The Advantages and Disadvantages of Tight Stop Loss Trading

I believe that I can only post here because I just became a commercial member, which is the best for me to only focus on trading and use this thread for my trading journal. It is read only thread because I set the highest vouch hurdle for posting here.

I believe FF's Trade Explorers is the greatest tool for me to analyze my trades for improvement.

I am adding Notes to my trade list at http://www.forexfactory.com/4xma#24-list

I have been working on tight SL trading system since 2007 and narrow my SL from 50 pips to 7 pips or less.

I believe the most advantage is the I can earn my loss back easily because I only need 7 pips winner to get one loss back or 14 pips winner to earn twice of my loss on a 7 pips Stopped out.

The other advantage is the I can find another trading opportunity when the market tells me I am wrong by stopping me out, instead of holding a wrong position and missing other trading opportunities.

However, there are many disadvantages trading with tight SLs such as

1. I can be right with the market direction but still lose money because I take the position in the wrong time.
2. It's very easy to take many positions and lead to big losses.

With the advantages and disadvantages are both so strong, one must be very skillful and discipline to trade tight SL system. That is why I need to analyze my trades for constant improvement on both trading skills and discipline.

I am writing notes on my trade list at http://www.forexfactory.com/4xma#24-list and post my reviews on my trading here as my trading journal. I hope we, both me and my viewers, can trade better every day.

Thank you for reading and happy trading.

I believe that I did not trade with patient for the 1st and 2nd trade. Both got stopped out, one trade against the trend the other entered with wrong timing.

I did not read the exit signal well to turn my 3rd to BE on my signal account and -1 pip on the live slave account.

Check my notes on my trade list for details.

Trading is a life time challenge. I must survive and be better every day.

I was trading well today with patient to follow my trading plan. The first trade was stopped out and the 2nd and 3rd trade are both good on entry and exit.

The benefit fo tight SL is that i can win every thing back in one good trading day like today to recover my 3 day losses.

Check my notes on my trade list for details.

Trading is a life time challenge. I must survive and be better every day.

Have a nice weekend!

I am so appreciated FF creates the Trade Explorers with the trading chart under the Trade List. My can find my entry point and exit point in the chart to analyze my trades so I can improve my trading skills.

Mastering my trading skills is so important for my trading system which only allows 7 pips or less off my entry point. I must constantly improve myself to be a consistent profitable trader.

I hope other Forex traders can also find this tool useful for their trading too.

Today, I traded badly because both my partner and I did not follow one of our trading rules which is not to trade when we have any trading platform issues.

The Internet Trade Mirror EA did not copy trade from the signal account to this slave account and we were trying to fix it while we were trading. After seeing missed two good trades, opened and closed on the signal account, that were not copied to this slave account, I started trading on the slave account and led to 3 losing trades.

After we syn the time on both computers of the slave and signal accounts, I took another trade on the signal account which was finally duplicated to the slave account as a loser.

Trading with tight 7 pips tight SL requires me to be totally focus on the market. I did not follow our trading rules that is why I ended up lost 8% on the slave account.

Forex trading is very tough and I must improve myself and follow all of my trading rules every day to have a chance to make some profits from the market.

Losing is part of Forex trading but today's losses are bad because I did not follow my rules. Luckily, we turned off the slave account when I recognized my issues.

Forex trading is very tough and I must improve myself and follow all of my trading rules every day to have a chance to make some profits from the market.

Well, another losing day but I am happy with my trading because I was trading with patient and following my rules. Keep it up.

I must build my trading skill every day because Forex trading is a life time challenge.

PS. We have no more issues on the Internet Trade Mirror EA. We just need to Syn the time.

I think I am making some major improvement on my trading skill. I did very well on both entry and exit because I was very patient to follow my trading plan.

Not that many pips (22) but 7.4% profit which is the advantage of tight SL.

See my chart and note for today's only trade.

Again, Forex trading is life time challenge. I must improve every day.

Just check Trade List to see the Chart and Note for today's trading.

I want to make this tread as my trading journal without a lot of interactions so I set the highest vouch hurdle for posting in this thread. I will update it every day I finish trading for those who are interested in tight Stop trading. Please come back to review my trades.

I believe there are many advantages for tight stop trading. However, it requires the trader to have high level of trading and mental skills (I will add those to the thread on regular basis). I must improve myself every day and understand Forex trading is a life time challenge of being the best of myself.

I will not trade tomorrow because it's a NFP day.

Thank you for reading.

If you are considering to trade with tight Stops, you must know the biggest disadvantage and how to avoid it or you can lose your account very fast.

Trading tight stops means you can get stopped out very quick and you can jump right back to another position if you don't have the mental skill to stay on the sideline for the best trading opportunity. If you find that you are trading very fast, you are overtrading which is the biggest disadvantage of tight stops trading. Your skills, both trading and mental are not working for you when you overtrade. You will soon find yourself in a big drawdown which is ok if you learn from your mistakes but some may want to search for another systems.

The only way to avoid overtrading is to be patient for the best setups. Tell yourself that you really don't need to trade every opportunity. You just need to take the right one for some good pips. Remember, no position is the best position because you are guaranteed not lose.

Trading tight stops requires life time commitment of being the best of myself. To be the best of myself, I must make improvements every day, both in trading and in person. I will share the benefits of trading tight stops as soon as I can.

Thank you for reading.

