Practice Exercise #2 (Money Management Test on DEMO)


If you started this Practice Exercise #1 you probably notice that this isn't working on ranging market (we had some examples of 5% losses on the last couple of days, due to Cyprus situation).

Testing this, with a SL=30p, we notice that in a range market of let's say 50p, our profit target of 90p is almost impossible to reach even if our position run in profit, for a while. And the SL will be hit, eventually, unless the PA will break any side, to have that 50% to catch the new trend (based on flipping the coin math probabilities).

The first idea that we can think of, to improve the initial exercise, is to use the Position Management (to "lock the profits"). 

Therefore after the step no8 ("
8. After having 20 opened positions, stop trading"), we can use the next formula to move the SL for the profitable positions:

New SL = Entry
± Spread ± few pips (i.e. 5p)

Or we can use a Trailing Stop = Initial SL
± Spread ± few pips (In case you can monitor the platform)

(Ofcourse you need to calculate this for every pair, since the Spread can vary from 2p up to +25p or more, for some pairs.)

Then, we will have the next steps for this new exercise:

1. Open a DEMO account = $10,000 (or continue to use the old one)
2. Take a coin (yes a coin).
3. Establish which coin sides will give you the signals. E.q head = long, tail=short
4. Open 20 pairs on your platform
(only pairs for not ruining the margins requirement. e.q no gold/silver/oil/indices, etc)
5. Flip the coin for first pair.
6. Enter (market order) using 0.01 lots (0.1 for $100,000 account), SL = 30p, TP =90p
7. Go to the next pair and do the same entry technique, then the next...until 20 pairs
8. After having 20 opened positions, stop trading.
9. If any position run in profit, move the SL = Entry ± Spread ± few pips or use Trailing Stop (NEW)
10. Let all the positions to run, until the new SL/TP hit.
11. If any position is closed (TP/SL hit), on the next day, open a new trade by flipping the coin, again (and move, the SL, for the profitable positions - NEW).

* Important note: Practice TEST on DEMO purpose, only!
I expect the results to vary, because not everyone can monitor their trading platform, during the day trading sessions (i.e. NY, London). Also, for the Trailing Stop command, the trading station must be on (computer).

I will update here, the average results posted by all of you in my Main Facebook Group, on the end of the next week. We will look for developing new ideas (new exercises) to improve the original statistic, too.


Best Regards,
^^_Lord_Ice_^^ 


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