Breaking Even Trades

[Pipsaholic]

Good advice guys but I feel if you have a low account balance capital preservation is key to make the account bigger by minimizing losses by breaking even or even a small profit as long it isn't a loss.

 

[munchiedude]

i just went through intriguin video that explains, amongst other things, "cancel and replace" stop losses.

the logic is basically like this...if your going long, you're going to identify the last sup level as your stop loss place. well, if you place a trade and it moves in favour of your direction and makes a new high, wait for it to come back to a "higher low" and then replace you stop to that higher low"

im nt sure if that makes sense, but all im saying is to move your stop los at suitable times to the next sup level. this doesnt mean it will be move to break even but just to move to minimise the risk.

 

[Hotch]

i just went through intriguin video that explains, amongst other things, "cancel and replace" stop losses.

the logic is basically like this...if your going long, you're going to identify the last sup level as your stop loss place. well, if you place a trade and it moves in favour of your direction and makes a new high, wait for it to come back to a "higher low" and then replace you stop to that higher low"

im nt sure if that makes sense, but all im saying is to move your stop los at suitable times to the next sup level. this doesnt mean it will be move to break even but just to move to minimise the risk.

Precisely! Only thing I'd add is you want your stop slightly lower than the support so price can "bounce" off it. Personally I enter at what I think is support with a tight stop, so if the support holds, then moving my stop to b/e would be foolish (imo) as I'd get out, wanting to get back in at support immediately.

 

[Pipsaholic]

LMAO!

im just a noob but FWIW i do use move to b/e stops, partly to eliminate risk as much as possible and to gain experience in a trade. since most traders lose money la la la, for a beginner, a b/e trade can be considered a "win" if you gain experience from it.

just my 2 pips

Right on especially if your new to the game and with an account lower than £5k i would strongly use breakeven stops until you have a much larger account.

i just went through intriguin video that explains, amongst other things, "cancel and replace" stop losses.

the logic is basically like this...if your going long, you're going to identify the last sup level as your stop loss place. well, if you place a trade and it moves in favour of your direction and makes a new high, wait for it to come back to a "higher low" and then replace you stop to that higher low"

im nt sure if that makes sense, but all im saying is to move your stop los at suitable times to the next sup level. this doesnt mean it will be move to break even but just to move to minimise the risk.

Do you take into account the type candlestick formations at support or resistance points or just support at one level?

 

[munchiedude]

Right on especially if your new to the game and with an account lower than £5k i would strongly use breakeven stops until you have a much larger account.



Do you take into account the type candlestick formations at support or resistance points or just support at one level?

side question: how do you do those multi quote posts?

im nt sure i understand your question pips but i will try explain it again and if i got time, i post a chart to explain.

lets say you go long

place stop at last sup lvl (low candle with 2 to left and 2 to right higher than the low candle).

so the trade moves in your favour upwards.
it then retraces and forms a higher low (again, a low with 2 candles to left and right to confirm the low).

the uptrend then continues and MAKES A HGHER HIGH.

at this point (making higher high), you can move original stop loss to the right and placed at the most recent low.

not teaching to suck eggs here so no offense intended, just trying to explain it best i can.

so from the technique above, it does not depend on candle formations as in order to cancel and replace, the price must make a higher high first.

lol, its hard work explaining it, but it works for me, better than moving s/l to b/e automatically as the cancel and replace effective chases the market and locks profit until u get stopped out whilst simply moving to b/e after certain number of pips may lead to being stopped out prematurely.

 

[munchiedude]

hi chaps,

ive got some time and thought i'd provide some graphs to show what i mean from cancel and replace. as they say, a picture says a thousand words

 

[Pipsaholic]

so would you wait till price retraces like 50% or 61.8 then use a stop and cancel S/L?

 

[munchiedude]

hi pips,

i havent implemented fibonnacci retracements into the cancel and replace partly cos im still learning it and partly cos i wanted to keep things real simple at the early stages.

also, the single most important criteria in the cancel and replace s/l is the when to do this.

i would only cancel and replace if the candle makes a new low (doesnt have to close a new low) as this demonstrates to me at least that price action is still able to make new lows therefore giving me confidence that downtrend is stil valid.

how much the price retraces is not relevant with this as ultimately, if i was shorting in the above scenario, if it retraces back to make a higher high, then the break was invalid and there was no downtrend, merely consolidation/sideways movement.

nt sure if thats clear?