August 1, 2015

How Do You Trade If You Cannot Be In Front of the Screen All the Time?

(Level: Intermediate-Advance)

(Need to know: Essential)

A common issue is what to do if you are not in front of the computer all the time. Here is how we do it:

1. We are not afraid of not getting every signal. We need sleep. Also the markets are always going to be there. We don’t have to get every signal.

2. For those who cannot be in front of the computer all the time you can use Pips Predator with a simple ‘light’ strategy. Here is what you can do:

Profit Attribution Pips Predator Pips Predator Light for Day Jobbers
Strategy 75% of signals 33% of Signals
Adding to profits Y N
Stop Loss 3 period low Y N
Stop Loss at 2 x ATR N Y
Moving Stop Loss (on additional positions) N
Exit (profit) At signal 2 x ATR
Enter At signal within few pips of signal

Number of Signals Taken 

a. In the full Pips Predator strategy you follow about 75% of the signals for your time-frame. Why not all of them? Because some are at night!

b. With Pips Predator light strategy you will probably follow around 33% of signals because you are at work, and so will trade before or after work

 

Adding to Profits

c. With Pips Predator you will add to profits as described in the trading manual

d. With Pips Predator light strategy you would not be in front of the computer so would either not add to positions, or if you are able, you will add to positions using a pre-defined entry, such as the one below shown in the images, based on the ATR.

 

Stop Loss

e. With Pips Predator strategy your stop loss is a 3 period low

f. With Pips Predator light strategy you are at work, so need to fix the stop loss exit at entry time, so you fix it at 2 x ATR

 

Stop Loss Moving

g. With Pips Predator you stop loss is not moved, you just add new positions and exit those according to the manual; but for your original entry you either exit at profit or the 3 period low.

h. With Pips Predator light you are at work, so you cannot move your stop loss. You could have a trailing stop loss if your broker permits it, but the further you move from the core Pips Predator strategy, the less your profitability will resemble it.

 

Exit

i. With Pips Predator you exit at the signal for a profit.

j. With Pips Predator light, because you are at work you exit at a predetermined profit eg. 2 x ATR

 

Entry

k. With Pips Predator  you enter at the signal.

l. With Pips Predator light you are at work so often miss the signal, so you enter within a few pips of the entry

 

Half way between Day Trader and Day Jobber?

So what if you are not always on a day job, but don’t have the time to trade full-time? You can see examples in the illustrations below of what you can then do, eg. add positions, but based on specific pre-determined ATR levels, so orders can be placed and left.

 

2. I have created a downloadable position size and entry, stop loss spreadsheet for you to use: (please do not share – it is exclusively for Pips Predator Members)

Position Sizing and Entry Stops Cheat Sheet

 

3. Look at the image 1 below from the attached ‘Position Sizing and Entry Stops Cheat Sheet (you can click the image below to make it bigger)

Blog

 

 

a. ATR, average true range, is the average over the past 14 periods that the price moves in each of those periods. It is daily ‘noise’ movements in the market. It’s just how much it bobbs about. You input this from the MT4 platform

b 2 X ATR is double that value. If we set a stop loss at double the ATR, we know it won’t get hit by just market noise.

c Risk Capital is your risk capital, assume here 10,000. You can enter the value here.

d. Trade risk is how much of your capital you are willing to risk ie lose in any one trade. We assume here 1% and you can input 2% if you prefer.

e. The calculation is therefore done for you how much you should bet per pip. Here it says 0.42 eg 42p per pip

f. Now assume Pips Predator tells us to enter Long at 1.5400

g. We get the calculation that our initial stop loss is 1.5160 (because it is our entry less 2xATR)

h. We know to add to our position if the price hits 1.5640 (because it is our entry PLUS 2xATR)

i. We know if we do add to our position, to move our stop loss up (to our new entry).

j. We add another position if the price moves up to 1.5880 and move our stop loss up to 1.5640

See the images below on this:

blog1 blog2

 

Benefits of this approach

1. All the calculations are done for you in the excel spreadsheet

2. We size our positions so we do not lose more than 1% of our risk capital

3. Our stop loss is at a distance the usual market noise should not hit

4. We add new positions and increase our profits

5. We move our stop loss up, so we lock-in our profits each time

6. We can place all these trades at the time of entry, so do not need to be in front of the screen

7. We can exit either when the stop loss is hit, or the Pips Predator tells us (I prefer when PP tells us, but if you’re not in front of your screen all the time then when your stop loss is set is fine).

8. But if you’re not in front of the screen, how do you know the Pips Predator will signal a buy signal? You use the 4h or 1d chart, and you look for the latest signal. If you’ve only missed the entry by relatively few pips, then that is fine, you still enter; after all you will only have missed a few pips, and the PP will more than make up for that in bumper profits.

Also how do you find opportunities quickly? See these:

 

Finding Opportunities Quickly from Alpesh Patel on Vimeo.

Tile Your Trading Screen from Alpesh Patel on Vimeo.