I am studying this exit... which I read off the tradingmakets.com website. I also would like to know if there are any traders using it.. and how it performs in real trading. Its basically exiting half your position when your initial risk has been met. So if you are long 1000 shares at 50 and stop at 48. WHen the stock goes to 52 you sell 500 shares and trail the rest.. with a stop at breakeven. Any thoughts or insight would be appreciated.
This is not something new or innovative...Its just a simplistic method to recapture your cost and allow the remainder of your position to fly...In some markets its easier to recapture your cost than others...Options, imo, are the easiest to recapture your cost as the percentage move in the underlying required to make your option double is often minimal...
Interesting post What this sounds like is a way to avoid losing. I'm beginning to re-think things. It depends on the traders accuracy. Your post on 8/01/02 concerning trader #1 and trader#2 comes to mind. Many times if someone has a series of small losses and slightly larger winners they will be marginally profitable . But a few losing days can end that. I've come to the conclusion that the consistent small gains and slowly growing the account is not the strategy for me. I'm better off placing less trades keeping the original stop and using targets and moving averages to determine my profitable exit. After a certain minimum gain move the stop 1/4 point above the entry . How many days have I had a tight trailing stop and grabbed 3 es points and see it run 20. Those are the day's that are going to build an account and dropping 1/2 of a good trade I don't like, because when it goes against you the whole position is going against you not 1/2,so why limit your profit? Not sure if any of this babble makes sense just my opinion...