Stop Moving Your Stop Loss to Breakeven / Profit TOO Soon! What's the Solution? ☝
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- Опубликовано: 29 янв 2018
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Moving Stops to Breakeven/Risk Free Trade? Don't do it too soon! www.financial-spread-betting.c... PLEASE LIKE AND SHARE THIS VIDEO SO WE CAN DO MORE! Should you even set your trades to breakeven? If you do this too aggressively you will end up hurting your own performance. You will end up missing not just losers but also lots of big winners. The problem can arise during drawdowns - you start trading too defensively... even scared. This hinders getting back on track.
Quit moving your stop loss (to breakeven) too soon. Let's discuss risk-reward and trade management. So is moving a stop loss to breakeven always a bad idea? Hopefully when you place a trade you have some kind of target profit and stop loss linked with the trade. If a trade moves into profit some traders will jump the gun and move the stop loss immediately and tighten it up (to breakeven) because they don't want to lose that profit. Psychologically I understand why people do this but you need to keep some leeway breathing space in the markets. You are not allowing for the noise in the markets i.e. not allowing the market to oscillating before resuming their trend. In real market conditions we rarely get moves that go from entry to exit in a straight line! You have more instances where the market puts you in doubt whether the trade is really moving in your direction and whether you have more potential opportunity for profit. But if you want multiple times your stake you need to allow the market space for movement. Of course i'm in favour of protecting capital and not giving profits back. So what's the solution? Two ways is using ATR or scaling out or pyramiding..
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I decided last year that when a trade is going well, and then has a significant pullback, instead of panicking and closing the trade, I make a conscious decision to stop panicking and change my mindset and look for an opportunity to add to the trade. So far it’s going well and my risk to reward ratio has increased dramatically. It’s interesting how trading is also a massive psychological game.
There’s nothing wrong with moving your stop to break even if you’re following a trading plan. Converting a trade to risk free is an excellent stress management technique
Moving your stop to break-even early will result in more "null" trades but is there anything wrong with that? It's good psychologically not to "lose" . Perhaps you entered too early and now you can re-assess and re-enter at a better price without having lost anything.
In short: the stoploss you move to breakeven immediately and get stopped out on, could have been your biggest winner yet. Yes, don't mess with anything that messes up your win/loss or risk/reward ratio.
Problem is the market makers are all about liquidity. They will always push the price back to where most people would have entered, and maybe even wick down before continuing upwards. This happens to me Every. Single. Time. So that when I lose, I lose, but when I "win" I only break-even. It's a mugs game
It seems that being able to handle giving some back to the market is a huge part of being able to hit more ambitious targets.
trading is one of the hardest ways in making money
Just sell 3/4 of your position and take some profit and let the other 1/4 ride. but still, do raise your stop to your entry after taking 3/4 of your position. That way you will have money in your pocket and the other 1/4 left wont put you at any risk.
I often closed my trade manually bcoz i was scared if the price go againts me and take back my profit or even hit me in the face with touching my SL..but the fact is i was the one who threw away my profit..coz a moment later the price go on my direction again..and my trade was closed prematurely..and im like..damn..what the heck am i doin....but thanx for the nice video sir.. really appreciate it
Traders are quick to move their stop to BE so that they are now in a "free" trade, a no lose position. But the noise in the market often hits their stop, but you can always re-enter if you still like the trade. I tend to take a part of the position off when it runs a bit in my direction, thus lowering my BE level.
This is EXACTLY the problem I've been dealing with!!! Thank you!
Dude you're such a blessing. This channel is such a blessing.
Pure gold. Thank you !!!
If you let s say do 10 trades, with TP 150 and SL 50 pips. Without having an edge, at the long term the mathematics say you would have 6.66 bad trades which would be a loss of 333 pips. You would have 3.33 good trades which would be a win of 333 pips. This is result is only valid if you do not move your SL. So charging spreads and swaps you would be losing some money.
Correct me if I am wrong, but as soon as you start moving your SL you will be changing that data. You will get less good trades that go untill your TP but you will also cut some losses. Anyway if you found an edge, I think it is like said in this video the idea not move your SL to fast and leave the market breathe. Thank for the great videos ! nice work
Always great stuff 👍
Thank you Mark! 🎁
Your coms style is very good. Clarity in putting your point in all of its assence, specially the small witty style when conveying between the lines message quickly.
Good video. This is something that I realized recently. I’m only paper trading now, but having the guts to hold through an initial retest has worked better than moving to BE too soon. When I do move to BE, it’s after a huge move. Even then, that might be the wrong approach.
Regardless, there are few things I find more frustrating and demoralizing than to move to BE, just barely get stopped out, and then have the price reverse and go on a massive run without me.