While Tight Stops Trading can be stopped out very quick when trading the wrong timing/direction, it's not a scalping trading because as a tight stops trader, I look for bigger profit when the entry is correct.

Today is bank holiday. I did not trade so I will explain a little about tight stops trading.

Instead of scalping that can easily lead to over-trading which maybe the most prevalent trading mistake that Forex traders make, a Tight Stop Trader must wait for his best setups (Yes, only the best) and get into the market when it's just about ready to move to his favor. Once the market moves and favors his position, he can see 3 times or more profits than his stops.

Can tight stop traders scalp? Yes, but must avoid per my experiences. I did scalp in the past and soon find myself taking too many trades with smaller profits with many stopped outs.

If you are considering trade tight stops, you must improve your trading skills and wait for your best setups (Yes, only the best setups) and look for 3 times or more profit than your stops.

I hope this can help a little bit. I will post "why it's important to get in to a moving market" instead of holding a position that goes no where next.

I hope that I can find a solution to receive your questions if you have any about tight stops trading because I currently set the vouch hurdle very high to allow fewer posts in this thread.

Thank you for reading.

Well, I took two trades and was lucky to move SLs to BEs for both positions or I would have had -4% loss.

Trading tight stops requires great skills and I am a little rusty after not trading for 4 days. I was mentally afraid to take risk and missed at least one good entry. I hope this is my warm up session and will trade with confident tomorrow.

Check my trade list to see how lucky I am to end with breaking even for today.

Forex trading is a life time challenge. You can see from today's trading that I must improve my skills, both trading and mental every day to have a chance to meet my trading goals, that are 1) to improve my winning ratio from current 44% to 65%. 2) to produce consistent profit of 3% per day. 3) to reduce total risk from 40% to 30%. and many more.

Good trading and see you tomorrow.

I did not close 2 winning positions with more than 12 pips each and end the day with -2.7%. I must work on my exiting skill which is very hard to master.

Check my trade list to see how I did today.

Anyway, even my entry points are good but I must build my skills on daily based, especially, the exit point. I sometimes missed many profits by closing the position too earlier or got nothing by closing position too late. Very tough on closing position but I believe I can improve it as long as I keep learning.

As many Forex service providers advertise that Forex trading is easy... Yes, Forex trading is easy ONLY if you have great mental skill...

I had another losing day not because my trading skill but my mental skill. I was behind so I wanted to earn everything back plus some health profit, that led me to not view the market correctly and let 2 profitable position with 12 pips or more to get stopped out again.

Check my trade list to see them for details.

Forex trading is not easy. I must improve my skills, both trading and mental, every day, to be a consistent profitable trader.

I need to be patient to wait for my best setups to get some health profit instead of trading at the wrong time for less profit or just getting stopped out.

No matter how skillful I am in trading, I can lose almost everything if I trade without Stops for any reason. That is how the last trade happen on Friday the 13th.

I am so thankful that it happened before we add more money to the account. Most important, we have a solution to prevent it from happening.

Must move on and build skills of trading 7 pips stops every day.

I think it's better to have my trading review right before my trading session.

Yesterday was the first day of the disaster on Friday the 13th and I did ok emotionally. I think I can trade much better with a little more patient and that is what I need to do today and in the future.

I must move on and forget about what happened last Friday. My new day, today and new balance is now at $1,258. All I need to do is to produce 3% daily profit consistently so I can do 15%/week and 65%/month.

I will be a much better trader if I can handle this DD well and I am building my trading skills every day.

+0.9% but missed the 80 pips up movement because I was afraid of taking risk on a strong down market yesterday.

The ability of taking risk is a must for trading or I will just watch the market. With all the risk management tools are in place. The worst I can go wrong is -6% per day. So I must trade with patient and determination by taking risk when I see opportunities.

I must work on my weaknesses and build trading skills every day as long as I trade the market.

Well, I made 6 losing trades after a 30 pip win so I believe I need to be on PIP (Performance Improvement Plan).

Here are the details of my PIP:

 

1. Increase my Winning Ratio to 55%
2. Must only take position that has 30 pips or more profit potential
3. Get my balance back from $1,280 to $1,600 or up 25% in 2 weeks

To achieve my PIP, I need to do the following:

 

1. Do Not Think about money
2. Focus on trading my best setups
3. First, constantly define and confirm market direction
4. Check any potential reversed signals
5. Wait for my best setups, most likely at pullback
6. Get in with the trend with confirmation on my best setups
7. If missed, wait for another opportunity instead of tracing the market by jumping in
8. If stopped out or closed (win or loss), repeat the process again
9. Don't need to force a trade if no opportunities.
10. Review and wait these on my notebook every day before trading

I also need to review my trades before and after a trading session.

Building trading skills every day is the only way to make profits from the market and it's not easy but achievable with efforts.

Winning Ratio: 1 win, 1 even and 1 loss below 55%
30 Pips or more Potential: All trades had 30 pips or more potential but 2 were in at wrong timing and 1 was out at wrong time. Must improve.

I don't need to think about money even it's on my PIP as long as I can perform the above.

No more trades until Monday but I must review my above plan every day to build my skills.

-6% for the above reasons. Must follow my PIP.

The 2nd trade did not reach my profit target of 30 pips or more and stopped out at BE. I must follow my PIP and look for 30 pips or more profit potential.

It's getting much better on handling my emotion and just need to build some confidences by making some good profit.