Stop Loss Question
Posted: 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
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.
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
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.