I started noticing things about the stopped out trades for the SignalTrader Trading System Robot, lovingly known as stRobot
All of them were caused by whipsaws, sudden, unexplained moves against the trade, one of them for instance entered the trade order and then stopped out 2 MINUTES LATER!!!!
So I have been ENTERING THE TRADE on the top of the whipsaw. So last tonight there was one on EURNZD and another on AUDJPY. Here is the AUDJPY one which is much easier to see.
So I entered the TRADE again at the bottom of the whipsaw. Here’s my reasoning.
a. My entry was good – STrobot had done masses of calculations, my risk reward was good, we were trading away from the 200MA daily figure sitting at 92.189 with the pair at 95.751 that’s a long way away and I know the 200 daily SMA can act a bit like a magnet unless it’s properly broken away, but it has!
b. The stop was realistic, it was set in 37 pips away from the entry, not too much but a small loss if it went, if it broke below the bottom of the congested area I would want to be out.
Everything about this trade was great until they whipsawed me. Until i worked out this technique I would just have a little moan when my trade stopped out like this and go wait for the next trade! But why do that when the market has said what it’s doing already – so I just head straight back into the trade at the bottom of the whipsaw. Entering actually an hour or so later (only because I was trying to sleep) @ 95.728, targets as before, stops as before.
Both the trades that stopped last night are now a few hours into them 15 pips total profit. Yesterday I took 35 pips profit from a long on EURJPY that only stopped (back to 35 pips profit) because of some news (the main cause of whipsaws).
It’s no use crying over spilt whipsaws, if the trade is good, the whipsaw is just a temporary set back, if your lot sizes are set correctly @ 1% (e.g. $100USD= 0.01) you will be able to cope with this kind of movement.