What does it mean to "move stop to break even"

Discussion in 'Risk Management' started by gravel lick, Jun 29, 2013.

  1. I am a confused as to whether this means move stop to your entry price, or move stop to where you give back all your profit.

    For example, let's say that I buy two contracts at 1600. I want to see one contract at 1601.50. At this point, I will have 6 ticks of profit (minus commission), or $150.

    What does it mean to move my stop to break even?

    Does it mean I move the stop on my remaining contract up to 1600?

    If so, if price comes back down and stops me out on the remaining contract, I am still up $75. So is that what "move stop to break even means"?
  2. That is what it means for me. I buy 2 or 10 ES at 1600. Sell half at 1603 and move stop to break-even or 1600 on 1 or 5 ES. So I locked in 1.5 points on initial size, and try to get a runner up to 1610 or stopped out.
  3. Break even means neither profit nor loss, so you would move your stop to your entry point.
  4. 'Break Even' would technically be the level where your PL is zero, but it's frequently meant as entry price or average position price. I love this risk management play, free money!
  5. Reverse break even stops refer to the entry price in theory.

    The stop for the commission is not and should not be taken into consideration unless you'd like to ruin the backtesting if you hadn't theorized about this before.
  6. Yes.
  7. MrN


    If only!
  8. Daring


    Buy 2 @ 1500

    Sell 1 @ 1600

    Break even to me, is 1400 + comm

    It also makes for more intelligent scaling out as you trail the stop by widening it and not shrinking it without increasing risk
  9. Thanks, I am curious why you wrote you locked in 1.5 points on initial size. It appears that you locked in 2.0 points. Thanks.
  10. Thanks. So it seems that "break even" can be either a zero P/L gain, or
    moving your stop to your average entrance price, which, in the latter case, could still leave a profit depending on how many contracts you have left.
    #10     Jun 29, 2013