Query: Moving Stops to Breakeven

Quoting rjb1024

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Jim, thanks for your very interesting contributions. I have a couple of questions.
(1) You emphasize price action but do you see a place for other indicators ??
(2) The CCI indicator reflects price action relative to MAs. Have you ever used this indicator ??

Cheers
Ron, Australia

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Quoting diallist

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(2) Regarding the maxim "Never let your winners turn into losers". If this is taken literally, then the stop should be moved to breakeven the moment the trade moves into profit, even if only by one pip. I did this frequently the last two months to achieve my 72% run up in equity. Naturally, this resulted in a lot of breakeven trades. No problem. I just got back in on the next pullback. Is this a good technique or will it be detrimental in the long run?

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Quoting james16

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this is a very interesting question and one of the best i have seen on this forum.

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Quoting james16

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so my answer is maybe you dont need to do it after 1 pip but there sure is nothing wrong with 10.

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Quoting firehorse

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Hi,Thanks to Diallist for asking the question and for James for confirming it.

It's taken a while for me to build it into a spreadsheet to examine all the what if scenarios thus the slow response. In my own fledgling discretionary system (8 pairs), in the most startling scenario, in one week it went from -429 pts to +71 by moving stops to break even at 5pts + spread. At -429 I would have abandoned the system and gone onto something else but at +71 it's still in the running

Anyway it shows my discretionary skills are still rubbish but improved trade management by moving quickly to BE makes an initially rubbish system possibly viable!

So thank you again to both Diallist & James

Best regards
Alan

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Quoting diallist

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That's great work Alan! Very encouraging! Would you be willing to share your spreadsheet, provided it doesn't give away your system?

Dial

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Quoting firehorse

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Hi,

Check your mail

Regards
Alan

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Quoting hagadol

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Hi - I am new to this forum, so hi to all.

The moving of the stop to B/E and after that the method of trailing has been an issue to me for many months, something I have played around and tested. At least now I am confident, that for the system I trade, I have it optimised.

It clearly depends on your overall strategy, time frame and risk /reward, however as a general comment, I would suggest that the stop needs to stay in a 'Value Zone' so that there is more edge to your trade paying you than stopping you out for B/E.

I am trading Cable and EurJap of a 1min / 5 min chart, trying to trade in the direction of the higher time frame trend (30min, 1 hour). Simular to Alexander Elder's 'Triple Screen' system. I am entering off support / restistance levels with the support of oscillators and pivots.

My initial stop depends on my entry point. If the most recent support is at 20, if I long at 20 I will place my stop at spread (3) +5 = 12. However I enter at 22, I will still place the stop at 12, meaning spread +7. I consider spread +5 from the previous support level to be 'Value Zone"

While it can feel comfortable to move the stop to B/E at the earliest opportunity, this comfortable feeling does not need to mean that it is more profitable. I like to consider the price moving in a range rather than just in exact pips, at any time. So I would not move my stop to B/E, while B/E is still in the immediate range and has a high probability of being hit. Best to leave the stop in the original position (value zone), or at least with the protection of knowing that for price to get there, it would have to make a new recent high or low.

I used to move the stop to B/E at around +8 and felt relaxed and comfortable. I kept telling myself that I was now playing with the house money, which in reality is a little short of the truth, IMHO.

After comparing this method to the adjustment I am about to explain and making the move to it, my results have rocketed:

Stop to 5/6 pips below support at +13. I close a 1/3 of the position here, so i am still getting paid, even if there is a stonger retest of the support level and I get stopped.

If I am unhappy with my entry, I might move the stop to B/E at +13. Though clearly leaving it at -6 from the previous support is usually safer, since there is often a retest of that support level.

Stop is then moved to B/E and trailed after retraces.

Usually if I have entered a trade, with the stop the 5 pips away from the support level, if there is a restest, my edge would still stand, so my moving the stop to B/E would take a way the edge, as there is a good chance of the stop being hit, as price has recently been offered at that B/E level.

So to sum up - Best to move you stop to B/E, when there is a reduced likely hood of it being hit rather than crave the certainty of not losing by moving it to early.

Sorry for waffling, hope you get the gist.

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Which four pairs do you trade?

On what time frame do you use your 30 pip stop? Hourly?  Wouldn't you have to make it large on the Daily?

[Is your 5-15 pips per trade or per day?
What do you mean by (4/5=20)? 

Quoting james16

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hey Hun, .... I pick my entries with the utmost care and risk 15 to get 10 to 15 trading 30 to 60 mini lots. ....

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Quoting Norbecker

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I have my own beliefs (or lack of) about religion but I keep them to myself as it would most likely lead to a rather long way off topic debate. Their are many places where people can discuss their religious beliefs. This board has improved a lot recently and I do not want to start another flame war or take this thread way off topic. Please do not take offence (Dialist and others) but can we stick to discussing trading forex?

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Quoting hun83

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It seems when I open my position ,...all the hell break loose jumps 5-15 pips against me,I'm sweating , shaking, but I don't give up
I just can't get my entries right,but from experience ,leave my trades to mature & at the end give me the result.
At the end it means ''money management''...in my humble opinion the most important tool in the trader's toolkit.....

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Quoting diallist

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Quite right Norbecker. My apologies. I've deleted my post.

Dial

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Quoting Isotonic

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OK I'm a bit late to the party on this thread but I thought that another old maxim:

"Buy on the dips [if the trend is up] or sell on the rallies [if the trend is down]"

was a common way of saying wait for the pullback and take your position.

Also if there is a breakout (and not a fakeout) from a consolidation pattern then also wait for the pullback.

I think Jim has already said to look for confluence areas for pullbacks here or on his thread - MAs, fib rets to which I would also add valid trendlines that have been tested at least a couple of times.

I think there are two options here then:

1. Watch the price action around the pullback using price patterns and/or bar patterns (like in Jim's thread) or

2. Place staggered limit orders ahead of time to where it is likely to occur if you don't want to screenwatch 24/7. This might mean you could guess wrong and be stopped too early or be too conservative and miss the move altogether.

Both with the added validity of confluence or other information.

Both could be done with tighter stops for a better risk/reward ratio rather than trying to chase the initial break.

I thought pullbacks were a well understood and practised technique, thats all!

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Quoting james16

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very nice isotonic, you are a great contributor to this forum. just in case no one has ever told you that. jim

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Quoting james16

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well dubya its funny you asked this. the truth is that i learned price action from many places. if you start searching you will not find a whole lot on it. its bits and pieces. the best one i have ever found is by todd mitchell. its two grand but worth it in my opinion. before you do that let me throw out something i have been working on with merlin. within a month or so i will be starting a private section on the forum. i am putting together the initial sections right now. heres the scoop. it will be around 50 to a 100 bucks a month. to you and anyone else that might be interested it will be worth a hundred times that, i know because thats what i have personally spent learning what i will teach. there are also more goodies that i wont go into right now. one of the requirements will be to demo an account while trading off of a chart with nothing but price. thats right, no indicators, no fib ret, no pivot levels, nothing. do you or anyone else think they could be succesful at this business with your "systems" if you could already be succesful with nothing on your charts but price. stick with me 2 or 3 months and i will take you where very few traders ever go. i made a statement several months ago that when i decided to do something along these lines that it would be affordable and special for those of you here on the forum. i have already been told i am crazy to do this for this amount of money. i dont care i am going to keep my promise. for those of you who start this with me it will never go up. and when a course and alert service follows, which it will, my friends here will be remembered then also. this is a new adventure for me and where it will lead i dont know, but i do know i value the relationships i have made here and i plan to honor those of you who start this adventure with me. jim

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