The Soldiers strategy comes from a basic premise that we tend to cut our losses too late and reap profits too soon.
The Soldiers strategy will have to be used in volatile markets since if the market is lateral, we will not obtain gains but losses. This is why it is perfect for the Forex market where we normally find great trends.
Soldiers Strategy, what is it?
As I mentioned before, soldiers strategy arises from the need to learn to let the profits run, avoiding prematurely cutting a winning position and cutting losses when necessary. For this strategy, we will choose a forex market that tends to give quite long tendencies, selecting and controlling several markets at the same time, as the lot that we use in the trade will depend on the capital that we have in our account but, mainly, our trading will be composed of mini lots (0.1 batches).
This strategy consists in letting battles (soldiers) die while their opposites (their fellow soldiers) continue to advance. We will use fairly large stop loss levels of about 300 pips to let the trades run and catch up without having to worry about a bad stop getting us out of the market at the wrong time and thus avoiding, to a certain extent, the noise occur during the day by the media.
Trading with the Soldiers Strategy
The trade with this strategy is simple. We select an asset by putting the chart in 1-hour candles and then open two opposing positions of 1 min lot with their respective stops to about 300 pips for each position. This is where we find the first advantage of this strategy is precisely the ability to disconnect for hours from the positions you have opened.
After several hours and if the market has entered the trend, the price will jump one of the two open positions letting the other run until we decide to close.
There are generally two options:
- Increase the lot, so we will be in a single market but we will earn more money.
- Increase the number of markets in which we will be active.
Here we find the second advantage of the strategy, the versatility, since we can adapt it to different circumstances if necessary, either because there is going to be a very important event (such as the elections in France, economic data that may represent a before and Etc.) or by our own circumstances, since we do not like being with many open trades or controlling many markets at the same time.
The best option from my point of view will be the second, for reasons I will explain in the following section:
Disadvantages of Soldiers Strategy
The biggest disadvantage of this strategy is if we enter a market that lies side in that range of 600 pips with the consequent danger of breaking even one side but back again so the loss could be double. Hence it is advisable to enter several markets simultaneously, because this way the probability that we will win money will multiply. That’s why I believe that the second option is better, because we will reduce the possibility of getting stuck in a market without seeing any results.
If we entered a market and after a day, it did not move with the strength we anticipated, leaving us with the capital trapped in it, we could leave before having to face more headaches as both positions would be covering each other and we would only have to pay the spread.
Another disadvantage is that once one of the stops jump we will find ourselves again at the mercy of the market without anyone being able to assure us that the market is not going to turn and this can be even more dangerous in volatile or unstable markets. For this reason, I suggest that you only trade minicots, so that the loss is minimal (if we lose 300 pips so it will be about $30, something affordable) and we can recover it with the profit in another currency.
To reduce the risk once you have jumped one of the stops, we should be present in the market and we could even raise the stop loss of the open trade to the level at which the previous jump plus the spread to cover the losses completely in case The price will turn completely as we see in this image:
At the end of the session we will have a large number of soldiers that have fallen, allowing their companions to continue advancing non-stop. At this point I imagine that as we all have to live, eat, sleep, etc. we can put a stop to those that remain to let them continue to advance in our absence by reap greater profits.
Is this trading strategy really effective?
This is a very mechanical strategy, easy to use and helps the trader to control the psycho trading with enough effectiveness since it gives a clear script to follow where there is not really the possibility of doubt. If it rises and jumps, let it keep going up and if I’m afraid of losing, I place a stop where it neutralizes the position and period. Of course, we should try it on a demo account before using it in a real account. Let me know if you decide to give this strategy a shot.