Leave stop loss and target or exit early?

Discussion in 'Risk Management' started by blox87, May 20, 2010.

  1. blox87

    blox87 Guest

    Do most people find better success by setting their stop losses/target in logical areas and just leave the trade as is until one of the two is hit ....OR.... Do you find better success by using your ability to " read the tape" for an indication of a reversal against you and exiting early whether it's for a smaller profit or loss than you originally planned on.


  2. drcha


    If May 6 did not cure people of the idea of stop losses, I don't know what will.

    When you put your money in the market, you are dealing with crooks. Good thing to try to remember.
  3. blox87

    blox87 Guest

    I'll rephrase.....

    I use a stoploss NO MATTER WHAT.... that being said, do others find better success by just "setting and forgetting" their targets and stop loss. Or using your intuition to exit earlier than planned when you think you see a reversal based on price action/volume and think you are wrong.
  4. maxpi


    I exit with TA but with a bracket order in place.. if I simply get scared that I'll lose when a trade is profitable I move the stop to breakeven... it's part psychology and part TA at that point..
  5. Absolutely, you should fire and forget. Make a trade, with stops and targets, and then go have a coffee.

    Otherwise, it's all emotions, and you'll never know how well/badly your entry/exit strategy is working.
  6. NoDoji


    I kept a long-running log of trades that I micromanaged vs. leaving initial stop and target, and "stop/target/leave it alone" strategy resulted in FAR more profit than trying to read the tape and moving stops around or exiting early.

    What I found is that price wiggles often occur within my targeted move at certain technical levels on a time frame smaller than the one I'm using for trade setups. This is where I get that feeling it might reverse on me, but I'm learning to trust my trading time frame for the profit target.

    So let's say your trading setups on a 5-min chart. Traders scalping off a 1-min chart will react to technical levels in that time frame and price may do retracements in that time frame based on those trades, but the overall move should follow through on the larger time frame assuming you've back tested your edge at length and determined that more often than not the full move completes before hitting your stop.

    I still find myself sometimes micromanaging trades though. Hard habit to break, but the brokers love the extra commissions, I'm sure.
  7. It depends on what your goals are. I can't speak for American tax system, but here in Canada, if you want capital "loss" then you can't buy back the same security until 30 days later. This means that if I am longing a stock, I would set a wider stop-loss (at key support level). If I get stopped-out by Smart Money, then I can't buy it back. If I do, I will lose the capital loss.

    If you are a professional trader, then your gains and losses are taxed differently.
  8. blox87

    blox87 Guest

    Thanks for the reply's so far,

    I've come to the conclusion that I'm only going to set and forget from now on.


    1. Less stress

    2. I tend to take profits early and always let my stop loss get hit resulting in my Risk/Reward not being where I originally intended it to be.


    Sometimes it misses the target by one tick and that really sucks but it doesn't happen too often.


    Is it smart to move the stop to break even once price gets halfway to my target?

    Example.. If I have a 1:2-1:3 risk reward, when price gets halfway to my target would it be smart to leave everything in place or move the stop to break even . I know it all depends on a variety of variables for different traders but I would like some of your opinions anyway.
  9. blox87

    blox87 Guest

    This is all assuming that we are trading futures without the capital loss rules that equities have
  10. NoDoji


    If I put on the trade as soon as it sets up, I do move my stop to b/e after a decent move, sometimes halfway to target, sometimes a little sooner if the volatility's not too high.

    If I chase an entry, I have to be more careful about moving to b/e too soon, because the b/e level on a chased entry is often the wiggle zone and I can't tell you how many times I've been stopped out b/e only to watch price move a few more ticks and then roll right on to my target.
    #10     May 21, 2010