Trade Management Model

dynamic Stop & Profit Management

The Trade Management process has 3 Elements:

• Trade Entry

• Management of existing Trades

• Trade Exit

What follows is our basic TradeManagment process showcasing how we manage a Trade (long trade in this case):

Trade Entry:

1. Setting of risk limits:

   1. Max Position =  Capital * max_position %

   2. Max Trade Risk   = Capital * max risk per trade %

2. Entry Conditions:

   1. no current position

   2. Trend Indicator has flipped from bearish to bullish (or vice versa)

3. Entry Execution:

   1. next Open Price

   2. StopLoss Distance : smoothed 30d IV * StopLoss Factor

   3. TakeProfit Distance:  smoothed 30d IV * Take Profit Factor

   4. Position Size = Max Position * suggested Model Position % (according to analysis of the Market Structure)

Trade Management:

1. set up Volatility Bands (S3, S2, S1, WMA, R1, R2, R3) around a 20d WMA (weighted moving average) to monitor trade success

2. „Trade runs into the Profit Zone“

   1. Trade exceeds R3 (resistance Vola Band) and returns below R3:

      1. close 1/3 of the position

      2. reset TakeProfit

      3. adjust StopLoss

   2. Trade exceeds R2 (resistance Vola Band) and returns below R2:

      1. reset TakeProfit

      2. adjust StopLoss

3. „ Trade runs against the Trend Indicator“ ( Trend flipped again after Trade Entry)

   1. adjust StopLoss

Trade Exit:

1. StoppLoss hit

   1. exit position

2. Profit Target hit

   1. close 50%

   2. reset TakeProfit

   3. adjust StopLoss