I wish I could remember the web site I saw it on. Someone did a fairly detailed study on this subject. Obviously the study considered THEIR methodology. The results, as I recall, suggested it's best to move the stop to BE so long as your NOT moving too soon. Of course what "too soon" is depends on individual time frames and methods. IF price seems to be trending I'll use a trailing stop. My % win declines but overall PnL improves.
Thanks for bringing this up Austin; I've (sub)consciously fought this behavior for years - often planning a great entry at a critical chart level, practically begging for the market to come down and fill me for a shot at 10,20+ handles. Then you get the report, and you're immediately looking for a way to extricate yourself because "you know" the first small rally should be faded, they will whip the low and let you re-buy cheaper, etc... Invariably we are our own worst enemy. For me, the proof comes overnight, where I'll often leave resting limits to fade overnight moves in various markets w/no target. More times than you would expect, I'll wake up to a massive unrealized gain with minimal transaction costs and no stress - I was sleeping. Further, if you look at a chart snapshot at the point where I'm filled, it looks like a "strong" move with lots of fib retracements and support levels that would make good covers which I would surely take had I been up. Well guess what, by the time I wake, it's come crashing through all of them creating a disgusting looking reversal. The same trades, of course, exist in the day session, but that's when I'm available to interfere with them. Bottom line, the 3:1 (or better) opportunities exist on a daytrade timeframe in all markets, and it's amazing how we constantly cheat ourselves out of them by scaling, overtrading, churning, and making the middlemen rich. It's not impossible to trade 1:1 of course, but there are far more efficient ways to make a buck.
why not just move a small portion of your lot to breakeven but keep your original stop/exit ? that way if your reason for being in the trade (pattern/trend) breaks down it will reduce your exposure but no kill the trade
All I know is that the longer time frame i use, the easier it is to stay in the trade. i used to do intraday/swing trades. I found that had I applied a longer time frame, I would have done much better, with less work, and stress. In a volatile environment, this is a bit trickier. The more experienced I become, I find that its better to use technicals to take me out of a trade....but if I'm way up, I/ve learnt to lock in far enough away that I won't be stopped out, and above my b/e.