Valuable and exciting...thanks
The key is to have a plan and stick to it. Everyone trades for a different reason. Some trade to build a retirement, a house fund, car note etc... I like to keep everything in perspective and compare it to my job. So if I see a trade that has the potential to make me 1000 plus. I’ll say I’ll risk this much to give the market time to move in my favor. If the market reaches 500 In profit. Then I will move my stop to secure 300 of profit and let the 200 ride to see if the market will continue in my favor. If I get stopped out. Then cool! 300 is a day of overtime i didn’t have to do. Of course every market is different and sometimes if the market has a huge profit potential I’ll just stay put. But there is no rules to securing profit. That’s why we have volatility
It is because of fear. I think Scaling out is the Best way. Thanks.
perhaps the best advice on stop loss management
What a video Mark, loved your points, especially where you said let's feed the psychological beast to be able to hit the higher targets. That was very much a philosophical point of life.
I used to update my stopploss to break even immideatly and realsised the mistake sometime back. I hope new traders watch this video and learn this as its very crucial
really needed this one
Thanks for your teaching
Another Great Video So Important!
They say there isn't useful resources for the market on RUclips. They're just looking in all the wrong places..this is great stuff
Another brilliant lecture given 👏👌👍
Another amazing video, I loved the part when you said: 'would I sell/buy at this point?' That is exactly the questions we should be asking ourselves when in those situations, if we enter on a key level (support/resistance), actually we should expect the price to come back and re test it again, right? Thanks for sharing that!
Your point about "would you sell it here" as someone shorting the stock (i.e. would you sell to enter after the long run back to your entry) made the light bulb go off in my head. Great point and definitely something I will consider from now on before moving my stops.
I love this guy but I think you could make a video substituting the words "too late" for "too soon" and it would be just as valid. Where and when you place your stop loss is part of your philosophical approach to trading. Ive tead that stock daytraders use very tight stop losses with the thought to minimize losses as much as possible and if the trade isn't working, get the hell out. I think you could develop an approach to Forex based on this. I've seen way too many people praying their trade will turn around... and then it doesn't resulting in big losses.
This is true. I was following a tight 5% stop not to get stopped out on some awesome runners. Now my stop is the ATR plus 2% to allow room for the ticker to move as it does on average as my stop trails.
I might as well say stop moving your stop loss too late. gg. The thing is when soon is too soon and when late is too late. Define a plan and stick to it. If it doesn't work adjust the plan.
Excellent excellent lesson. Thanks!
such a cool mindset! you're absolutely right! "I'm selling my position" is totally right. if you wouldn't sell normally then why are you doing it now????
you're a master! thank you!
This is great info. I just made this mistake myself and ended up seeing the market reverse right when it hit my moved stop loss and then it went right to my Take Profit. I've written the information in this video down and will for sure use it in the future cus this is gold
Very helpful!
Fourth way, once the trade starts walk away and let the trade run, if you win all good, if not you have to accept losses as long as you have a decent risk:reward system of 1:2 you will make money
there are no clear solution.
you want to help. but in the end, our profits go away if we don't.sure I wanted to always trade perfectly and know how and when enter and exit trades, in reality, such system does not exist.
I trade the ES intra day and at 3 to 5 pts(pending on volatility) my ATM strategy moves to BE +2 ticks. Sometimes i get stopped out sometimes I don't. I've traded with and without a BE move and I much prefer to trade with it. You never know if the market has turned or not and I do not allow winners to turn into losers. Plus when it auto moves to BE +2 its a nice feeling to know I have a risk trade on. To each their own though
Sound advice!!!$£$£
Thank you
I'm new at this, but why can't we close a trade and take that 50ish when price reverses And then start a new trade when your price trends in direction you want?
Did u calculated how many times the markets goes back and u go in stop loss from a profit ? It’s not a retoric question
This is the way I see it. If I am willing to hold on to losers why not hold on to a winner. I literally now just sent my stops at my entry point and let the chart do whatever it wants. Of course I have a number that I won't be willing to give back but in that case I will sell 90% of my position and let the rest run.
Sometimes the market might move sideways for quite a while. I prefer moving my stop loss as the trade goes in my favor. I would much rather get stopped out a little profitable and then restructure the capital to another trade rather than painstakingly watch the market move sideways while I could be making more money with that capital in another trade.
find a strategy that is consistent on back test. Take a few days trading that strategy at 0.1 percent risk. Let the trades all play through and don't touch any trades until they play through. This will train you to see your strategy proving itself in live trading with no significant risk to your account and then start to ratchet up the risk %. one day at a time as the strategy proves itself.
Hello Very informative series of videos thank you sir
what is your opinion of " Scaling Out" Trades for Risk Management
Do you use 2% per trade?
Do you use ATR for SL and TP?
