Into the castle - page 3
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Considering that lock is a comfortable loss and basically the same thing is a strong idea. Let's not forget that if a loss is fixed at 50% of the balance, it will take 100% of the profit to cover that loss (without adding more money)!
So lock and fixing a loss are completely different things and you have to fight to the last for the dough.
And now about the lock. Google it and we get a huge list of pros and cons.
But when we talk about the lock lock, let us not forget that there is no grail in forex. It's the same with locke. Yes, there is such a tool, but you need to know how to use it.
And the ability to use it depends on the trading strategy.
If the trading strategy consists only of locks and averages, then the losses are guaranteed.
If we have a profitable trading strategy, which is profitable without locks and averaging, the lock, together with the averaging, will be a very useful tool in such a profitable strategy.
Let's consider a variant.
You have a TS that naturally opens positions based on some prediction of price movement.
You open a position and after a while it turns out that the market goes against the position. The signal was wrong.
And now the most important thing.
If your trading strategy shows that we should open an opposite position, then we open a position in the size of the one that is already open. The drawdown is fixed. This is a lock.
Since the TS is still mainly profitable, the new position - the lock will go to the profit. When do we close the lock? Obviously, when the reversal signal appears. We close the profit-lock position and open an additional position to the existing loss-making one. We wait for profitability.
Everything written above hinges on having a profitable strategy. If you do not have one, the lock will not save you from losing the account.
Of all the above, only highlighted (in blue) is the only real thing - the lack of margin. But this issue can be solved in other ways, such as:
- reduce margin requirements by increasing leverage;
- equity (because you do not have to keep all of your trading capital in your account, it is quite enough and 1/10);
- reduce aggressive trading;
- etc., and it all comes to one.
Everything that is not highlighted is self-hypnosis, but it has a right to exist, because it helps someone.
SanSanych Fomenko:
Let's not forget that if a loss of 50% of the balance sheet is recorded, it will take 100% of the profit to cover that loss (without a share)!
I wrote a little above, but I'll say it again. Because I see from subsequent posts that it does not come to me.
Well, who is forcing you to reduce the lot size (thereby fixing the loss)? Don't fix the loss by reducing the lot size, trade a stable working lot and everything will be OK! Then to cover 50% of the loss, you will need the same "50% profit".
In short, "self-hypnosis", no less.
Let's look at a variant.
You have a TS that naturally opens a position based on some prediction of price movement.
You open a position and after a while it turns out that the market goes against the position. The signal was wrong.
And now the most important thing.
If your trading strategy shows that we should open an opposite position, then we open a position in the size of the one that is already open. The drawdown is fixed. This is a lock.
Since TC is still mainly profitable, the new position - the lock will go to the profit. When do we close the lock? Obviously, when the reversal signal appears. We close the profit-lock position and open an additional position to the existing loss-making one. We wait for profitability.
Everything written above hinges on having a profitable strategy. If you do not have one, no lock will not save you from losing the account.
In order to move a loss-making position to breakeven, the new one should pass the same distance as the loss-making one did in the opposite direction. Plus the distance covered by commission, plus spread, plus swaps. Thus, chances to close an unprofitable position decrease with every new lock.
In other words, to neutralize a losing trade, the TS must pass more points in the necessary direction than the TS without any lots (it is profitable without any lots). Do you understand?
It is more profitable to close a losing trade and wait for a new signal, than to feed the bottomless belly of the market monster with commissions and swaps.
The only justification for the availability of lots in the account - two independent TS working on one instrument. Although, this means that the trade is not performed in the best way, because the same can and should be done by one TS instead of two (saving the same spreads and commissions).
In this case, the problem will be the same as with martingale - if you have enough deposit. Every new lock paralyzes another part of the deposit, and when/if one has to close a losing deal(s), because the deposit is already paralyzed and there is no money for a new lock, the loss will be incomparable to the loss of stops.
I don't think we should walk away from locks, but for every single lock there has to be a market reason, not relying on statistics like in the casino.
Of course, if a person entered the market to make billions, and opened a deposit on cent account with 100 rubles, of which 95 is bonus...
They don't make anything and then they shout that the market is a scam, there's no money in the market...
And what you call market fundamentals is nothing more than a strategy.
Locks, stops, hedges, options, and swaps are all tools. You don't know how to hedge doesn't mean hedge is bad, you just don't know how...
Locks, stops, hedges, options, swaps are all tools... If you don't know how to hedge, it doesn't mean that the hedge is bad, you just don't know how...
