Benifits of Setting a Target

Hi Everyone,

I wanted to post another good question from a trader and touch on a practice that can save you some losses.
Here is the post and question:

I am using it with 0.01 lots for the pairs AUDUSD and USDCHF . I have chosen AUDUSD because of higher swap and becuase it seems to me that USDCHF is an adequate hedge. But I notice , that a simultaneous movement usually gives more value for AUDUSD than for USDCHF , a situation which is even convenient now with a positive trend of AUDUSD. But in a negative trend it will lead to losses which surely will be larger than the collected swap ( and possibly the trend might continue over the maximal 40 trades , so that I experience no cycle and a cumulating loss ) .
My question:Would it be clever to use 0.02 lots for USDCHF when I see definitely a negative trend ( to have a more correct hedge and possibly even more profit ) ?

and my answer:

The proper lot size for eurusd and usdchf is eur .04 and chf .05.I would have to follow audusd and usdchf but to your question you would need to have a different lot size on both rather than just 1 lot size.To avoid a big drawdown,decide on an acceptable profit (I use 100 pips) you may use 25 pips then apply that as your target.That might cut your swap on some trades but you'll gain more from the target being reached and with each target being reached the Ea will continue to place trades(up to the amount you set) that become more relevant to time (present) thus minimizing your drawdowns.
A good pratice, and this should be part of your plan is to bank your profits often before you loose profits in a reverse and banking profits will minimize the drawdown in the event there is a reverse and substantial move. Hope this helps. David aka spiritfriends

Most traders,especially new traders feel that the bit hit brings them the big cash.With that also comes the big risks of holding your trade.You can't stay up 24/7 and watch your position so impliment a cash out by setting a target.That way,you bank some profit which is the point to all of this while letting smaller positions mature.In the event of a sideways market,your trades continue to pick up the swap.In a drawdown you minimize your stake because trades have been closed when targets have been reached and if your using version 1 it will be another 12 hours before a replacement trade is placed and 8 hours with version 2.Depending on your lot size,set your target realistically.Know the pairs your playing by using an ATR indicator giving you the day,week and monthly moves.

David aka spiritfriends