View Single Post
  #9 (permalink)  
Old 06-24-2006, 05:39 AM
Aaragorn's Avatar
Aaragorn Aaragorn is offline
Senior Member
 
Join Date: Jun 2006
Location: USA
Posts: 801
Aaragorn is on a distinguished road
let's look at this from a more instance specific senario.

Is there a signal that would identify these specific time points?

these are the big ones to me
2006.01.06 15:30 -130 pips
2006.03.29 08:26 170 pips
2006.04.03 09:18 100 pips

What I'm trying to do and I don't know that it is possible is reduce the losses of an automated straddle strategy by not stradling when there's a good chance that range action will not retrace sufficient to close both sides of a trade. A straddle strategy works well in a channeling market but can't survive lack of retracement when price action moves away from the channel. A big move is any move sufficient to move the price action far enough away from the channel that it won't retrace to close the opposite side of the straddle and leave it hanging. How wide that channel is depends on the user's settings. It could be as little as 2 or 3 pips below the point of entry.

as to how long i'm willing to wait I should think about three or four days tops. Big move entries are points at which full retracement to those levels may take several days. But the real goal is to avoid opening the losing leg of a two sided position. It may never be possible to fully avoid this but I'm not looking for perfection just to avoid a greater percentage of the losing sides being entered to begin with. Now before you say, 'this sounds like a job for a stop loss', that's very possible IF there is a way to keep the stop loss from messing with all the winning orders which WILL retrace and close.

If I put the stop loss on everything it dramatically reduces the profitability of the orders which retrace and close. To make this work better I have to prevent the high probability losers from opening in the first place so that the majority of the winners can run without getting stopped out. how can a winner get stopped out you ask, well it can if it is going to win only based on a retracement and it moves to stop out before it turns around and goes to profitability. This happens in many cases, a large percent of the winners started as losers and turned around.

I am looking at other methods detecting and of closing out losing positions besides traditional stop losses. But my focus here is to prevent high probability losers from ever opening. I don't have to tip the scale too far before it will swing in my favor Every little shift toward profitability tips the scales.

Last edited by Aaragorn; 06-24-2006 at 06:00 AM.
Reply With Quote