No one is saying that they are bad. You can use it, but you need to be aware of what is justified in loc and what is self-defeating. Most loca adepts that I have met are in an extreme stage of self-deception. Consequently, none of them has ever managed to earn anything, all of them, without exception, have lost money.
To some extent lock is a Matrix with its imaginary life. The trader believes everything is fine, the balance is increasing. But once you look at equity (choose the red pill), you are in the real world.
Of course, if a person came to the market to make billions, and opened a deposit in a cent account with a sum of 100 rubles, of which 95 is bonus...
They don't get anywhere and then shout that the market is a scam, there is no money in the market...
And what you call market base is nothing more than a strategy.
Locks, stops, hedges, options, and swaps are all tools. Not knowing how to work a hedge does not mean that the hedge is bad, just that you don't know how...
Yes, they are tools, but as long as they don't become self-hypnosis.
But self-hypnosis is also a tool, and quite effective, for some:
ultra-aggressive trading leads to demoralisation, demoralisation leads to self-deception, self-deception leads to locks.
This leaves the questions open:
- where do the lokas lead to?
- and what causes over-aggressive trading?
The trading system showed an opportunity to buy: opened buy, made a mistake after 50 pips and opened sell. The price crawled away from the Buy for a total of 150 pips, +100 pips for the Village. The system shows another possibility to buy, opened buy, closed sell +100 points.
Even if the system gives 4-5 wrong signals in a row and the next one is correct, it is always better than simple fixation of negative signals and demoralization.
In my example we haven't yet used maneuvers with order volumes.
Look, Vladimir, without locking, with reopening:
The trading system showed an opportunity to buy: opened a buy, made a mistake, closed 50pp later. The price crawled away from the Buy for a total of 150 pips, we opened a Buy. Closed when the price returned. Equity line - exactly the same as yours.
Volume manoeuvres - just as easy to convert to netting.
Yes, there was even a specially made class which created virtual positions - from the EA's point of view separate orders were used, but it all worked on MT5 with netting, where there was one aggregate position - and everything was absolutely transparent, the EA thought the TS was working with counter orders, the terminal thought the TS was working without counter orders - the result was the same.
I am experimenting with a similar method - from counter-trend I try to get into a trend with a calculated risk from the profit made when trading with a counter-trend. After counter-trend opening I close blocked orders and trade the remaining volume. The only problem is that the trend rarely develops in the opposite direction without a flat.
The Control Trend - is usually a corrective wave A-B-C and probably this structure is optimal for such actions, but without knowledge of the material (wave, and not just wave??), to distinguish the wave impulse from the false and here the truth can be sought until the M1)). And who said it would be easy - advertising ))))
Look, Vladimir, without locking, with reopening:
The trading system showed an opportunity to buy: opened buy, made a mistake, closed 50pp later. Price crawled away from the Buy by 150 pips in total, opened a Buy. Closed when the price returned. Equity line - exactly the same as yours.
Volume manoeuvres - just as easy to convert to netting.
Yes there was even a specially made class which created virtual positions - from the EA's point of view individual orders were used, but it all worked on MT5 with netting where there was one aggregate position - and everything was completely transparent, the EA thought the TS was working with counter orders, the terminal thought the TS was working without counter orders - the result was the same.
This is one example, I use lots and hedges and don't bother with stops. I don't lock a minus i lock a losing position several times. But I don't lock - 1000 I can lock -1000 and +5000
In my TS, the share of commissions and other .... in profit/loss are such that they can be neglected and I am not discussing them.
In general: loss fixing is the last thing to do. Let's not forget that a stop out is also a stop loss.
Once again: to make up 50% of a loss you need 100% of the profit. And that's several months of good TS. So maybe we should wait for the right moment?
I will continue listing the conditions under which locks will succeed or fail.
1. Locke requires a small deposit load and small drawdowns. The margin level should be close to 1000% and the drawdown should not exceed 10% - 15%. Then there is room for manoeuvre. Otherwise they lock the losses.
2) Lock is extremely successful with rapid vertical market movements. Imagine you were standing against a Brexit. A vertical movement begins and a lock is placed. If the position opened on the lock is at least 10% larger than the losing position, then a profit is closed at the bottom. If the position is equal, you close the profitable position at the bottom and open an average on the losing position that is multiple of the losing position. On a pullback you close all of them. Surely the result will be at least better than the initial fixing of the loss.
3. locks lead to losses on long flat trends, in which the correction is in the form of a sideways trend, rather than a pullback.
I predict that in the near future we will have extremely volatile markets in which a movement of 100 pips or more in an hour is commonplace. And we will also see movements of 1,000 or more pips in a few hours. Traders who own a tool like locke will be able to save their deposits from being drained.