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Trades closing way before stop loss


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My trades keep closing way before my stop loss and I can't seem to figure out why. I'm aware of slippage and spreads but some of them still don't make sense. Today I set a an order to sell at 1.37611 with a stop loss at 1.3766 and limit of 13749. The price filled my order and then moved down towards limit, came back up to 1.37607 where it apparently hit my stop loss and closed the trade. Price then went down far below my limit so should have been a good trade.

Basically my trade closed while it was in profit, saying it was at the stop loss.

Please can somebody help is there any way I can change the settings to make the trades more accurate as I can't seem to get the system to work, even close, to correctly.

Thanks

Edited by ryanair737
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3 minutes ago, ryanair737 said:

My trades keep closing way before my stop loss and I can't seem to figure out why. I'm aware of slippage and spreads but some of them still don't make sense. Today I set a an order to sell at 1.37611 with a stop loss at 1.3766 and limit of 13749. The price filled my order and then moved down towards limit, came back up to 1.37607 where it apparently hit my stop loss and closed the trade. Price then went down far below my limit so should have been a good trade.

Basically my trade closed while it was in profit, saying it was at the stop loss.

Please can somebody help is there any way I can change the settings to make the trades more accurate as I can't seem to get the system to work, even close, to correctly.

Thanks

Hi, which market?

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I suspect I might have been caught by a similar thing once or twice, so I'm interested in investigating this using the chart.

I assume this is GBP/USD.  What time did it open and close?  As accurately as possible, please.  To the second would be good.

I have put a couple of my unexpected closures down to a sudden widening of the spread.  Which, of course, you have no control over.

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During the 07:00-07:01 candle, as you say, the mid price hit a high of13762.1, which was well under your stop-loss.

However, the high bid and ask prices were 13757.1 - 13767.1 (a spread of 10), and since the ask was above your stop-loss it triggered.  Painful.

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2 minutes ago, ryanair737 said:

For example when back testing do you use the ask/bid price rather than the mid?

Yes, you should definitely use the ask/bid price when backtesting. Spreads change constantly based on market conditions, time of day etc. and can have a significant impact on the profitability of any system.

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59 minutes ago, andysinclair said:

Yes, you should definitely use the ask/bid price when backtesting. Spreads change constantly based on market conditions, time of day etc. and can have a significant impact on the profitability of any system.

I'm trying to work out the best way to do this. Do I need to keep toggling between the bid/ask price view as I'm backtesting to see where my buy in, stop loss and limits would be hit. Or is there another way to factor it in? I'm guessing as it keeps changing I can't just add/subtract a certain amount of pips.

Thanks

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8 minutes ago, ryanair737 said:

I'm trying to work out the best way to do this. Do I need to keep toggling between the bid/ask price view as I'm backtesting to see where my buy in, stop loss and limits would be hit. Or is there another way to factor it in? I'm guessing as it keeps changing I can't just add/subtract a certain amount of pips.

Thanks

yes you do have a problem there, IG operate a variable spread system and though that has several advantages for traders it makes for problems eg backtesting. 

You might try just testing during main market hours and avoid the higher set spreads outside main hours but still will have a problem with periods of volatility.

Another possible aid is that though the web based platform doesn't have the function to display both bid and ask at the same time the Prorealtime and the mt4 platforms do.

Might be worth looking at mt4 just for backtesting as it also auto records test data.

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Your main problem is your strategy.. the risk reward is fine as it looks like 2:1. But the gap between your stop is limit is tiny, it’s 0.12%. That means your stop is about 0.04% from your entry and limit is 0.08% from entry. You’re going to struggle to get any consistency with that.. market can move up and down and touch the stop too easily, it needs to be wider. By the same token, you can easily get big winners than 0.08% so you need to widen both.

I’d look at something like average true range and see what’s the expected size of the moves then determine profit targets from that and set stops in proportion to that and in appropriate areas.

Even if there was no spread it would be a struggle. But as you’ve found out it makes a difference.. the spread is more noticeable the tighter your trading range is

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20 hours ago, Caseynotes said:

yes you do have a problem there, IG operate a variable spread system and though that has several advantages for traders it makes for problems eg backtesting. 

You might try just testing during main market hours and avoid the higher set spreads outside main hours but still will have a problem with periods of volatility.

Another possible aid is that though the web based platform doesn't have the function to display both bid and ask at the same time the Prorealtime and the mt4 platforms do.

Might be worth looking at mt4 just for backtesting as it also auto records test data.

Sweet I didn't know mt4 was better for backtesting. I'm gonna give that a shot. Thanks

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1 hour ago, Caseynotes said:

if you need any help setting it up just sing out.

This may be a really stupid question.. When shorting would my limit be hit at the bid price and stop hit at ask price? Vice versa for long positions. Or is it when shorting, both my stop and limit will be hit at ask price and long positions would both be hit at bid price?

Thanks!

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3 minutes ago, ryanair737 said:

This may be a really stupid question.. When shorting would my limit be hit at the bid price and stop hit at ask price? Vice versa for long positions. Or is it when shorting, both my stop and limit will be hit at ask price and long positions would both be hit at bid price?

Thanks!

it is a bit twisted;

to get into a trade you buy the ask or sell the bid.

For shorts -  the bid price must hit your order to trigger the short entry.

 - to get out of your short trade you do the opposite, you need to buy back your sell position so you buy at the ask price so the ask price must hit your stop loss or take profit target.

 

(And for longs it's the opposite way round).

 

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12 minutes ago, Caseynotes said:

it is a bit twisted;

to get into a trade you buy the ask or sell the bid.

For shorts -  the bid price must hit your order to trigger the short entry.

 - to get out of your short trade you do the opposite, you need to buy back your sell position so you buy at the ask price so the ask price must hit your stop loss or take profit target.

 

(And for longs it's the opposite way round).

 

Got it, thank you!

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