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Breakeven Stops: At Entry or 1-2 Tic Profit?

  #17 (permalink)

Boise, Idaho/USA
Trading Experience: Advanced
Platform: Ninja Trader 8
Broker/Data: IB, NinjaTrader Brokerage, Schwab
Favorite Futures: ES
Posts: 123 since Sep 2014
Thanks: 35 given, 209 received

Back in the day when I was in MBA night school I learned two very important lessons that are per-tenant to this.

A very large tech firm with a world wide monopoly on a very common office technology was not interested in sophisticated analysis. All the managers were held accountable in a way that made a simple payback calculation the go no go decision rule. So there is always a better way but that does not make it the best.

We also learned by experiencing an emotional disaster involving tinker toys, that the best plan in the world is worthless if you can not implement it in the real world.

To the original question. Many trading systems use a scale out. Price Action Trading System takes profits on half of the entry at 4 ticks and then moves the stop loss to break even at 5 ticks. Mack says this is based on years of observation.

Futures Trader 71 keeps statistical analysis of the average rotation size in the ES so he knows the difference between noise and a move.

So yes the first step is to track rotations and then work backwards to a rule of thumb that usually works. Then double check the rotations as the market changes.

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