Trading idea: Layered limit order with small SL

FX:AUDUSD   Australian Dollar/U.S. Dollar
This trading idea maybe not practical on a small timeframe because of the spread can easily trigger SL or open order. I only risk 1% from my account on every trade. Say, 1% is 100USD (10000USD balance). I divide the 1% into several small parts, say 8 part (100USD/8=12.5USD). Now I can open 8 layered limit order with good risk:reward ratio with the risk of 12.5USD on every limit order (SL overlaps on every layer). If you use Forex Lot Calculator, you will realize, if you have small SL area, you will realize, the lot size is bigger. Do accept losses on the "earlier" layer because the price may break the SL. When the true reversal happen, profits will regain fast (because of the using big lot). If the price made to the latest SL, you loss 1% (100USD).

IvanLabrie PRO
2 years ago
I see, I asked this in another post of yours.
Sounds like a smart idea, painful to input so many orders though haha.
I'll do some math, might be worth doing it.
Have you compared to entering with a wider stop or waiting for the top to get in? You think this gives you a probabilistic edge?
I have one trade active, with 3 limit sells, same stoploss for all though. Might be better to do this instead.
coffeeground IvanLabrie
2 years ago
hehe i dont even try this because im too lazy to calculate the lot size and dividing stop loss. very hard to do in Metatrader. But i realize in cTrader platform, you can drag and drop order level, stoploss level, take profit level easily. maybe a more practical platform to do this strategy :) yes i have compared to wider stop but i realize i cant use larger lot size because i only want to risk 1% of my balance. Usually i got 1:3 risk:profit ratio, but by doing this sometime i can get up to 1:20 risk:profit ratio and it allow me to use bigger lot size (according to lot size calculator)
IvanLabrie PRO coffeeground
2 years ago
Great, I'll have to back test it. What about the same invalidation stop and gradually bigger positions? I believe you have something worth exploring here.
coffeeground IvanLabrie
2 years ago
if you got a trading portfolio (like myfxbook) this strategy will definitely affect your win and loss trades statistic. your potential investor might see your portfolio and see that many of the trades is a losing trades (because of very tight SL).
coffeeground IvanLabrie
2 years ago
for example the in above chart, you will have 3 losing trade and 1 winner.
coffeeground coffeeground
2 years ago
sorry, 6 losing trade vs 1 winning! :) good luck doing backtesting! im very appreciated if you share the test result with me :)
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