moving stop to break even

jacknapier

Active member
157 2
See the attachment. This happens constantly. I bring the stop to break even, then it stops out and then continues to nail my target and then some. Well, except when I'm wrong, of course. The problem is that if I let it run without bringing it up to break even then it turns around and stops out. Always. It's uncanny. It makes me think there's something psychological going on. I'm curious if anyone has any idea what it could be?
 

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member275544

0 0
See the attachment. This happens constantly. I bring the stop to break even, then it stops out and then continues to nail my target and then some. Well, except when I'm wrong, of course. The problem is that if I let it run without bringing it up to break even then it turns around and stops out. Always. It's uncanny. It makes me think there's something psychological going on. I'm curious if anyone has any idea what it could be?

i see two entries on your attachment, both would have hit their target, before you even thinking of moving to break even. i cant see from this what the issue is :confused:
 

jacknapier

Active member
157 2
i see two entries on your attachment, both would have hit their target, before you even thinking of moving to break even. i cant see from this what the issue is :confused:

You're right. I saw that too, but I was away from my computer at that time so it was nearing my target when I came back. I don't usually like to get back into a trade too fast as that's led to losses in the past.
 

Splitlink

Legendary member
10,850 1,233
See the attachment. This happens constantly. I bring the stop to break even, then it stops out and then continues to nail my target and then some. Well, except when I'm wrong, of course. The problem is that if I let it run without bringing it up to break even then it turns around and stops out. Always. It's uncanny. It makes me think there's something psychological going on. I'm curious if anyone has any idea what it could be?

Stops are the single, major, cause of uncertainty with all traders, especially in the first years. My rule, which I try to obey, is

Once you are in profit, get out at a profit. There will, always, be another time.

Where do you place your stop? The chances are that they are in the same place as lots of other traders.

If it is within reasonable reach, you can be sure that the market will spike and clean the whole lot out. It is business logic and the market is not after you, specifically, although it might seem to you that it is, but is after hundreds of stops, of which yours is only one. I try to place mine well away, in case there is a computer crash, but stop manually. Even after all these years, stop placement is always a problem and I am not always successful.

If you have to leave, then try targets, as well. I do that when I go to work, at lunchtime. There is a spikey period, then, and I put my target at a point worth having. Sometimes, not always, the result can be satisfying..

Remember to keep the account healthy, even if is not by much. Losing can be dispiriting. Much better to be a little ahead, a big move will come.

Good Luck
 

BeginnerJoe

Senior member
3,329 350
Have you ever wondered the guy on the other side of the trade liked to loose money less than you do ? Or, did you imagine you were trading against an ATM ?
 

tar

Legendary member
10,443 1,313
Have you ever wondered the guy on the other side of the trade liked to loose money less than you do ? Or, did you imagine you were trading against an ATM ?

Most likely the other side of his trades is a marketmaker who is willing to buy at the bid and sell at the ask to gain the spread between them .
 

Shakone

Senior member
2,458 665
I'm curious if anyone has any idea what it could be?

Not sure what you're really asking for? It is quite likely to be selection bias, in that you notice more the times when you left your stop below the low and price took it. Also when you were planning your strategy, perhaps you noticed on the charts a lot of times where price turned and went on a nice move, but you didn't pay special attention to just how many of your entries would be stopped out if you moved them to breakeven every time.

Nothing disastrous about a breakeven. But you have to commit to a way of trading and not just moving your stop to breakeven because you have a fear that if you don't 'they' will come and take your stop.
 

new_trader

Legendary member
6,571 1,429
1) Trade with Tighter stops.
2) Only move your stop to secure a profit.
3) Abandon the idea of break evens.
 

Lord Flasheart

Legendary member
9,796 975
two other options
1) take 1/2 off and leave 1/2
2) take 1/2 off and leave stop in original place giving a free trade
 

new_trader

Legendary member
6,571 1,429
two other options
1) take 1/2 off and leave 1/2
2) take 1/2 off and leave stop in original place giving a free trade

I always assume people are trading the minimum possible. But yes, I agree, if possible, take half (or more if possible) at an immediate profit and leave the stop alone. Once the market has made a significant move and you're confident your figuring is correct, move the stop to secure a further profit. Trail your stop each time the market advances in your favour.
 

Splitlink

Legendary member
10,850 1,233
This probably is the best bit of advise on this forum. It takes long time to realise this simple bit due to our natural bias to look for opportunity costs i.e. what might have been. Never regret for stopping loss or even more importantly jumping for a small profit.

Some study showed that most of the trades that result in big losses were in small profit initially that was not closed due to temptation a much bigger profit / greed.

Minimize your largest regret.

I've been trading for a long time and, believe me, I've missed some beauts. Yesterday I shorted the Dow, took 10 points and saw it go down another 25-30!

This happens all the time and, at one time, I cursed like hell. Not any more, I'm still alive. Just forget it and go for the next one.
 

Splitlink

Legendary member
10,850 1,233
1) Trade with Tighter stops.
2) Only move your stop to secure a profit.
3) Abandon the idea of break evens.

2) is better than 3)

Think carefully about 1) My jury is still out on this. I think that you have to be flexible and reasonable. If it is more than you want to risk, leave it. Better than have it close and likely to be triggered.

Anyone can do that and the trouble is that they believe that they are selfdisciplined and all that BS, when the average volatility of the price made it likely that the stop be triggered, right from the start.

A close stop is a chance that one is taking. If one believes that the top has been reached, for instance, a short with a close stop is fine because the profit possibiliies can be excellent for little risk, But, always, assume the worst and watch how the account will be affected in the event of failure.
 
 
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