MightyOne wrote:TooSlow wrote:
1) Stop loss is the current daily high or current daily low.
Adjust your position size accordingly.
2) Take profit by moving stop.
3a)When trade is +5 or more, move stop to BE+1.
3b)When trade is +10 or more, move to to BE+5, or switch to trailing stop.
Optional exit is to exit part of trade position with a profit to bank it, move stop to BE+1 and watch the market.
Take profit when the question arises as to whether or not you should stay and you are unwilling to increase your position size by even a quarter; If it is incorrect to add then it is incorrect to wait.
100% of the time, if you are going to move your stop to BE+ANYTHING, take partial profits:
Scenario 1: you are up 5 pips, move stop to BE+1, you are stopped for +1.
Scenario 2: you are up 9 pips, move stop to BE+1, you are stopped for +1
Scenario 3: you are up 14 pips, move stop to BE+5, you are stopped for +5
"Why do I have to get stopped out? Why can't the trade run away and never look back?"
Because 90% of the time that is not what happens when you move your stops.
EDIT: I should clarify that "BE" in the scenarios below is defined as your entry price.
Scenario1: you are up 5 pips, reduce your position size by a third, move stop to BE+1, you are stopped for +2.333
((3/2)5 - 4) * (2/3): reduce by a third at 5, get stopped after a loss of 4, & normalize profit.
Scenario2: you are up 9 pips, reduce your position size by a third, move stop to BE+1, you are stopped for +3.666
$1 makes 9, $2 makes 1, and you are up $11.
$11 / 3 = 3.666 pips.
((3/2)9 - * (.6667) = 3.666
Scenario3a: you are up 14 pips, reduce your position size by a third, move stop to BE+5, you are stopped for +8.000
((3/2)14 - 9) * (.6667) = 8.000
Scenario3b: you are up 14 pips, reduce your position size by a third, move stop to BE+5,...
price retraces 5 pips, reduce your position size by half, you are stopped out for +9.333
$1 makes 14, $1 makes 9, $1 makes 5, & you are up $28.
$28 / 3 = 9.333 pips.
((3/2)14 - 5) = 16, ((2/1)16 - 4) * (1/3) = 9.333
If price takes off then simply increase your size by thirds.
MO, that is confusing to me. You are converting dollars to pips.
For 1 pip = $1.00
Scenario2 - Profit $9 on 1 lot and $2 on 2 lots. Total profit = $11.
What is the reason for all the extra math and converting to 3.666??
I just do not understand.