Seeking advices on money management

[chamane]

Hi,

During the past 6 months or so, I've been looking for a simple and profitable trading system. I don't want to make millions, just a decent income. After trying tons of different methods, I came to think that one of the most interesting approach is using a multiple timeframe analysis. The one I use is based on the PSAR indicator. Here how it goes:

Entry long:
- Watch for a first PSAR (0.09-0.9) dot under a closed candle on a a 4 hour chart.
- Once the first signal is validated, look at a 30 minute chart and watch for the first PSAR (0.1-0.11) dot under a closed candle after a retracement.

Entry short:
- Same as above but adapted for bearish movements (PSAR above closed candles).

By the way, any other combination of timeframes seem to work as well. For instance, a 5min/30min combo looks great for scalping.

Comments:
- Avoid range markets on the 30 min chart (when Bollinger bands (20-2) go inside Kertnel channels (20-1.5)). I also use the Bollinger Squeeze v4 indicator that gives the same information.

I am enclosing examples of my system. Visually, it looks very promising and I have been trying it for the last two weeks with interesting result, but I think that my risk to reward ratio is not optimized.

The way I trade is using a stop loss set at the last PSAR dot on the 30 min chart wich I find very close to an ATR (10) X 2.5 gap. But from there, I am not sure if I am at the end of a trend or not. If it is the case, I can get stopped fast. Most of the time, entering after the retracement gives a momentum in the direction of the 4 hour trend, but it can trun around very shortly after to hit my stop.

What I do for now is to cash in at every 10 pips of gain (but my stop loss gap is higher than that and thus giving a poor risk to reward ratio). I trade 8 different pairs at the same time, so I can expect something like 50-100 pips per day.

I want to avoid the big loss that can happen regularly and at the same time getting as many pips as possible (of course). What would you suggested me to improve my money management?

Thanks and regards.

Sorry for my poor English.

Chamane

[fxtrendline]

have you try trailling stop to optimize the result ?

[chamane]

That's what I am doing, actually. As soon as I reach 12 to 15 pips of gain, I bring my stop loss to 10 pips beyond breakeven. That's where I cash in my 10 pips quite often. Sometimes I get stopped with the original PSAR dot for a big loss and sometimes I can see that 10 pips beyond breakeven is only a small retracement leading to a huge gain afterwards, but I am out already. I was wondering if it was the best way to proceed.

Chamane

[Reealjrd]

Money management is a way traders control their money flow: in or out of pockets... Yes, it's simply the knowledge and skills on managing a personal Forex account.