Reduce risk after a gap opening?

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  • 04/20/2022 at 10:27 AM #191944 quote
    Marcel van Vliet
    Participant
    Veteran

    Hi fellow technical traders,

    It regularly happens to me that the price opens after a gap below or above my stop loss order, so that the order is filled much lower/higher and the losses are always higher than planned.

    It might be an idea to double the number of shares for the Stop Loss order so that when the order is filled, the remainding shares are immediately triggered into a short/long order to reduce the loss slightly by hedging after you close the trade manually at the end of the price decline/rise, or the candle close.

    What are your thougts on this process?

    04/20/2022 at 11:16 AM #191947 quote
    GraHal
    Participant
    Master

    Sounds good … ideal scenario to test out using Pro-order / backtest etc?

    Can you code it? If not, then some kind soul might help you?

    04/20/2022 at 1:00 PM #191948 quote
    robertogozzi
    Moderator
    Master

    Is this what you mean?

    DEFPARAM CumulateOrders = FALSE
ONCE LotSize  = 1
ONCE StopLoss = 100 * PipSize
IF Not OnMarket THEN
   ExitPrice = 0
ENDIF
IF OnMarket AND Not OnMarket[1] THEN
   ExitPrice = TradePrice - StopLoss  //update EXITPRICE the first bar after entry
ENDIF
IF close CROSSES OVER average[100] AND Not OnMarket THEN
   BUY LotSize CONTRACTS AT MARKET
   ExitPrice = close - StopLoss
ENDIF
IF ExitPrice > 0 THEN
   SELLSHORT LotSize * 2 CONTRACTS AT ExitPrice STOP
ENDIF
SET TARGET PROFIT StopLoss* 2
    04/20/2022 at 4:56 PM #191979 quote
    JS
    Participant
    Senior
    Hi @marcelvanvliettrading

    I probably don’t understand what you mean but suppose you double the number of contracts for your StopLoss and you are Long on market and your StopLoss is hit by a “gap below” then your Long position is closed and a Short position is opened.

    Now your short on market and so your expectation is that after the “gap below” the price will fall further??

    05/02/2022 at 6:34 PM #192570 quote
    Marcel van Vliet
    Participant
    Veteran
    Hi JS, Yes only to reverse at any point, but most of the time the price descends further, so your lost of the first rally against your position becomes somewhat smaller.
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Reduce risk after a gap opening?


General Trading: Market Analysis & Manual Trading

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Marcel van Vliet @marcel Participant
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This topic contains 4 replies,
has 4 voices, and was last updated by Marcel van Vliet
3 years, 9 months ago.

Topic Details
Forum: General Trading: Market Analysis & Manual Trading
Language: English
Started: 04/20/2022
Status: Active
Attachments: No files
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