Lesson Learned: Never place stop too close to technical level

Discussion in 'Strategy Development' started by thecalip, Feb 23, 2006.

  1. It has finally happened to me.

    I was trading EC today and saw there is a major support level 1.1926 in both 5 mins and 10 mins chart. I entered the trade at 1.1927 soon after the market open at 6, and put a stop at 1.1922.

    The market start move in my favor and adv to around 1.1931 and I moved my stop to 1.1924. In the next 15 mins, I got stop out at today's low, and in the next 20 to 30 sec right after I got stop out, the market rallied 12 points to 1.1936.

    Lesson I learned: never move stop too closed to technical level. Don't adjust stop because it moves in your favor. Adjust them if and only they create a new technical level or market conditions has changed.