To be comfortable with this tactic, within a trend-following strategy, you have to accept that retrace stops don't matter. What I mean is that lost capital is vitally important but lost unrealised gain is not the same thing and is worth exchanging for a chance of excess profits if the trend continues, as trends normally do. The idea is that the parallel trades in a trend never closes until the trend has been potentially fatally weakened.
Depends on the market, time of day, and your trade plan... Here's an example in crude oil this morning. It's a Monday, so I tend to treat each leg as it's own trade. @Robert Morse makes some good points - treat each leg as it's own, and as oneself 'does the setup still make sense?' CL had a nice leg up on a decent setup. Took profits, pullback offered decent reload for leg 2, we'll see if it has legs to hit profit target #2. On Mondays per this trade plan, Leg 2's are not as compelling with the stats, so I need to adjust expectations accordingly. And let's not forget, it's a Monday...
%% Good points, ironchief; IF only bullmarkets uptrends, or bear market downtrends lasted 95% of the time.LOL I re-tested an indicator , just to make certain; its named ''know sure thing'' LOL.Sure enough it doesnt seem to work 95% of the time. But even better than 95% ;people buy anything in a bull market, mostly. [edit , end of day/+,quote=that was 95%, not 955% , which maybe a bit optimistic, long term LOL