Optimal Stop-Loss Take-Profit Levels

[Gamma_Jammer]

Anomaly - I think we're slightly at cross purposes here. I basically agree with you re. letting your profits run. I've come to the conclusion that the way to make some decent money is to catch the decent moves. I just don't think that optimising a system to death in order to catch exact tops bottoms is the best way to trade. I'm not talking about trying to take the easiest 10 pips of a 150 point move but neither am I talking about trying to squeeze 145 of them.

I just think there's a happy medium to be had somewhere that will allow you to develop a system that isn't too hard on the emotions that will give longer term signals than would typically be employed by the average 'scalper'. Not that I have anything against scalping per se just that for me personally I can't see ever that being how I want to operate.

[anomaly]

GJ--
I must have misinterpreted your earlier post then. I agree that it's counter-productive to try to identify tops bottoms. However I do agree with Alexer Elder who grades all trades by the percentage taken. If you take 60 pips off a 100 pip run your grade would be 60%. You should always aim to increase your percentages.

As for trading strategies that aren't too hard on the emotions we may disagree. I always want my emotions to be the weak point of my trading systems. If learning to think another way is the only thing sting between me the holy grail that's an ideal scenario. My thoughts are the only thing in this universe that I know I can control. =)

[Gamma_Jammer]

Well on your last point there's no right or wrong answer just whatever works best for the individual. But for me I also try to recognise the fact that there are only so many trading hours in the day I want to be applying my system across 6-8 currency ps (on the assumption that there will always be a chance of a good signal in one of them).

So factoring in time if for example I could grab 60% of a move with a 1 hour position 75% of a move with a 4 hour position I'd personally be inclined to take the 60% move on. Not only are you free to do something else but in the (admittedly a bit extreme) example I've chosen it's pretty obvious that there's been a change in momentum if you're trading retail fx (as opposed to sitting in a bank with the extra info flow that entails) that sort of thing makes me more inclined to take the money run. I'm looking for trades where when they work I fully underst WHY. for me that usually equates to trading on breaks of key tech levels trying to go with the large interbank stops orders generated by hedge funds.

Well it sounds great in theory :-)

[wozdan]

Hi

Dacoffey I think you have overlooked an important issue. Moves are of diffrent magnitude (in pips) on diffrent ps becasue the absolute levels of exchange rates are diffrent (EURUSD is 1.2 GBPUSD is 1.8). If you measure TP SL in pips you have to have specific rules for each p.

I have a simple 4h/1h support/ressistance system that I tested live (one eurusd usdchf) for some time with diffrent TP SL levels the best results where on the

EURUSD: tp 50 sl 35 (coincidence?
USDCHF: to 100 sl 50

Sometimes my system makes me leave 100 pips on the table but overal the gratest profitability is when tp is 50

cheers good luck

[dacoffey]

wozdan: Excellent point...I will begin testing using relative percentages.

[Gamma_Jammer]

Very good point Wozdan but interestingly the 2 examples you have given (eur/usd usd/chf) both have similar 'big figures' (given no change in EUR/CHF they would both converge at around 1.2380 if the greenback turned).

yet you have found optimum results for your system using very different parameters for the two ps.

So while you are of course right about the need to optimise for specific ps it would never be as simple as mutiplying by 1.5 (1.8/1.2) to give cable values based on eurusd for example.

This is largely to do with structural differences in the different currency ps. Liquidity dealing conventions etc.

[wozdan]

gamma

you are right of course it is not as simple as multiplying (due to action on crosses) but generally one can expect the moves will be bigger it is best shown on gbpusd

cheers