Hard stop: Breakeven or trailing stop? | Forex Factory

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Hard stop: Breakeven or trailing stop?

  • #1
  • First Post: May 22, 2013 12:33pm May 22, 2013 12:33pm
hi guys,

I want to ask the experienced traders here which type of SL is best. Is there any advantage to moving SL to breakeven or using trailing stop.

thanks
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #2
  • May 22, 2013 1:27pm May 22, 2013 1:27pm
Depends on TF, your trading style and flows on market.

IMO TS is good when you don't set TP and count on general dynamic on market (strong moves like today S on EURUSD).
Personally I don't use TS because of "mechanic" style of this method. TS don't see important price levels.
TS as SL is simply stupid because assumes that price "have to" go in direction good for us without any bigger retractions. Noone has 100% entry accuracy in longer time.

BE is better but... as I said everything depends on strategy.
  • #3
  • May 22, 2013 2:26pm May 22, 2013 2:26pm
I use only fixed StopLoss but with a little criteria...

In case of Bullish order: TakeProfit = EntryPrice + [(EntryPrice - StopLoss) * 1.618033988749895]

In case of Bearish order: TakeProfit = EntryPrice - [(StopLoss - EntryPrice) * 1.618033988749895]

Is all about the Golden Ratio
  • #4
  • May 22, 2013 2:56pm May 22, 2013 2:56pm
For me Time Frame should be one of your basis. 30mins,15mins,5mins and 1min time frame should be given a Breakeven stop when in profit because prices tend to be more volatile for your stop. However for time frame 4H above a trailing would be necessary for you to ride the overall trend but this would be a tough one than Breakeven because you need to find the safest place to your price trailing stop unlike Breakeven. Breakeven is easier to use however Trailing stop will make a difference by protecting your winners and not letting them turn to loss or 0.

Understand your trading personality first because in the end your the only one who can make it work for your system.
"I made money every time you place your Stop loss too close to ME"
  • #5
  • May 22, 2013 3:47pm May 22, 2013 3:47pm
Quoting ouissam
I use only fixed StopLoss but with a little criteria... In case of Bullish order: TakeProfit = EntryPrice + [(EntryPrice - StopLoss) * 1.618033988749895] In case of Bearish order: TakeProfit = EntryPrice - [(StopLoss - EntryPrice) * 1.618033988749895] Is all about the Golden Ratio

Time turns trend. - W.D. Gann
  • #6
  • May 22, 2013 6:58pm May 22, 2013 6:58pm
Quoting ouissam
I use only fixed StopLoss but with a little criteria... In case of Bullish order: TakeProfit = EntryPrice + [(EntryPrice - StopLoss) * 1.618033988749895] In case of Bearish order: TakeProfit = EntryPrice - [(StopLoss - EntryPrice) * 1.618033988749895] Is all about the Golden Ratio
That statement, taken in and of only itself is totally ridiculious.
At what point are your entries taken? Do you simply decide to
be a bull/bear at some random point and let your calculation do
its magic?

Is the "Golden Ratio" the only thing you take into consideration
with total disregard for all else? Please explain further as I intend
to learn from you.
When the Joker is in the deck.. fear not and play it well
  • #7
  • May 22, 2013 7:07pm May 22, 2013 7:07pm
Quoting pemully
which type of SL is best. Is there any advantage to moving SL to breakeven or using trailing stop. thanks
There is no "absolute truth"

Had I set a hard stop I would have been stopped out on this trade
Often though... if you DON'T set a hard stop.... you're screwed because
of living on "hope". Trailing stops suck because they rob you of "what might
have been" ?
Only you can decide.
Attached Image (click to enlarge)
Click to Enlarge Name: wut.gif Size: 25 KB
When the Joker is in the deck.. fear not and play it well
  • #8
  • May 22, 2013 7:07pm May 22, 2013 7:07pm
Quoting ouissam
I use only fixed StopLoss but with a little criteria... In case of Bullish order: TakeProfit = EntryPrice + [(EntryPrice - StopLoss) * 1.618033988749895] In case of Bearish order: TakeProfit = EntryPrice - [(StopLoss - EntryPrice) * 1.618033988749895] Is all about the Golden Ratio
i do it in a greater way and i will not show
but from my opinion moving stop loss to breakeven is better to be done in all conditions
focus while relaxed to see better
  • #9
  • May 22, 2013 7:35pm May 22, 2013 7:35pm
Quoting orabi
{quote}i do it in a greater way and i will not showbut from my opinion moving stop loss to breakeven is better to be done in all conditions
Can you elaborate as to what you "greater way" is all about.
On the following chart is shown several "pivots". Can you suggest
at which pivot I should exit the trade, because I DON"T know.

If I were to set a stop at BE at this point is there ANY WAY possible
that would benefit me, aside from saving me from my own stupidity

which seems to run rampant at times.


