Powerful Trade Management Rules to Maximize Profit

The DTFL bank trading strategy uses multiple trade management rules. One is focused on the change between trading sessions, another is the end of day rule. These rules protect us against the large amount of volume that flows into the market around the start of a new trading session.

In some cases, the market attempts to create a new trapping setup. We call this creating a stop run on a stop run. The idea is that smart money, in search of more liquidity, manipulates price multiple times to further induce buying/selling pressure.

SESSION CHANGE RULE

RULE: Exit open positions that are break even or negative 5 mins prior to the open of the New York session and move the stop loss to break even on any positive position.

This process allows you to cut losing positions early and protect capital when in a winning position.

The above image displays a prior long trade where I moved the stop loss to break just prior to the start of the NY Session as the trade was in profit. This secures the trade incase the new volume coming in has different intentions or a deeper stop run is to occur.

End of Day Trade Management

RULE: Close all open positions prior to the end of the New York session (5:00 PM)

I like to close my trades 15 minutes prior to the 5:00 PM NY Session close. This rule is to avoid the expanded spreads on pretty much all currency pairs around the close of the New York session / open of the Asian session.

The Asian session is known to be a very low volume trading time. Because of that, we try to stay away from the expectation that price would remain in the direction of our intended move during the Asian session.

The risk of the new session going to seek out more liquidity before driving further in our direction also remains. Therefore, exiting any open position is one of the ways we try to secure unrealized gains.

Below is a KIWI (NZD/USD) long trade where I exited using the end of day trading rule.

In short, I recommend securing profits and cut losses short any time you are about to enter a new trading session.

I hope you enjoyed the breakdown. As usual, like and leave any comments or questions below.

Happy trading

-Kevin

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