Trading with one position vs. many


#1

I originally posted this here in the performance section – Just ONE open position? But I realize now that this section is better for the topic.


I am the signal provider for the 1x20 SafetyTrade system where I use just 1 position and a tight 20 pip stop. https://www.zulutrade.co.uk/trader/395384/trading

As a Trader, I have long debated the merits of trading with just one open position vs. many positions. Out of about 10,000 systems on ZuluTrade, it seems that a large percentage of them open many positions at once. While the profits can be incredible with many positions at once, it can create a very dangerous situation in case of market reversal.

My goal is to find the perfect “sweet spot” between risk and reward, draw down and profits, and create the perfect system for followers.

Here is my list of pros and cons. What are YOUR thoughts?

Pros of ONE position:
Total pip draw down should be less because draw downs are not multiplied.
If the market changes direction then the trader can make the transition faster
There are fewer trades to manage, so less chance of an attention or technical error
Small accounts can follow a trader with low margin requirements
Better entries because the trader is more focused
No chance for trade-stacking (Martingale) blowouts when the market goes against you
Less chance of a FIFO violation
It is easier for followers to scale their mirrored trades appropriately

Cons of ONE position:
Loss of opportunity. Can’t take another promising trade without closing out the first position
Related to this, with a high-probability move I can’t “load up” for extra firepower.
Multiple positions on the same or correlated pairs allow for better average entry prices
I can’t scale out and leave a runner on and may miss big market moves
“Boring” action with only one

What are YOUR thoughts?


#2

I believe I have an easy answer, If you are trend or counter trend trader it doesn’t matter.
At the end of the day once you decide that at a particular time how much risk you will take of the account, it is easy to answer.

Suppose total risk you want at a time is 5% or less.

  1. You are a trend trader and buying pull back: It’s GBP trending upwards or downwards
    a) you take 1% risk or GBPUSD at 38.2% of impulsive move AND price went to 61.8% retracement AND You are still confident on your analysis that it is uptrend and price will go to 127% or 162 % expansion,

you open second 1% risk in GBPJPY

now price retraced further to 78-88-100% you are still confident that it is consolidation of larger time frame or uptrend and it will go back atleast to your first trade’s entry point of GBPUSD of not to the last high of GBPUSD which will form atleast ABCD pattern;

you take a 1% risk in GBPCHF or GBPCAD or GBPAUD or GBPNZD or EURGBP and your total risk is now 3% of porfolio as long as you stick to your stop loss of price closing below the impulsive move confirming your analysis being wrong.

Now you can exit your last trade first when it goes near the first entry of GBPUSD taking 2% profit and rest of the trades you can bring to Break even to take a home run.

You exited last trade first and still followed FIFO rules of USA.

Still you have 2% risk available in case Market makers decided to put GBP pairs on consolidations that day and start up or downtrend on euro pairs.

I hope it makes clear how you can have 5 trades running at the moment.

If you have decided only to take 2% risk of the portfolio at a give time, you can still enter 0.40% and can have 5 trades as described above.

I trade breakouts sometimes and it is hard to predict many times when price does not pull back at all before 50-80 pips. at that moment I enter on any candle and stop loss 3 candles below the entry canle.

I take 2nd trade if price decides to pull back just after my entry on closing of 1 candle against impulsive move putting SL 2 candles below and

I take 3rd trade at 3rd candle this way I can close all my positions in profit by the time price comes closer to first entry point and I have no fear in exiting in all positions still have 3% profits.

I make sure that 2nd and 3rd trade is different pair combination to comply with FIFO rules of USA.

Pls guide if my understanding about FIFO rules is wrong.

Wish you all the best,

Navdeep s Rajpal


#3

Great analysis! I think it is very clear. If the market is moving in your favor, then increase the power among the correlated pairs. The key, as you mentioned many times, after proper trade selection is honoring the stop. There are a lot of variables to keep track of, but that is what makes trading so fun, and I think it will be good Alzheimer’s prevention later in life!!!