Reduce risk after a gap opening?

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

  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?

  

  Marcel van Vliet

  Participant

  Topics: 62

  Replies: 98

  Been thanked: 7 times
  04/20/2022 at 11:16 AM #191947
  GraHal

  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?

  

  GraHal

  Participant

  Topics: 211

  Replies: 8765

  Been thanked: 2179 times
  04/20/2022 at 1:00 PM #191948
  robertogozzi

  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

  1 2 3 4 5 6 7 8 9 10 11 12 13 14 15 16 17

  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

   

  

  robertogozzi

  Moderator

  Topics: 69

  Replies: 17130

  Been thanked: 4026 times
  04/20/2022 at 4:56 PM #191979
  JS

  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??

   

  

  JS

  Participant

  Topics: 26

  Replies: 1701

  Been thanked: 768 times
  05/02/2022 at 6:34 PM #192570
  Marcel van Vliet

  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.

  

  Marcel van Vliet

  Participant

  Topics: 62

  Replies: 98

  Been thanked: 7 times
• Author
  Posts