Layering - Multiple Entry & Exit Strategies

Once you have chosen the Pair you want to trade and also decided at which Ratio levels you would like to go long & short it is normally very useful to consider layering

Layering is basically a way of "not putting all the eggs in one basket". With this I mean that instead of taking a large position you can take several small. Entering each position at a better and better Ratio.

Lets look at a practical example. Below you will my Pair trading Indicator and EA running on two separate MT4 pages.
Please note that they have different Entry & Exit values.

Click in picture to enlarge

Click on picture to enlarge

As you can see the picture to the left has a larger distance between Entry and Exit thereby granting larger profit if triggered. The picture to the right has a more narrow distance granting a smaller profit but instead a higher probability of being triggered. Many times, especially in volatile markets, it can also be triggered multiple times generating several profits during the same trading day.

I personally use many layers, normally between 4-5 for each pair. With my Pair trading software you can easily use as many layers as you wish. You just open a new chart in your MT4 and do the individual settings for each layer. Below you can see how it looks when I have the same Pair setup with 4 separate layers. You see that each layer has their own chart.

Pair trading setups

New - Pattern based trading