Break-even strategies: Protect your position, cover your costs and optimize your profits!

Published on: July 25, 2023

After receiving numerous requests from our valued traders, we are thrilled to announce that break-even options have now been incorporated into our strategies!

In the fast-paced and volatile markets of today, it’s essential to have strategies in place that protect us from worst-case scenarios. We’ve all experienced the frustration of watching a potential profit turn into a loss in a matter of seconds due to sudden market reversals. With the introduction of break-even options to our strategies, we can now take control and minimize these risks, ensuring that our positions are safeguarded even in the most unpredictable of markets.

Notes:

Hi all,

We have some exciting news for you. You can now apply a break-even stop to your strategies, which is a feature that many of you have asked for.

We have added three new options to the strategy manager: the trail after ticks, the break-even ticks, and break-even plus ticks.

But before we explain how to use these options, which are very simple to set up, let’s review why they are beneficial for you.

A break-even strategy helps you to secure your position as the prices move in your favor. It does this by moving the stop-loss order to the same price as your entry price.

By doing this, we usually say that our position is risk-free. If the market reverses to our entry price, we don’t lose or gain anything. However, we should consider that if the stop loss is at the entry price, we are actually losing money, because we have to pay the commission to our broker for that trade.

So to make a truly risk-free trade, we need to move our stop beyond the break-even point, that is, above or below our entry price depending on if we are long or short. And this is where the break-even plus ticks option, comes in handy.

We can adjust this option to any number of ticks we want, but mainly it should be used to at least cover our commissions. And this depends on what we trade. For example, if we trade the ES, commissions are around $3.50 to $4.00 per contract round turn, so 1 tick above or below break-even can cover the costs of trading 3 contracts.

But let’s not waste any more time and see how these strategies work in practice.

Here we have a simple strategy with 3 lots, 8 tick stop, 15 ticks target, and a break-even at 5 ticks.  This means that when prices go up 5 ticks, our stop order moves to the same price as our entry price. We also have the break-even plus 1 tick. This means that when prices go up 5 ticks, our stop order moves to one tick above our entry price.

Here is an example of how to use our strategy. First, we need to choose it from the drop-down list. We buy the market at 17 even, and when the price goes up 5 ticks to 18.25, our stop order also goes up to 17.25. This is our entry price plus 1 tick.

As the market reverses, our stop order gets executed and our target gets canceled, since this was an OCO order.

Here is another example of our strategy. We keep the same settings as before, but we add the trailing option. This means that our stop order will follow the price when it goes up more than 6 ticks.

Let’s see how it works. We choose the strategy from the drop-down list, and we sell the market at 20.75. When the price goes down 5 ticks to 19.50, our stop order also goes down to 20.50. Like the previous example, this is our entry price plus 1 tick. Then, our stop order keeps trailing downwards with the price until the market reverses and executes our stop order, canceling this way our target.

The last option that we have added is the trail after ticks.

Before, when we applied a stop trail in a strategy, the order would follow the prices right away as they went in our favor.

With this new option, we can set how many ticks the prices need to go beyond our entry price before the stop order begins to trail.

This will make our order and trade management easier by giving us more control over them.

Let’s look at our last strategy, where we have the trail after ticks at 5. This means our stop order will remain 8 ticks above the price until it drops 5 ticks.

Let’s take an example. After choosing the strategy from the drop-down list, we sell the market at 18.25. Our stop order is at 20.25, and when the price drops 5 ticks, to 17 even, our stop order moves to 19 even, which is 8 ticks above the price. From there, our stop order follows the price downwards until our target is hit, canceling the stop order.

In summary, these new options give you more flexibility and control over your strategies. You can use them to protect your positions, cover your commissions, and optimize your profits.

We know you will find these new features useful and easy to use. They are designed to help you improve your trading performance and reduce your risk. If you have any questions or feedback, please let us know.