I don't see historic S/R working more than coincidentally, on anything thats not on the chart so 2hours tops, even then I don't find it enough to trade off. Jumping on live in the moment momentum is the only way to beat this game, enough to make it count. SL wise, if the trade is on the table, it should be going the right way, end of story, SL should be at the earliest tightest point where the market will stop going the right way, regardless of tbe trades profit or loss. Do the right thing, regardless of PL then your a trader. Anything else and your a HOPER!
Break even stops are the worst thing you can do. Because it means that, when you go long, prices may NEVER go lower then your entry price. If they would go lower you cannot exit anymore at break even, you will have a loss. Nobody can enter and never have a better quote for this trade, which means that most of the time you will be stopped out in seconds. Break even can work only if you apply it at a certain level of profit to protect this profit. If you enter a trade you should have a "guideline" to help you define if the direction is still good or not. Only when the trade has already some profit you can use a break even stop. But this break even stop cannot be used as long as your "guideline" tells you that the direction is still good. So after initiating a trade you should follow your "guideline" and only later your break even stop.
My number one priority is to protect my capital. I frequently move my stops to breakeven after the trade has moved in my direction. To my way of thinking, I now have a risk free trade. It in no way keeps me from having extended gains. Do I have trades that get stopped at breakeven then go on to have extended gains? Of course I do, but I also have trades that I take off at breakeven that exceed my original stop. It's just one trade of many and doesn't affect my ability to make a living.
I agree with you and Taowave. There are a million ways to skin a cat when it comes to trading profitably. You have to analyze *your own* data for *your own* style & setups to determine what works best for you. IMO, the issues most traders face, regardless of stops and management style, are: whether they're satisfied with their current results; if not, how could they improve them?; and would making the necessary changes be worth it to them or not?
I think most people see this too simple. You may have a risk free trade but maybe you will damage your long term profits. For your risk free trade you will have a price to pay. In other words, you think that you protect your capital, but maybe you miss profits because of that. These missed profits are also a protection for your capital, because the more profits you have the less risk that you will lose your capital. But you gave it away by using break even or trailing stops. I will explain what I mean: When you have a system for trading you should check a number of things. One of these things is: where should I put a stop? To answer that question you should take a big number of trades and for each trade you should watch what the open max profit and open max loss was. With that information you can define where the optimal stop should be. Due to this testing you will never miss a good trade by being stopped out. And if you are stopped out you know that statistically in the long run you will maximize your profits, because in the long run putting the stop according to the testing will generate more profits in total.
Deaddog says, "I frequently move my stops to breakeven after the trade has moved in my direction." Which is fine as far as it goes. But he doesn't say how far. "I am nobody" approaches this, which some people call MFE (maximum favorable excursion) and MAE (maximum adverse excursion, though technically it ought to be "incursion"). One can calculate the MFE in advance if as a result of his testing he can forecast the MFE with a satisfactory degree of probability. The MAE, however, is much easier to test: how far does price have to go in my direction before I can with a high degree of probability be confident that it will not back up on me like projectile sewage and prompt my exit from the trade? If, for example, a trade of mine moves 5pts in the expected direction, I am reasonably assured that I won't have to exit the trade before price reaches the expected target. To move a stop -- if a physical stop is used -- to breakeven before that pretty much tosses probability out the window and one resorts to nail-biting. In other words, all trades come back or recoil or retrace to some extent at some point, but the good ones come back to the entry trigger only rarely. Generally this means trouble. Or one entered at the wrong level. But even if one stops himself out, he is always free to set a new entry trigger in case he erred in doing so and price continues to move in the desired direction. A pain in the neck? Yes. But risk management is often a pain in the neck. As long as one doesn't get all emotional, it's not that difficult.
I like simple. If a trade isn't working; get out; there is no law that says you cannot get back in. As far as missing a good trade I miss them all the time. The market presents many opportunities each day. I have to manage the trades I'm in, follow my plan, and not be concerned about coulda, woulda , shoulda or the opportunities I lost by not deviating from my plan.
It's normal that you miss all the good trades when you keep it simple. Your statement of the misses confirms that your system works very well. But why are you trading if you miss all the good trades? Are you a masochist?