Interesting concept! Didn't even know it was a thing. I do the exact same thing without moving my stop to minimize the loss per trade. Helps me stay below my daily loss limit and gives me a fighting chance to take more trades.
Yes, I re-add. I don't always do it, but when I do, the following conditions must be met:
The side must be long.
Price must reclaim the VWAP.
The position must break above the previous 5-min ORB.
If we are in a high-volatility environment where the VIX is above 21, I don't do this. If the market is in a downtrend, I don't do this either, as breakouts mostly fail in that environment.
Thank you for sharing that idea. I had not previously thought about stratifying the stop-loss into layers, but conceptually it aligns very well with how I approach position management.
Both trimming gains and cutting losses are strategically designed to preserve capital. They are not opposing actions, but complementary parts of the same discipline. Within that framework, only the strongest winners should be allowed to expand. A trade must first prove itself before it earns the right to progress into 3R, 4R, and ultimately whale-sized territory.
I see a potential opportunity to consider adding changes to my Smart Canvass System. My concern, since I already trim at 1R and let my winners run, any trim under the entry would become a structural shift in my expectancy and reducing size before asymmetry shows up, I run the risk of clipping my edge.
I'll need to run this through my EDGE logic (historical expectancy, asymmetry and historical avg. loss grounded in an ATR based structure) and see how pre-1R reductions would mathematically impact my expectancy and PF.
Essentially, I'll need to pressure test my strategy. Congrats and thanks again for sharing. You've given me work to do and points I need to think about. - Dave
Interesting concept! Didn't even know it was a thing. I do the exact same thing without moving my stop to minimize the loss per trade. Helps me stay below my daily loss limit and gives me a fighting chance to take more trades.
That's the right mindset! Keeping losses small enough to stay in the game is half the battle.
Would you add the stopped portion at later stage? Under what conditions? Otherwise why don’t you reduce risk position from the beginning?
Yes, I re-add. I don't always do it, but when I do, the following conditions must be met:
The side must be long.
Price must reclaim the VWAP.
The position must break above the previous 5-min ORB.
If we are in a high-volatility environment where the VIX is above 21, I don't do this. If the market is in a downtrend, I don't do this either, as breakouts mostly fail in that environment.
Thank you for sharing that idea. I had not previously thought about stratifying the stop-loss into layers, but conceptually it aligns very well with how I approach position management.
Both trimming gains and cutting losses are strategically designed to preserve capital. They are not opposing actions, but complementary parts of the same discipline. Within that framework, only the strongest winners should be allowed to expand. A trade must first prove itself before it earns the right to progress into 3R, 4R, and ultimately whale-sized territory.
I see a potential opportunity to consider adding changes to my Smart Canvass System. My concern, since I already trim at 1R and let my winners run, any trim under the entry would become a structural shift in my expectancy and reducing size before asymmetry shows up, I run the risk of clipping my edge.
I'll need to run this through my EDGE logic (historical expectancy, asymmetry and historical avg. loss grounded in an ATR based structure) and see how pre-1R reductions would mathematically impact my expectancy and PF.
Essentially, I'll need to pressure test my strategy. Congrats and thanks again for sharing. You've given me work to do and points I need to think about. - Dave
Thanks for the kind words, Dave. If you run that backtest, I'd love to see the results, even if just privately.
capital preservation is everything
100%. can't trade without capital.