Topic: Setting SL and TP for Trend Trading
Wondered if I could ask for some feedback on how people might approach this.
I have 10 portfolio collections trading right now and they are not doing too badly - some decent trends have been identified, a few false starts which is to be expected and all in all the account is up 3.93% with a drawdown of 1.62%. Early days since it's only been running a few weeks but I am trying some different approaches now to improve/monitor the trades.
What I am finding is that the SL I have automated is clearly an optimised SL based on the backtesting data. Since my trades are running from 1-7 days (which I am happy with) I obviously need to change the SL from this value optimised over 20-40 years. Couple of approaches and a couple of questions.
1. I could set the SL to ATR. However, the ATR values seem really high - e.g. EURUSD is 0.00131. Is this 131 pips? Or 13.1 pips?
2. I could set a standard 50 pips SL on every trade. Its low but I would rather have more trades stop out than risk the price falling further. I am playing the long game here with my strategy. I can also engage in some position sizing and work out the SL value here to a % of my account value so I am managing the risk.
3. Should I bother with a TP or just let the exit criteria (whatever it is) do it's job? Reason I ask, I can't always guarantee the software hasn't created a "silly" exit criteria and I dont really want to check each strategy, it would take too long. Again, ATR could be used or a set value, e.g. 100 TP.
4. I found one interesting approach - my strategies seem consistent in picking up trends and creating more than one trade, e.g. I had 10 USD/JPY in the same direction last week. I set the SL and TP on these in staggered amounts, e.g. SL was 40,50,60,70,80,90 etc. This could take advantage that the price goes against me, then reverts back. I need to give the trade some breathing room but also insure myself if it doesnt.
5. My other approach with TP was to sell HALF the position once I make 50 pips. Then set a TSL at 45 pips and recheck this every day, thereby locking in profit. The alternative is to wait until 50 pips, sell nothing and set the same TSL. I quite like this approach.
I would be really interested to hear others experience and advice on this - I feel Im finally finding some ground now and have some demo trades out there which I would love to improve