Some great responses so far. I like to keep it a lot simpler. I make 'ticks' as I get in the money. If I'm long 5000, up a dime I'm down to 4000 . . . up .15 I'm at 2500. If it comes back in and I still like, I rebuy. If it trades up .25 from intitial cost, I rebuy and treat it the same as initial position. Making 'ticks' reduces the stress for me. I hate being in the money by .50 cents and riding all the back to a loser. So this is how I avoid that and let my winners run. If it's up a dollar, I didn't capture the whole move, maybe .60 of it this way. But I feel better knowing that I am being proactive. I try to treat my losers the very same way. I start making 'ticks' as it goes against. At some point if I am not totally stopped out, I add back to the position reducing my cost having already taken the loss on what I have sold. I don't look at it as averaging down because I have sold on the way down and not just added to a loser and hoping. If I trade the same both ways, and I am right 60-65% of the time, I do just fine. For me, if I treat winners and losers differently, I have a bad day.
The easiest way to exit is actually the most obvious, exit on the manifestation of greed or fear, ie a volume spike 4x its avg 5 minute bar in an intraday scenario. Typically in this instance the positions chart pattern should go parabolic and be comparable to its largest 5 min bar move historically. Secondly, if the position has slowly grinded up with relative consistent volume you might only want to sell 1/3 to 2/3 of the position on that parabolic move and rebuy on consolidation because of such a high probability of a stronger follow-through due to stronger support as well as new positions and position building on the initial major pullback, this is typically indicative that large buyers or sellers exist due to the constant volume
opposite thinkers make all the money - i win 60-90% of the time with small winners and when i lose i lose big like 3X my winner size. i am so happy no one else has the stomach to do this. so please proceed to ride them winners!
At what point is it best to move a stop to break even? This has been the most difficult facet of trade management for me. I hate letting a winner turn into a loser; on the other hand, I hate getting stopped out somewhere near b/e then watch the price make a really strong move in my favor without me, and realize that if I'd left the initial stop in place I'd still be in the trade.
Depends on if you are trading momentum or trading market structure. Also depends on if you are trading for handles or ticks which depend on your time frame. Keep chart print of the markets you trade and market all entry and exits. Once you have a sample size of 20 or more trades analyze both approaches to see which is best for you. These trades have to be live and not on demo account. Sometimes the best approach is the one that fits your mental make up and not the one that makes the most profit. Hope this helps, good luck.
There is none. Under testing by some research I have seen (industry publications, etc.), size of stops (within reason), breakeven, scaling out, trailing stops, and lot of others do not offer much in the way of overall performance boost. The best thing to do, is take a sizable number of your own past trades, pump them into a spreadsheet, and see what happens when your particular methods are in the market. If 1 or 2 of the stop methods seem to help, then you MAY have something, but probably, none will prove better than others.
I would recommend a series of scaled trailing stops for winners. In other words, each stop triggers a partial liquidation of the position and an adjustment of the remaining stops. You can also use the scaled stops to gradually reverse your position as well. For losers, stop out all or at least half of the position at once.
Risk :reward ratio Baby! Use it when deciding on entry as well as for trade management. TG's can be adjusted to match your R;R as tg gets nearer. If market agrees i will try to trade thru tg's and then place stops for exit as we pass thru. Go fro the bonus money., set stop and ride the wave
The general gist of it is that you want an exit method that will avoid getting stopped out by typical noise, but will get you out once the market is genuinely reversing. So for example with a trailing stop method, you want to make sure your stop is bigger than the average "noise" pullback. It will also be useful if you can somehow determine when a price spike/overextension makes a genuine correction likely.
Almost never. Your stop placement should never have anything to do with your entry price, rather it should be determined by the market action. Moving stops to breakeven is simply ignoring market action to provide false psychological comfort. Your stops should be at a place where, if the market reaches it, you are probably wrong. Occasionally responding to the market when you have a profitable position may result in breakeven being the best place for a stop, but this will be purely by coincidence.