Regardless, I know you "do it in a greater way" which is very admirable
Attached Image (click to enlarge)
Click to Enlarge Name: wut.gif Size: 33 KB
When the Joker is in the deck.. fear not and play it well
  • #10
  • May 23, 2013 8:14am May 23, 2013 8:14am
seems there is no easy way out.
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #11
  • May 23, 2013 8:27am May 23, 2013 8:27am
Someone once said that getting out at BE was like not getting paid for a job done. Sounds about right.
  • #12
  • May 23, 2013 9:21am May 23, 2013 9:21am
Trailing stop loss to BE price is the best. I used to trailing the initial stop loss to BE price + x pips away.

Below is my EA testing by using trailing stop to BE + x pips
Attached Image (click to enlarge)
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  • #13
  • May 23, 2013 9:38am May 23, 2013 9:38am
Quoting ~bull.bear~
Trailing stop loss to BE price is the best. I used to trailing the initial stop loss to BE price + x pips away. Below is my EA testing by using trailing stop to BE + x pips{image}

thanks...i bet moving to B.E reduces drawdowns and also profits as you cut out some winners.Its seems its always a compromise between the two. Have your tests with other SL types shown the same?
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #14
  • May 23, 2013 9:39am May 23, 2013 9:39am
It makes no market sense to put a SL at B/E just because you don't want to lose money. Would you open a new trade in the opposite direction at that price? Because essentially that is what you are doing.
H.D
  • #15
  • May 23, 2013 9:49am May 23, 2013 9:49am
Quoting Hilar
It makes no market sense to put a SL at B/E just because you don't want to lose money. Would you open a new trade in the opposite direction at that price? Because essentially that is what you are doing.

mmmhhh
wo-yoy! wo-yoy! wo-yoy! wo-yoi! wo-yoy-yoy-yoy!
  • #16
  • May 23, 2013 10:07am May 23, 2013 10:07am
Quoting pemully
{quote} thanks...i bet moving to B.E reduces drawdowns and also profits as you cut out some winners.Its seems its always a compromise between the two. Have your tests with other SL types shown the same?
Trailing stop loss to BE method depend on overall trade management system, it won't be useful for just 2 opened positions because you cannot earn much.

I use averaging up + trailing stop to BE + grid + hedging with decreasing lot size for subsequent grid level. And i only activate trailing stop to BE function if 3rd grid level position is triggered. So risk would be 1st and 2nd grid level if price reverse. However, i have opened opposite direction model to hedge. If you refer to my thread journey, you can check more about this, and i name this method as math model.

My idea is to reduce any risk and raise more profit as possible. Importantly, RR must be good for one model.

I have done many test, so my finding is the worst to best as below,
Stop loss > breakeven > trailing stop > model
  • #17
  • May 23, 2013 1:17pm May 23, 2013 1:17pm
As this thread shows, I really think it depends on the overall strategy. I personally use a SL system in which I advance the stop once price reacts in a favorable direction. Trailing stops just don't cut it for me...the market must retrace no matter how bullish or bearish it may be. Finding logical levels that indicate a break in the trend and disaffirm my market outlook always make the most sense.
"Serenity, you sound like a frustrated Canadian living your life in the US"
  • #18
  • May 23, 2013 2:53pm May 23, 2013 2:53pm
It depends on the strategy used - I think that fixed S/L and TP is best with a countertrend strategy where you are trading between support/resistance levels. But a trailing stop with no TP is better when trading with the trend and trying to ride it indefinitely, until the trend reverses.
si hoc legere scis nimium eruditionis habes
  • #19
  • May 24, 2013 12:32am May 24, 2013 12:32am
Quoting pemully
{quote} mmmhhh
the market moves erratically, but traders try and move their live equity curve smoothly. So even when you get the direction right...

Let me explain with a picture
Attached Image (click to enlarge)
Click to Enlarge Name: Equity vs Market.png Size: 561 KB
H.D
  • #20
  • May 24, 2013 2:28am May 24, 2013 2:28am
Quoting Hilar
{quote} the market moves erratically, but traders try and move their live equity curve smoothly. So even when you get the direction right... Let me explain with a picture

Emm...right. That is why it is very hard to trade smaller time frame instead of bigger time frame. In bigger time frame, we obviously ignore this minor correction, and concern about the direction of the trend. Therefore, loss is minimized for trading bigger time frame. However, the profit come from this time frame is not satisfied by oneself, because trader is only get x pips for time y. But in smaller time frame, the trade might get 100x pips for time y if he is doing right. Meaning to say, the trade get small income for trading bigger time frame (Less trades), or the trader get more income for trading smaller time frame (More trades).

IMO, i think it is possible to do equity curve system by trading multiple pairs. The system needs very good mathematics calculation and a few of management techniques, maybe MARKOWITZ PORTFOLIO THEORY,THE CAPITAL ASSET PRICING MODEL and etc. If you want this PDF for these theory, you may PM me your email. I think it is out of this thread topic if i post the thing here.
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