When you trade around other interests (like sleeping), the use of entry orders is a necessary evil. Today was one of those trading days when using entry orders ended up a frustrating experience. I have a very simple trading strategy that uses entry orders, round numbers, and the London open. The system attempts to execute low risk, high probability trades while I sleep. Occasionally the market will deal me a hand like the one I was dealt this morning. I had a five lot entry order waiting to go long EUR/USD placed at $1.3380. The market missed my entry point by four pips. My dealers trading platform pegs EUR/USD’s low price for today at $1.3884! It stinks to miss out on 120 pips for the sake of four pips, but this is the game played when using entry orders to mange trades in our absence.
I think trading support and resistance with entry orders is a lot like fishing your favorite fishing hole. You have a good idea where the fish are biting, you even cast your line in the right spot, but sometimes the fish swim right by your lure without taking the bait. Just because a fishing hole is familiar to you, doesn’t mean you’re going to bring home dinner every day. I bring this trade (or lack of a trade) up as a reminder to those of you who are new to trading price action. Support and resistance trading is an imperfect science, and even when everything is correct you still might miss out on a killer trade. This is the compromise we make for the convenience of sleeping, or working a day job. You have to take trades like this one in stride, or trading will drive you mad. I hope your line was cast at $1.3390 last night instead of my fishing hole at $1.3380.
Best of luck,
Ryan
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When you’ve got the capital to trade multiple lots then the strategy can be stagger into the trade. In Ryan’s trade above he could have had orders to buy 1 lot at each of the following levels:
1.3400
1.3390
1.3380
1.3370
1.3360
If 1.3360 is hit then his average entry is his initial goal of 1.3380. However since it didn’t even get to 1.3380 only 2 contracts would have traded, and at a healthy profit.
However in doing this you are guarenteed to be long 5 lots on ALL LOSERS, but that would be the case anyway with the initial strategy.
This stagger method helps mitigate some of those previously lost opportunities
Hey Robb,
Appreciate the great comment! I agree with your suggestion, and I’m sure someone can use that to their advantage! Personally, I’ve never been a fan of scaling in as the position is opened, and still moving against you. I should try it though, see what happens with this system. I’ve been using an 80 / 20 over / under entry because I’m being cheap by design. I’m trying to play the probabilities when it comes to round numbers, and get the best price while doing so. Sometimes I miss a good one that would have been fine at 90 / 10, although the 90 / 10 entry seems to stop out more.
Ryan
Ryan,
It may work to set up SMS price alerts @ alertfx.com
It will send you several SMS messages that will ring on your cellphone as soon as the price comes to pre-determined value.
Thanks for your presentation at fxstreet. John
Hi John,
Thing is, I like to sleep. If I miss a trade over a few pips, so be it. There will be another, and in the mean time I’m well rested. This “00″ system worked well again this week.. video on it’s way tomorrow! I’m glad you enjoyed the FX Street presentation, they are a lot of fun.
Ryan
Hi Ryan,
I just came across your website, and like you am interested in more sleep too, whilst being able to trade.
I am using a US based MT4 FX platfrom, which compared to other platforms available OS, has less capabilities, in particular no HEDGE of same currency pair and FIFO.
I have just had an idea that may work, but would like your second opinion. My question is…. Why not use a different FX Platform, one that is capable of HEDGING the same currency pair, in this case EURUSD, then you can place the limit order at a higher level, and then using larger stops on each concurrent position, you may cover the downside position you estimated with an extra margin. Once the hedge is stopped out as the currency climbs, you will be making profits after that point.
This will give you more trades because of the greater range of position.
Many Cheers
Ray
Hi Ray,
Hedging is not a tool I’ve used in any serious capacity, and now that U.S. based traders are unable to hedge I haven’t pursued it much. The goal of this system is to seek out extremely high RTR potential trades by using round numbers near the London open. When I get filled, I want the best price to help RTR. I think hedging would probably skew those numbers a bit.
You could open an overseas account and hedge to your hearts content, I’ve been dragging my feet on that through. I’d like to have hope the CFTC will listen to traders, but I may have to move overseas if I want anything more than 10:1 in the near future.
Appreciate the comment, welcome to the blog!
Ryan