Straddle Technique 2.0

Updated: Jul 4, 2018

I’m still hyped. Please bear with me.

Ever since I’ve understood the technique, I’ve never passed each trading day without participating in the London Open. I am hooked! In fact, it’s the only trade I’m preparing for nowadays.

Thanks to this enlightenment, I spent the past days back testing and improving my straddle technique. Been doing great since. And that’s what I’m gonna share with you.

My first straddle was a success but the next days were either break-even or a stop-out. So, I tweaked it a bit and so far, it has solved problems.

Read related article: How to Trade the London Open

You may review the basic idea with the link above. If you would notice, it’s still vague (e.g. put orders before London Open). I’m gonna improve those here:

1. Place Orders Right Before

How fast can you place an order? Is 5-minutes enough?

Ideally, you have to wait for the bar to finish. But, I’ve observed that the price moves quite erratically when the clock strikes 8AM (UK time; 3PM Manila) you might miss the ride. When you place way early (like 30-minutes early), the market may hook you into a false breakout, a “fakey” and then stop you out in the next hours. The solution is to place orders right before.

Also, add a pip allowance to your entries. For example: if the High is at 1.31552, then round it off to a slightly higher level at 1.31570 for your BUY Stop. When I did this, the trade ends up triggering the actual direction of the breakout and avoided the fakey.

2. Do NOT Cancel the Untriggered yet

In case one order gets triggered and it turned out a fakey, your opposite order is there to correct the fakey. You’ll know a fakey when you see the initial order is a touch away from dying.

The best scenario: the market triggers the actual breakout and win the whole move. The okay scenario: the market faking on you and ends up with a break-even.

Therefore, do NOT Cancel the Untriggered just yet. Of course, we're hoping that the market triggers the actual breakout and avoid faking on us. Honestly, that's the best scenario. Because we could avoid losing and catch the whole winning move. However, just to be sure. Keep the pending opposite order.

Wait for the market to gain strength and be clear about its breakout direction. If the market is going strongly in favor of the open trade, only then you may cancel the opposite order while securing the open trade’s stop-loss to positive.

3. Aim for a Higher Reward

Keep your risk at the minimum while squeezing out as much of the breakout movement.

For example: if the range of the last three H1 bars is playing between 15 to 20 pips, then keep your stop-losses between 15 to 20 pips as well. Meanwhile, make your target 30 to 40 pips. I’m suggesting to NOT just target 1:1 anymore. You should go to at least 1:1.5 now! Lucky if you reach more than 1:3.

The point is you should get more. The breakout movements are strong anyway. With this, you could actually gain more than your losses in case you get victimized by a fakey.

Think about it. If you just put 1:1 and then you're stopped-out by a fakey, triggered and won your opposite trade, it will just equal to a break-even. Compared to a 1:1.5 ratio, at least you would win slightly above the break-even.

I have yet to see the worst case scenario, a total loss with this improved straddle technique (where both orders get stopped-out). So far, so good!

Also, I have yet to try this with other currency pairs. I have a hunch that you may use the same principle to any ranging or indecisive market. Which, by the way, happens mostly on critical zones, the support and resistance.

So, let’s not forget the basics.

Happy trading everyone!


@marilesaca || Trading Kitten :3

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