Stop Loss Question

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Brookmyre
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Stop Loss Question

Postby Brookmyre » Mon Mar 08, 2010 9:39 am

Hey all.....I have a question about stops.

I know plenty of ppl on here have different opinions on stops, dont move them, move it to break even, if price closes against your entry close it, man up and take the full stop :lol:

But I was wondering....is it worth scaling out of a stop?

If you were scaling out of an 18 pip stop 1/3 of your position every 6 pips it goes against you, then you effectively get an 18 pip stop for the same cost as that full position and a 12 pip stop.....but gaining the opportunity to buy back into the trade at the same or better price if the PA turns back in your favour.

But the bigger issue is that you have a full position on at entry rather than scaling into a position and reducing profits...... while minimising risk by de-leveraging as price moves against you without compromising the room for the trade to work....

Maybe this is a dumb idea. I don't know. I guess if price has moved against you by almost 20 pips your original analasis may have been pretty flawed anyway, but I'd love to hear any and all opinions, for or against.
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TygerKrane
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Postby TygerKrane » Mon Mar 08, 2010 5:34 pm

I for one like that idea, I tried that for a bit b/c I agree on giving your initial analysis some room to work in (back when I was trading off of indicators & oscillators.) I've only stopped doing that b/c around the same time, I decided to give TRO's methods a more earnest study, so I moved to scalping methods and keeping stops @ around 10pips.

I am testing out targeting 4pips and then moving stop to -1 on remaining lots.
My broker allows me to set stops/entry orders 5pips away minimum, but I swear waiting for that 5th pip is trouble for me, so i try to lock in 4 -- if the -1 stop is hit after that, then I net 3pips on the trade.

**Krane catches Tyger** !>I'm here to chew bubble gum and make major pips...and I'm all out of bubble gum.<!

Brookmyre
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Postby Brookmyre » Tue Mar 09, 2010 1:02 pm

thx for the feedback TK
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noone22
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Postby noone22 » Tue Mar 09, 2010 11:34 pm

adding to a losing trade?
well well, I was taught, that this thing is big no no.
Nobody proved me opposite yet.

Moreover, 10 pips later (in scalping world) -
has nothing to do with previous signal at all.

If you're still moving with up trend (should you went long first) -
you're fine, but this is not always happenning, as you know.

Humble
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Postby Humble » Wed Mar 10, 2010 1:02 am

The thing about stops is that they get you stopped out. I understand those with very deep pockets prefer not to use them. The rest of us need to place a stop where it would not interfere with the trade, if the trade goes as expected. If the trade does not go as expected you should close it rather than wait for the stop to be hit.

I think the point of some of the MO/TRO teachings here, are to enter a trade with memo and so give the stop some breathing space. Thus giving more time to make a profit before the stop is hit.

As es/pip likes to say, "take your profit or I'll take it from you".
Is price closing higher or lower than something? Simple yet powerful question. ..MO

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bredin
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Postby bredin » Wed Mar 10, 2010 2:00 am

I think its more risk averse to scale into a trade, than to take a full position and stop out a little at a time.

G.
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Brookmyre
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Postby Brookmyre » Wed Mar 10, 2010 2:37 am

Noone: I wasnt talking about adding to a losing trade, but dismantling your position as price goes against you.

Humble and Bredin: thank you both for your input :)
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newschool
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Postby newschool » Thu Mar 11, 2010 2:39 am

Cut your losses, let your winners run.

I will add that : never average-down, but average-up when you can !

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Postby aliassmith » Thu Mar 11, 2010 2:43 pm

bredin wrote:I think its more risk averse to scale into a trade, than to take a full position and stop out a little at a time.

G.


Actually I think it is a big player move. In a live market, ie Stocks,
Futures etc. someone always has to be on the other side of your trade.

If you buy in 1/3 @ 30,000 shares for 50 then wait to see if the market
moves up buy in 1/3 at a higher price then you help to create momentum.

Have to be really on your chess game to play big. Fool enough of the
herd to make your move. :twisted:

AS to the original post: A Stop-loss is what you make of it. It has
to be tailored to your trading method and psychological make-up.
Trade Your Way as Long as It Makes Money!

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