TSP - Trade Splitting

Concept diagram

The concept diagram provided below depicts the function block associated with this page.

Function principle

Trade splitting is a strategy in trading where a single trade is divided into several smaller trades. This approach is often used to manage risk and enhance trade execution. For example, a trader may split a trade into two or more parts instead of investing the entire amount. Each part is then executed separately. This can be done in any ratio such as 50:50, 30:70, 50:30:20, 30:30:20:20, or other ratios. A tactic like that allows a trader to maximize profits and minimize losses by adjusting based on the market's response to the initial trade. It's a flexible strategy that can be particularly beneficial in volatile markets.

The Trade Splitting functional block allows you to split your trade into up to five sub-trades. Each sub-trade can have different trade entry and exit points, with the first trade used as a reference, the so-called master trade. The first trade (master) is that one which is opened based on the actual trade signal. As soon as the split trade feature is enabled, the principle applies to each trade the trading module opens.

The functionality of the trade splitting algorithm is illustrated below.

As standard, the initial stop loss difference of the master trade serves as the reference for each split trade. It represents the unitless value of 100. Let's assume the initial stop loss difference is 100 pips. If the input parameter > (TSP) A open position is set to 190, the second trade will be opened when the price reaches the point: Initial stop loss + 190 pips. > (TSP) B open position configured with 210 will open a trade at initial stop loss value + 210 pips. This relative price description is also used to define the take profit value. Please note that the stop loss will be reused from the master trade, even with the same trailing characteristic.

Based on this relative price position description, the minimum value of the open positions can be 0, and the take profit level of the master trade defines the maximum value. For the closing position, the same minimum and maximum values apply, except 0, which means the same take profit as the master trade will be used, and -1, which means no take profit is used.

A split trade is only active if the volume is unequal to zero but larger than 0. This input parameter is a percentage of the master trade volume. For example, if the master trade is open with 1.20 lots, then > (TSP) A open volume = 50, which means a trade with 0.60 lots in volume size will be opened when > (TSP) A open position is reached. A split trade is disabled when the volume configuration equals 0.

Parameters for split A

Input variable within MetaTrader (Identifier in SET file)	Default value	Comment
> (TSP) A open volume (0 -> OFF) (IN_nTspAOpenVolume)	0	The input value cannot be smaller than 0.
> (TSP) A open position (IN_nTspAOpenPosition)	30	The input value cannot be smaller or equal to 0 or greater or equal to IN_nTspAClosePosition. The input value cannot be smaller or equal to 0.
> (TSP) A close position (-1 -> No TP, 0 -> Master, >0 -> Pos.) (IN_nTspAClosePosition)	0	The input value cannot be smaller than IN_nTspAOpenPosition.

The following illustration shows split trades without distinct take profit levels but with varying open volumes.

tip

To reproduce the chart from above, you can download and use the SET file package um_eab_ctsp_3_v_2_0.zip.

The subsequent illustrations display the variation of the open position. As observed, if the open position is below 100, the split trade will be initiated when the price decreases. Conversely, if the open position is above 100, the split trade will be initiated when the price increases. Since 100 represents the same price as the actual opening price, two trades will be opened at the beginning. Please note that the illustrations only demonstrate buy orders. The behavior for short orders is the opposite.

tip

To reproduce the chart from above, you can download and use the SET file package um_eab_ctsp_4_v_2_0.zip.

The final example series showcases different input parameters for the close position. As before, only long trades are used to demonstrate the behavior. Short trades will behave oppositely.

tip

To reproduce the chart from above, you can download and use the SET file package um_eab_ctsp_5_v_2_0.zip.

In summary, this feature provides a range of trade splitting strategies to manage risk and adapt to specific market conditions after a trade is initiated.

Parameters for split B,C,D,E

As previously mentioned, you can configure up to five split trades, each following the same configuration principle. The remaining input parameters for this input group are summarized in the table below. Here, X can represent A, B, C, or D, and each set of input parameters is configured in the same way as explained earlier for split trade A. The default values for opening positions vary from trade to trade and are not recommendations. Please adjust each split trade feature according to your preferences.

Input variable within MetaTrader (Identifier in SET file)	Default value	Comment
> (TSP) X open volume (0 -> OFF) (IN_nTspXOpenVolume)	0	The input value cannot be smaller than 0.
> (TSP) X open position (IN_nTspXOpenPosition)	B - 60 C - 90 D - 120 E - 150	The input value cannot be smaller or equal to 0 or greater or equal to IN_nTspXClosePosition. The input value cannot be smaller or equal 0.
> (TSP) X close position (-1 -> No TP, 0 -> Master, >0 -> Pos.) (IN_nTspXClosePosition)	0	The input value cannot be smaller than IN_nTspXOpenPosition.