Hey gang,
I've had this idea for a while now, and those of you who are members of SHF may have seen this before, but I figure the more eyes on this, the more likely that someone with better coding skills than I have will get some ideas, and since Zorro is a
much more powerful and empowering platform than crapt4 could ever dream to be, this would be the best place to share...
=========================================================
I'm a tightwad! When it comes to trading, I want to spend the minimum amount of my balance as possible.
I'm also a greedy bugger! So, when I see a big move, I want to pile as much into it as possible.
Some people say, "Go in big, and scale-out to pocket some of the profits along the way!"
I say, "Hmmm, and do you scale-out your losses by the same ratio? If not, you're going backwards."
So, what to do? I can't have my Kate, and Edith too, right?
Well, maybe, just maybe, I can... I'll leave it to you guys to punch holes in my way of thinking.
Part 1: Initial trade + scale-in affordability.
I start by trading only 0.01 lots (I told you I was a tightwad!), and managing that trade's stop... Each time I move the stop further into profit, I ask myself 2 questions...
i. Is the profit protected by my stop on this trade (or a fraction of it), enough to cover the potential loss from a scale-in trade of the same size with its stop a few pips behind the first trade? If yes, then...
ii. Is there enough momentum in this move to for me to be able to lock some profit in on that scale-in trade? If yes, then go for it.
Rinse and repeat.
Part 2: Doubling-up the scale-in lot-size.
If I get in on a big move early enough, and
if I manage my stops wisely enough, I'll soon have enough profit locked in to risk some of it on a trade that's double my initial trade's size, with its stop a few pips behind the previous trades' stops... Get a couple of those with profit protected and R&R.
There comes a time where I have to say that enough is enough, and I won't double-up any more, though.
The problem with this system is, when do I stop scaling-in? I have no idea at the moment
Use pattern recognition and/or a lowpass filter or RSI to tell me when it's time to just enjoy the ride? I figure there's better brains than mine in here that could work that out.
Part 3: Wave-hopping.
On SHF, I wrote about "promoting" trades through the timeframes... With the first trade in each run, move the stop into profit as normal, but then holding it back until the trend on the next timeframe up signals an entry in the same direction... Whether we enter on that HTF signal or not is irrelevant, but when price moves to that TF's breakeven point, we move the LTF trade's stop to the HTF BE+profit... R&R.
Part 4: The Basic Combo Deal.
Use the scale-in affordability test as usual, but once you enter your first scale-in trade, you hold the initial trade's stop back... Its protected profit (or a portion of it) still contributes to the affordability test for subsequent scale-ins until the next HTF takes over its stops management, at which point the profit contributes to the HTF's affordability test.
Onward and upward!
Since I'm
trying to get away from using time in any of my trading (other than time in front of the computer), replace any references to "timeframe" with "Wave", "LTF" with "Smaller Wave", and "HTF" with "Larger Wave".
I'll stick with "Wave(s)" from now on...
Part 5: The Extra-Combo Deal
Since all trends start and end with the smallest waves, they take priority... I don't care if the largest wave signals a long entry, if the smaller waves don't agree, then there's no entry. Why??
Have a look at Z1... It does pretty good, eh? When trained right, its profit is approximately 200% of starting capital. Nice! but look it its win rate... It's approximately 35%, which is pretty good for trend-trading systems, from what I've gathered...
The thing we want to change, though is the approx 65% loss-rate... Now, if we could tune Z1 in to a smaller wave, so that the stop is around 10 or 15 pips, and still maintain the win-rate on that wave, (and ratio of pips won/lost), I reckon we'd be laughing. Here's why...
When the small wave moves its trades' stops into profit, it sets a flag to tell the next wave up that it is allowed to trade in the same direction... That small wave's flag is maintained until its trade is stopped out, at which point the flag is set to "No go".
We would need to tune that to some degree, though.
The same restriction is applied to the larger waves' scale-in trades as well.
I feel that by using the smallest trade-able wave as a "traffic controller" we can minimize the losses on the larger waves.
=========================================================
Well, that was long-winded, eh? This is what happens when the night is a barmy 36C (97F)... It's cooled down to 27C (86F) at 6:45am, so I guess I can try to get some sleep now.
I hope you guys can use some of these ideas, or have some fun with them, anyways
