Alternative Trading Strategy with RET Pro
Double your overall expected profit with less risk, and less work.
Key Change in Strategy:
- Use the new SL2 as the alternate Stop Loss instead of the normal SL Stop Loss.
Key Benefits:
- Average profit/risk per trade is about 4 times greater
- Set and forget. No need to ever adjust the Target once the trade is entered. Ideal for traders outside of the USA.
Key Drawback:
- The percentage of profitable trades is about 1 in 3 (down from 2 in 3 in the standard system), making it harder to trade emotionally and more important to implement sound money management.
Key Considerations:
- Although the average profitable trade is about eight times more profitable than in the standard system, because there is twice the percentage of losing trades, the average number of consecutive losing trades is about double. So it is very important to reduce the risk of each trade by half. For example, if you are currently risking 2% on each trade, drop it to 1%.
- Because, at times, entry can be very close to SL2, margin requirements with your chosen trading platform may be a limiting factor.
The Alternate Stop Loss:
Note the new alternate Stop Loss (S2) is positioned under the Impulse wave 2.
Implementing the alternate strategy is very simple. Rather than use the standard stop loss – which is positioned at the beginning of the Impulse (or Zigzag) wave 1, use the alternate stop loss, which is positioned one tick under (or over), the Impulse (or Zigzag) wave 2.
The exact values are available in the popup window that appear on a mouse-hover over the beginning of the pattern (with the Pattern Stats button depressed):
A new column has been added to the SWOP window; SL2 (Stop Loss 2). If this column is not visible for you, select VIEW | FEWER COLUMNS from the SWOP window menu.
The SL2 column contains the alternate Stop Loss values. However, if the market has already hit the alternate Stop Loss and exited the alternate trade, the column will display the word HIT instead of a number.
Note the new SL and SL2 radio buttons in the Position Size Calculator. Select SL2 to automatically have the SL2 value inserted into the Stop Loss entry box. This radio button is sticky.
The SWOP system has not been changed. All operation, calculations, history and statistics reflect the standard system results, not the alternate system. The only change is the display of the SL2 alternate stop loss value.
Note that the trade will stay on the SWOP board as normal, until the standard trade has been exited. The alternate system may be taken out earlier than the standard, but never later, as the target is the same, but the stop loss is closer to entry.
There is no need to modify T1 when using the alternate system because at the point where T1 would normally need to be modified, the trade is exited by the alternate Stop Loss. You can therefore turn off the audio and email alert for a T1 Change. This will save you a lot of time modifying T1. It will also allow you to trade markets that move while you are not available to make T1 changes.
This system will produce, at times, many losing trades in a row – about twice the number of the standard system. It is therefore very important to reduce your risk on each trade to at least half of what you are currently using so that a large number of consecutive losing trades will not wipe out your account.
Because SL2 is so much closer to the entry point than SL, the average Profit/Risk of profitable trades is about eight times more than the standard system. This results in the overall system being much more profitable – as long as you don’t get wiped out by a long stretch of consecutive losing trades. Therefore, be very careful to make sure your risk on each trade is reduced to at least half of what it was previously.
Margin Requirements can be an issue, especially when the entry is very close to the SL2 value. Always take note of the margin required on your trading platform to enter a trade. If it is greater than about 5-10% of your account, then it may be worth reducing the position size accordingly.
At times the market may have moved back past SL2 by the time you place the trade, so always check the current market price before placing the trade – and enter the current market price manually into the Position Size Calculator for a more accurate position size.
Summary:
This alternate system will produce about twice the overall profit of the standard system, but it is more difficult to trade on an emotional level because if often produces many consecutive losing trades before producing additional profits.
It is most important to reduce the risk per trade so that a long string of consecutive losing trades are easy to cope with – both emotionally and financially.
We suggest you trial this alternate system on a demo account until you have verified the results and are comfortable to put real money on the line.
Your feedback is always welcome and appreciated, or if you have any upgrade problems, or require the link, drop us an email to our Support Team
Richard Swannell
RET Pro - Development