Buzzy Schwartz did a short on this topic in his excellent book "Pit Bull," named "Honor thy Stop." Only two pages long, I took a screenshot for you and attached it below. I think you will find in these pages the advice you're looking for. btw Welcome to ET. <3 Keith ps I do recommend the book. It can be found here:
Taking losses is simply part of managing risk and part of the game. Early in my career, after taking big losses and blowing out a few accounts, I realized I was Bart Simpson continuing to touch the hot stove while expecting a different result every time. I still remember the night I went behind the bar in the family room by myself, said "that's it, I'm never taking a large loss again", and did a shot of Johnny Walker. It took some time to become successful, but it was the first step. Now losses don't even bother me. There is almost always red on my blotter at the end of the day. If there isn't, it stresses me to review my entries and exits for the day, because it usually means I'm taking gains too quickly. You should check out this journal: https://www.elitetrader.com/et/threads/grinding-it-out-day-after-day.187730/ He's one of the rock stars of ET, and it's extremely informative, especially when he says that daily P/L is just noise. Good luck.
Stop losses getting hit is like losing a few pawns in a chess game to get better positioned. Helps to view them as a positive & not burn much mental equity on a few small losers. I place my orders as a bracket (stop & target) at several different stop levels, making it harder to get knocked out of my position. "A well-played stop-loss is just about the most beautiful trade". CIS, billionaire bedroom trader
The stop-loss is the reverse of the entry. The parameters on which it is based come from the entry conditions - previous price behaviour plus current price. But price behaviour continues to develop after your entry. If price behaviour changes radically enough, it has the potential to invalidate the entry conditions that got you in in the first place. If the revised entry conditions mean that neither you nor any other rational trader should now be entering in the same direction of your position, why should you hold it and wait for the stop-loss to be hit? If you are long, price must rise to make you a profit. The only way price rises is through traders making more buys. But if you would not buy at this price after the recent price behaviour, why would you think they should?
Thank you so very much everyone for taking the time and helping me with this topic. I really appreciate your help. You guys and gals are really super awesome, and being a part of this forum gives a feeling of a bigger trading camaraderie! Wishing you all the very best of luck and great trading profits!
Exactly right... great analogy. I like to use OTO conditional orders with that for daytrades to bracket eg 1a) buy 100 shares ABC buy,-stop $22.4 1b) stop $21.9 I wish that there is a way to have one triggers two other orders, both the initial stop loss as well as to sell if it reaches the exit target. I've tried using trailing stops but they often shake out too soon. The very best setup would be to have your initial order trigger as many other orders as you want. Such as selling half the position at a predetermined exit target, then trailing a stop on the remaining shares. But I don't see that feature with any broker. Would make a huge difference.
One of many dumbest parts of my life, like many traders when a newbie, I was short Mid Am T-Bonds, Mid Am was an exchange in same building as CBOT and traded half size back in 1980s. I just "knew" in my heart the highs were in and cancelled $300 protective stop, went to bank twice to get loans as Bonds kept going up, closed out trade losing $10 grand while on vacation in Vegas. Even after Bonds kept going higher. I allowed to take it personal, it was years later before I learned to hedge correctly. I have realized eventually that knowledge and much back testing won out for me. So now, if I don't have the answer before the question, can't put on trades. Good luck.
I trade crypto algorithmically with a bot I built that has very similar functionality. When it sees the pattern I'm looking for it sets multiple buys at different technical levels then when filled sets sells the same way in the other direction starting with a smaller fraction of whatever the buy amount was then successively larger sells at higher technical levels with finally the largest sell at the top. Works very well and runs mostly unsupervised. Point being you could definitely find a programmer that could code something like this to work with stocks and it doesn't really matter if your broker supports automation or not since anything that appears on a computer screen can be automated one way or another. Wouldn't be prohibitively expensive either.
Stop looking at each trade as a winner or loser. Measure your success by whether you follow your plan or not. If you have an edge the money will follow.