Trader Dale Volume Profile
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Position management<br />
<strong>Volume</strong>-based Stop-loss: Alternative SL approach<br />
With the Alternative SL approach, you don't quit your position when it hits the SL level but you<br />
exit it only when a candle CLOSES past your “normal SL“. The reason for that is that sometimes<br />
the price overshoots your level even though the original idea behind the level was right. This could<br />
be caused by strong volatility, SL hunt (SL squeeze), or because you simply didn’t give enough<br />
room for the position to develop. I bet it happened to you many times, that you took a SL and few<br />
moments after that the price completely changed direction and your trade would end up in a<br />
profit. Alternative SL approach takes care of situations like that.<br />
However, there is also a downside to this. The downside is that you don’t know in advance what<br />
your final SL is going to be.<br />
It is not easy to manage such positions from the money management point of view. For this<br />
reason, I use "catastrophic scenario SL" which is 150 % of the "normal SL". If the price hits<br />
“catastrophic scenario SL” – I quit the position immediately. With this, you can at least tell how<br />
much the absolute worst scenario will cost you.<br />
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