Dear oldtrader,
When you take a trade, how do you decide your initial SL.
Do you close the trade in loss even if the initial SL is not hit.
I understand closing the trade when in profit is ok even if it is small one. That is because your Trail SL gets hit and you are out of trade with a profit.
But, when the trade is ON, initial SL is not taken out why do you book loss prematurely by applying trailing SL. I mean, you should adopt trailing
SL only when your trade is in profit.
I was just going through the charts applying fractal AFL on 1 hour TF. Struck with following idea.
When we initiate a trade, we should mentally prepared to give up the initial SL. right? For example, on 28/4/2016 a sell signal is generated at 7846 and initial SL is 8005 ie 161 points SL. Infact, the initial SL is taken out on 26/5/2016. But on 09/5/2016 a buy signal is generated at 7867 with an initial SL at 7695 ie 171 points SL. The initial SL for this buy signal is never hit as on today. But, on 13/6/2016 there was a trailing profitable SL exit at 8110.
Loss on short is 161 points. Profit on Long is 240 points. So, net profit is about 80 points with just 2 trades.
We are holding short futures in current month and long futures in next month.
Let us assume we are not flipping the trades on every signal it generates. We hold on the trades until initial SL Hits or profitable trailing SL hits.
will see with larger data, if it works well.