Break the rules of trading!
What coastline trading stands for:
- A serious strategy that infra leverages each trade
- A risk to reward ratio of 50 to 1 or worse
- A permanent draw down, sometimes higher than 40%
- No stop losses, No timing the market
- And be consistently profitable
The Coastline Strategy in figures
Last month: 1885 PIPS.
Last week: 1145 PIPS.
The method explained
How is it possible to make money with a risk to reward ratio of 50:1 or worse?
Let me answer with another question: How many times did you get stopped out before the trade resumed in your initial direction? Stop orders are a source of liquidity and markets will move partly because of them. In some cases, substantial moves can derive from stop clusters being devoured. This is one of the reasons I opt to close profits fast and let losers run.
How do you manage your trades without a stop loss order?
95% of the trades close in profit, so I have to manage the losses caused by 5% of the trades. These losing trades are not managed individually but as a whole. I do that by increasing and decreasing the exposure on the long and short legs.
Why do you sustain a permanent drawdown?
This is because I use a different definition of a drawdown. For me, it's not a series of losses which demand to be recovered. I see the drawdown as an implicit cost of the business, together with explicit costs such as swaps and spreads. If you have made a 100% return on your balance, a 50% drawdown means your equity is up by 50%. In other words, if you close all trades at that moment, your ROI (return on investment) is still 50%.
I’d like to know more about your hedging strategy. How does it work?
The hedging is treated like a sub-strategy. It enables me to remain tail risk positive, safeguarding the account's performance in exceptional circumstances, like for instance during an election period. The hedging is never 100%,
Do you use leverage?
Yes, I make use of leverage but each individual trade is very small compared to the account's size. Keeping the position size small enables me to construct a larger position with many trades at different price levels. In exceptional circumstances I may increase the exposure in one direction, capitalizing on a directional market movement powered with higher leverage. But I keep always enough available margin to profit from what is called the "coastline" of exchange rate fluctuations.
To learn more about the method, you can watch the webinar: