Stop Loss or Hedge It?

You got a position opened and the market is about to hit your SL (Stop Loss) value.


What do you do?


Quickly remove the SL value or Hedge it or you just let it go and then smile ?

You play 'hide n seek'. Just keep moving the sl until you get cornered & found by a margin call. This means you lost the game but you just play again with a

Only kidding of course. Seriously I would keep the sl where it is if it's part of the plan, simple as that. If hedging is part of the plan then that's also what should be done. If you move the sl (hard or manual) because your not sure what to do then you are not trading, you are just playing like hide n seek.

Good luck.

Either hedging or SL, never let it run. Using hedging allows you to use bigger positions, as well as having the chance of getting back the failed initial trade back.

You just smile my friend? Lol really?

Thanks man for your comment.

What do you mean by "never let it run?". You mean manually close it?

Hedging is for the very experienced traders. If you are not good at identifying the turns in Price Action, ie, trend change both short-term and long term, steer clear from hedging. In that case, take the Stop Loss on the chin and wait for the next set-up/trade

“you just let it go and then smile”

I mean just waiting for the trade to come back to your entry, without having either a pending or psychological SL.

"... or you just let it go and then smile ?"

... well sometimes I dont smile ... I say some *!#/*;^~

https://www.forexfactory.com/search....archid=6069544

How many threads in FF had discussed the same topic..

You can hedge with a slightly bigger lot size and just use a VERY tight SL. NEVER let the hedge trade go into negative. Chip away at your initial loss until the entire trade is in profit and then close everything.

SL is part of trading ... Dont Scared from SL ... you emotionally attached with your loses which is not good ...

If you don't know what to do, you should walk away from trading. Losing trades should be accounted for in your system, money management, and trade management. If it's not, you've got bigger issues than your stop getting hit.

Same for hedging. Professional traders don't use hedging for loss avoidance. It's for risk reduction to lower the loss amount and a good trade will lose the hedge and the winner will easily absorb it. Options are by far the better hedge vehicle than using a broker that lets you open a position in both directions.

I think your question is overly simplistic. First of all you have not mentioned any reasons for your hypothetical trade. Most traders I know (myself included) open a position thinking that price will continue to go in the direction of their trade...otherwise why open the position at all. Following this logic then the placement of a stop loss is presumed to be protective in nature. Its whole concept is to protect against catastrophic loss - much like an insurance policy. The idea is you are willing to risk a small amount to realize the potential (and theoretically larger) gains. The stop loss is (generally speaking) placed in a area where - if hit - price action has negated your trade premise and thus you will either reverse your trade premise or wait for another opportunity in the chosen direction.

I cannot say (and you have not stated here) where and why your stop is placed where it is...but if you are using a stop in the above described manner why would you move it farther away and risk even more of your account? Clearly the market has disagreed with your trade premise, either WHERE you entered or WHEN you entered. So you miscalculated and the whole point of having a stop is to limit your risk...WHY would you move it??

Further, if you think price is going to move opposite of your chosen trade...instead of "hedging" why not just stop and reverse? Take an even smaller loss than your original stop, and take advantage of the counter movement in price.

So this then brings up the greater underlying issue (one which you have not addressed here) and the "elephant in the room". Did you miscalculate your position to begin with? Does your trade premise determination need work? Or did you participate too soon, or too late? Did you actually have a plan with which to execute, or did it just "look right"?

Stops helps us evaluate our own behavior more than that of the market. My advise (not knowing anything further about your position) would be take your loss - and I hope it is a small one. Re-evaluate your reasons for your position. Ensure that you have an edge and are following the conditions that work best for your edge. If all looks good and you would still participate in the same place for the same reasons...congratulations!! Your trade didn't work out and your stop loss fulfilled its purpose and kept your loss under control. It happens to all of us and it is just part of the cost of doing business.

Remember fear of having your stops hit is kind of like a someone who wants to be a boxer but doesn't want to take a punch...

hmmm... you are asking "what do you do" from a community of 99% losers?

Be smart.... collect all the data from responses to this thread and do the opposite!

My response... SL and Hedging is the only way to limit risk... remember, I said to do the opposite :-)

extrem easy.
when you have a strategy use your strategy SL when you learned the basics or are experienced.
when you are a beginner use a SL or hedging. but one rule is for sure, only beginner use hedging, never ever i have seen one hedging who was not a beginner in trading or programming because of the disadvantages of hedging and not one advantage (without its easier for beginner programmer) , or who was thinking he was not a beginner but always was. avoid all people who tell you hedging is better, they are for sure bad in programming or in math.

never ever remove the SL, then you strategy will not work any more, or you habe done somethiong wrong inside the strategy creation!
removing SL will increase the risk dramatic.

they is no different..

Step 1 -- delete the stop loss
Step 2 -- price average
Step 3 -- ????
Step 4 --profit