Is it time to consider a “set and forget” strategy and if we do what are the benefits?

Mar 6 • Between the lines • 2425 Views • Comments Off on Is it time to consider a “set and forget” strategy and if we do what are the benefits?

shutterstock_113612767A “set and forget” strategy is a fairly simply proposition; rather than continually and at times obsessively market (and chart) watch whilst awaiting for our sets up to occur, we instead place orders into the market and allow them to be executed when price reaches our pre-determined levels or, perhaps if we are using an expert advisor, our cluster of indicators to align. In many ways we are letting the market come to us, as opposed to chasing the market.

The process of a full set and forget strategy is not necessarily applicable to swing traders and may be more appropriate for day and or scalp traders, despite the fact that using automated orders for entries when swing trading is entirely consistent with one part of the three order plan used for set and forget.

The execution of our S&F (set and forget) method is taken care of by our platform as we place our: entry orders, stop loss orders and take profit limit orders into the market. All we need to do then is to; sit back, relax, let the platform and our input take overall third party responsibility and await the outcome.

There are many outstanding benefits to the S&F principles many of which we’ll list here, equally there are some potential pitfalls that traders need to be aware of.

The benefits

Less time chart watching; many traders prefer to use an EOD strategy (end of day) when using a set and forget strategy. For example, they may note that price could reach and either breach, or reject a critical moving average plotted on the daily chart, such as the 100 SMA or 200 SMA. Or traders may note that price on a particular currency pair is approaching to the downside or the upside a key psyche looming round number. Such as the AUD/USD at 90.000. With that in mind they may place an order at that level for price to reject this key level the following day.

Less chance to become emotionally involved; this is perhaps one of the biggest benefits of placing orders into the market on a set and forget basis. You place the orders according to your trading plan knowing that you are then obliged to sit on your hands. Whilst early days this can prove to be difficult, eventually the process becomes automatic.

Orders can be taken 24/7; we’ve no need to miss that opportunity that presented itself when we’re asleep. As we plot our trades, using our end of day strategy, we can be alive to the opportunities that may present themselves in, for example, the Asian session.

Less chance of being influenced; the 24/7 constant stream of (at times) confusing and distracting market information that comes our way, from many diverse sources, can seriously affect our decision making unless we’re made of stone. But if our orders are in we simply concentrate on the accuracy of execution. If the orders don’t trigger we move onto the next day.

No temptation to tweak the system; the order either ‘triggers’ or it doesn’t. If the order doesn’t trigger then quite simply the market has not behaved in the manner we predicted on that particular day.

The pit falls

Possible slippage and poor fills; we might get filled some distance from our order in a very fast moving market and if we’re shooting for a few pips only this can really derail our plans. Is there slippage control on our platform, or can we have a chat with our broker if this is a regular occurrence?

Might lose out on not being in the market by only a couple of pips; there are times when your order just doesn’t trigger by a pip or two. This is a regular occurrence if your orders are close to critical pivot point levels or crucial SMAs and conversely it should indicate that your trading is very close to where institutions are hunting.

Not being there when orders execute can be distressing early days; but eventually this emotion recedes as we defer to the only method of trading we have full confidence in.

We have absolute 100% confidence in overall strategy; this can’t be stressed enough, unless we have 100% confidence in our plan and our complete strategy then a set and forget strategy just isn’t for us. We really must build slowly and carefully, using perhaps micro lots until we become completely comfortable with our new method of trading.
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