Stop Loss Management Question

Setting a stop loss is one way we interact with the market other than opening and closing positions.

My question has to do with altering the stop loss once one is in profit (say initial stop loss was 50 pips, and one is now in profit by 50 pips). Should one always set the stop loss to break even, or try to perform technical analysis to determine where the price would hit that would signal the trend is reversing?

One thought I had was that setting the stop loss to break even may not be the best idea because it could hurt your edge, especially if your system is trying to go for 100+ pip wins. But for psychological reasons, the break even point is very good. What are your thoughts?

This is ultimately a personal decision, but at the stage I am in, preventing losses is the main priority. Once a trade is at 50 pips profit, I will move stop to BE or BE+1. Then it is a matter of personal preference on whether to trail or take profit somewhere along the way, but make sure your system dictates which, and follow it.

andersenws

i agree with the last post, where you place your stop loss is your own decision. it depends on how muhc drawdown you can take financially and psychologically, also on many other factors. but for me personally i like to hit 30 pips then run a trail so that i am garunteed atleast those 30 pips.

Another thing you can do is, once you get to your 50 pips and you move the SL. When you move the SL, take a portion of profits off the table. This way you ensure yourself of a little profit. If you feel you are in a ranging market, when support or resistance is getting close to being "touched get ready to close the trade or take some more profits off the table. Or if the range does get broke, that is when you decide if you want to add to your trade.