Trade-in market currency

When the trade is in the right direction, we will pull the stop loss up / down to lock in the gains gained before adding a new trade also in the current market direction (a manual trailing stop). Simply put, our total Risk will always be fixed (the best case is to reduce it to zero) but the "potential" return will increase a lot, too great, right? However, if you accidentally forget to pull the stop loss before adding a new trade, the account can lose because we are "double trade", even "triple". Moreover, because we will pull the stop loss up / down quite close to a trade that does not apply this strategy, if the market accidentally bounces (test support/resistance, fakeout ...) then it will be considered to lose all, trade even though the loss is not too big (we have already locked profit). Tactics only apply when the market is going very strongly in one direction.

Apply :

  • Assuming the EURUSD pair is going down, you see a pin bar at resistance 1.3670 giving a sell signal. It seems that this is quite a good Resistance so you decided to put the stop loss at 1.3700.
  • Next, the chart shows that there is no important or clear support level up to the level of 1.3200, so you decide to aim for a rather large Take Profit.
  • Your risk is $ 200, for simplicity consider you selling 2 mini-lots at 1.3600; 100 pips Stop Loss x 2 mini-lots (1 mini-lot = 1 $ / pip) = 200 $.
  • You aim for a ratio of R: R to be 1: 3 for this trade, so Take Profit is at 1.3300 and you will add 2 more SELL orders, 1 when it reaches 100 pips, 1 when it reaches 200 pips.
Your trade is on the right track and goes 100 pips, so you SELL add 2 mini-lots at 1.3500, according to the original plan. So in total, you now have a SELL 4 mini-lots (4 $ / pip), which also means your profit is 1000 $ (the first 200 wins + 800 $ if the two current orders win) if The market hits the original 1.3300 targets.

Most importantly: Before placing a second SELL order, you must pull your first stop loss to 1.3600, and this order is now a "free" order (break even if you hit SL). The Stop Loss of the second order is also at 1.3600, so the total Risk of both orders is still $ 200, but the "potential" profit is now almost double.

The market continues to go in the right direction, so we SELL add 2 more mini-lots as planned. Now is 6 $ / pips offline. The potential profit is $ 1200, double what we originally targeted, and the best part is Risk = 0 $.

Why is Risk equal to zero? Looking back a little, you will understand. We have dragged the SL of the previous 2 trades down to 1.3500 (of course, dragging when adding the 3rd SELL order), ensuring a profit of $ 200 of the first trade and the second trade at this time "break-even". $ 200 of that first trade compensates for the Risk of $ 200 of the third trade => Of course "free trade".

Finally, the market hits 1.3300, all 3 trades close and you get a trade with R: R = 1: 6. You never risk more than $ 200 on any trade, and you profit $ 1200.

  • With this way of trading, you absolutely can take huge hits (10: 1 is also not impossible, on the days when the market "waves"), but of course, trading like this needs experience and a little luck.
  • Should be prepared to touch SL or break even because just 1 retrace is enough to "knock out" our whole pyramid because SL has pulled down quite close.
  • Always remember to drag SL with the trade, this is the most important point of the strategy, if you don't pull the SL, you can lose the account in the blink of an eye because many trades accumulate.
  • Never add to a losing trade, this is not Martingale!
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