Thank you again
Check some of our videos on scaling out: ruclips.net/user/ukspreadbettingsearch?query=scaling+out
I move my stop loss up by 1% of my account balance when my profit also increases by 1% and don't use a take profit whatsoever. This allows winners to run pretty muchrun untill they finish and also trades that dont have much steam sometimes get stopped out at 0. In the long run I make less profit, while simultaneously taking less losses. Money isn't everything so I'm not stressed about the money I maybe could have gained moreso that I'm stress free about losses I never recieved.
when the market doing those fakes breaks i just can think... save your money...what are
you waiting for?
ya cuz trailing stops are not existent
Would it not be better to take partial profits.
Solution start from 5:02
If this is true then how come many traders say not to be greedy and to go in and out of trades quickly??
Everytime I panic sell, the price immediately goes in my favour again, but when I decide to leave my position going, it still keeps decreasing to hell to the ooint were the loss is too high. When I then close my position, it goes the other way a second after. Trading is a scam
Know your market, don’t be greedy (not suggesting that anybody is) as you cannot win all the pips and moves. If it’s a significant move and I sense that it’s retracting i’m closing to review and come back another day. Opportunities are always there to be taken. Trade what makes you comfortable, if it’s a good move and money for the day- see you later alligator.
+Ukspreadbetting, this is one of the main things I struggle with when trading, locking in profits too soon and getting stopped out at 2:1 profit, only to watch it go to 3:1 or 4:1 and beyond. Excellent video as usual and I'll try and work your tips into my trading strategy.
Feed the beast
lol, backfired. Mine was actually should be hitting the TP but i moved my SL to breakeven, and fuck sake the price tested my entry LMAO! not gonna do it again. I mean too early, i did that too early
when i first came across this channel a few years ago when i first started looking at the markets, i was quite suspect, i was like "Whats he selling?" but after studying Forex for quite a while now, i can safely say that this channel has lots of sound advice and theres no hidden agenda or hard sell for a course.
@ UKspreadbetting. as someone who works in digital marketing (started in web development) i can say with some authority that you need a rebrand, your domain URL is an absolute mouthful full of hyphens and the website feels dated, you are generating lots of great content but are greatly limiting your growth. i mean this with no disrespect at all. Im not trying to sell you anything. i wouldnt be able to help but with a reinvigoration of the channel and website, i could see you getting to the 1M subscribers. best of luck
Thanks for appreciating our content. We have started on revamping the website but it seems to be taking us quite some time as there is quite a lot of content.
Do you use trailing stop loss? My problem with trailing stop loss is that as time goes by, my stop loss is getting nearer and nearer to the current price and later will be closed even if the market is still in the direction that I predicted. I'm basically out because of the trailing stop loss. Would stop loss be a better option?
What do you mean you're out because of the trailing stop loss? A trailing stop by definition will trail the price and is best used for short-term trades. Couldn't you use a more 'relaxed' trailing stop? Otherwise, simply move the stop manually (no trailing stop).
Let's say that my trailing stop loss is at 20 pips and I bought long. When the price goes up by 10 pips, my trailing stop loss also goes up by 10 pips. Then there is a correction of 21 pips before going up again. I'm already out of the game by this time because the stop loss adjusted. When I used a normal stop loss, I would not have been stopped after the correction.
It's just that my system automatically uses a trailing stop loss when I make an order. It's basically click and done. There is also a way to make an order using a stop loss but I have to do it manually. But I have to do it if I want a stop loss instead of a trailing stop loss. That is what I did in my latest order.
You are right though, a trailing stop loss should be used for short term trades and a stop loss for longer term trades. I never read when a stop loss and a trailing stop loss are being defined. That is actually important.
if, after you place your trailing stop loss order and it is filled, are you able to manually move the order? like, is it a visible line on your screen? can you grab it? maybe moving it would stop the trailing aspect of the order and turn it into a standard stop loss, which you can move wherever you want?
wait why do people move their stops higher as the trade goes higher?
Let's say Dan is long (buy position) in stock XYZ and has a stop loss in place at price P. If XYZ stock moves up in price some people will move the stop up (i.e. make it tighter) to protect their profits. If they move the stop to the level they had initially bought it theoretically becomes a no-lose proposition.
Yep, it's what I am always tempted to do - move up to break even, so when it goes against me I don't lose much more than the spread. Something I will rethink after watching this video.
and can you briefly explain in words why it is bad to do that? I've watch this video and i do enjoy it but sometimes i need to see it in writing to understand thanks guys! :D
it can be bad because the trade might be working for you, and you get out of the trade too early because the stop is too tight, and your profits will be not so big. when the price is in a pull back, people get nervous. they think maybe the stock will not go higher, maybe they will lose all the profit. what to do? tighten the stop, lock the profit in. buy a volvo. But if we wait, let the market rest and regroup, and see if then it goes higher. yes? buy 2 volvos.