A Set of Powerful Money Management Tools

Al Parsai

If you have any questions about the articles and/or tutorials please do not hesitate to contact me. My email address is aparsai@pipboxer.com. It might take a few days to reply back to you but I'll do my best not to miss a single question.

Money management (MM) techniques are those that you use to get the best profit from each trade. With the help of these techniques you can maintain the win rate (i.e. the ratio of winning trades to losing trades) while you increase your pay rate (i.e. the average gain per winning trade to the average loss per losing trade). The following tools are embedded in PipBoxer. You can enhance the behaviour of your system with similar tools.

•         Move to Breakeven: If the price moves in your favour (e.g. 30% of profit target) the system moves the Stop Loss to the purchase price of the currency or a value near to it. This reduces the chances to lose a trade or at least mitigates the loss size. For example if PipBoxer v2.0 buys USDCHF at 1.2400 and the TP (Take Profit) is set to 1.2500 (i.e. 100 pips) while SL (Stop Loss) is set to 1.2320 (i.e. -70 pips) you might lose up to 70 pips if the market moves in the opposite direction of the trade. That’s why if the price moves to 1.2430 PipBoxer moves the SL to 1.2401 (i.e. +1 pips). Now if the market moves against you gain +1 pips instead of losing 70 pips. The exact deviation from the BE (Break-Even) point depends on the back-test results but my suggested value is open price plus 1 pip.
   

•         Trailing Stop: If the price moves in your trade’s favour to a certain level (e.g. 60% of the profit target) the stop loss will jump to BE plus 1 pip  and then every pip the price moves toward TP the SL also moves one pip above TP. If the price moves in the opposite direction, the SL does not move and remains where it was. Therefore, if the direction of the market reverses you still make some money. For example in the previous example if the price moves to 1.2461 the SL moves to BE + 1 pip (i.e. 1.2401). If the price moves to 1.2467 the SL moves to BE + 7 pips (i.e. 1.2407). Now if the price moves in the opposite direction the SL stays where it is and if the price drops over 60 pips it hits the SL but instead of losing money you gain 7 pips.
   

•         Move to Mid-TP: Suppose the price advances 90% in your favour and suddenly reverses. In this case the trailing stop will save a few pips for you but that probably is not even enough to pay for the rollover swap interest. To address this problem in such cases the system moves the SL to somewhere around 50% of the TP. In the previous example if the price moves to 1.2485 the SL moves to 1.2455 so if the price drops you make 55 pips. If the “mid TP” was not in place you would have only made 25 pips with the help of TS.
   

•         Compromise TP: If the price moves in the opposite direction and there is a big chance that you’ll lose this trade the PipBoxer v2.0 moves the TP to somewhere near BE so if the price moves in your favour the system closes the trade with minimal loss or even a little bit of profit. This feature is one of our favourites because many of the trades that were supposed to end up in loss will make money just as a result of a short move of price in your favour. This feature is similar to “Move to Breakeven” but when the price moves against your trades.
   

•         Negative Trailing Stop: This feature enables a trailing profit in the opposite direction. It means that when the price moves in a negative direction it moves the TP to BE first and then follows the price in the negative direction. This feature in some cases minimizes the loss.
   

•         Move to Mid-SL: With the help of this feature if the price approaches the original stop loss the system moves the TP to the midway to SL. This means that if by chance the price slightly moves in your favour the trade may get closed with half the loss instead of full loss.
   

With all these MM tools in place you are guarded against negative market movements to get the best results possible.

Click here to find out why PipBoxer v2.0 is the right choice for you.

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