies have small win ratio (10-30%) but high risk reward (2-4 RR).

Other strategies are mean reversion - lots of small wins, and few big losses. These works in calm, range type markets. But when trends hits, you get few big losses what wipes out lots of small wins. Opposite from trend following, these have high win ratio (>70%), but a lot smaller risk reward (<1-0.5RR) to stay in overall profit.

Also you can try to hold middle ground, like trying to get 1.2RR and 50%, or 55% and 1RR to stay in green zone. Because markets lots of the time is not in strong trends, and not in long boring ranges.

Your example probably showed that your strategies are trend following and they are not design to take small profits. And probably you can not add anything better for taking smaller profits without losing RR.

Re: Closing trades...when movement reverses...

Thanks. First off by RR you mean Risk Reward? You mentioned 3 strategies. Can you kindly point me resources of such  strategies..like working examples or videos etc so that I may understand them better.
Regards,

8 (edited by Irmantas 2017-09-05 10:20:50)

Re: Closing trades...when movement reverses...

Yep, RR means reward risk ratio. 3 means that you get 3 times what have you risked. Trends, ranges, and trending ranges smile ... are market behavior, what we try to make strategies for. You will need to google for this basic technical analysis to understand that.

Re: Closing trades...when movement reverses...

Irmantas wrote:

Yep, RR means reward risk ratio. 3 means that you get 3 times what have you risked. Trends, ranges, and trending ranges smile ... are market behavior, what we try to make strategies for. You will need to google for this basic technical analysis to understand that.

I will google..lot to learn. Thanks.

Re: Closing trades...when movement reverses...

Hi Araza,

You can add in BE and Winner options to protect your profit.

If you only add BE (Break Even option), you prevent your grain (floating profit) to turn into actual loss.  So with BE, trade stopped out if you have gained a certain pips and then sudden market reversal will stop your trade at breakeven, 0 loss.

And if you add in Winner options with BE, each time your EA adds a Winner Option, when your last trades reaches it's BE, it will move all the rest of the previous trades to this new BE's level, in another words, all your previous and open trades have new SL level which is = current last trades BE level.  Moving SL to BE for those previous opened (still opening trades), means your floating profit is protected.  If you understand what I mean.

Profit Protection is as important as your Strategy building.  Good profit protection management can turn a losing EA into a profitable one.  That is why I'm proposing to have the "Extra Trade Management Features" in FSB Pro.

Because currently, we can't add trailing to our existing closing conditions.  You are "forced" to choose to close either by trailing (or other methods) or use your own closing rules.  The proposed "Extra Trade Mgt Features", I want to have both exits methods, i.e. exit either by my trading rules and or trailing.  This is a more dynamic trading method and would definitely help improve our trading performance tremendously (in my case).

Hannah

Re: Closing trades...when movement reverses...

hannahis wrote:

Hi Araza,

You can add in BE and Winner options to protect your profit.

If you only add BE (Break Even option), you prevent your grain (floating profit) to turn into actual loss.  So with BE, trade stopped out if you have gained a certain pips and then sudden market reversal will stop your trade at breakeven, 0 loss.

And if you add in Winner options with BE, each time your EA adds a Winner Option, when your last trades reaches it's BE, it will move all the rest of the previous trades to this new BE's level, in another words, all your previous and open trades have new SL level which is = current last trades BE level.  Moving SL to BE for those previous opened (still opening trades), means your floating profit is protected.  If you understand what I mean.

Profit Protection is as important as your Strategy building.  Good profit protection management can turn a losing EA into a profitable one.  That is why I'm proposing to have the "Extra Trade Management Features" in FSB Pro.

Because currently, we can't add trailing to our existing closing conditions.  You are "forced" to choose to close either by trailing (or other methods) or use your own closing rules.  The proposed "Extra Trade Mgt Features", I want to have both exits methods, i.e. exit either by my trading rules and or trailing.  This is a more dynamic trading method and would definitely help improve our trading performance tremendously (in my case).

Thank you once again for the detailed explanation. Is there some documentation on this for FSB pro. Talking about the software part of it.

Re: Closing trades...when movement reverses...

https://forexsb.com/wiki/