I whole heartedly agree with this, because it WORKS FOR ME.
I used to set trail stops (so many ticks behind current price, etc..).
This chopped my account up in tiny pieces, only to see price action go in my direction.
My friends asked me, "whats your stop?"
I always replied, "I don't use a stop. I enter a trade with no stop (naked trade), and once price action indicated that the move might be exhausted, I then drop a 'stop' on my NT chart-trader."
Dangerous? Actually safer for me.
I let the chart tell me when I should "drop" my "stop."
I find the proper charting time frame for my personality, enter a position with no hard target and no trail stop or hard stop.
I then "drop" a "stop" on my chart trader.
If I win, then I move on to the next.
If I lost, I did nothing wrong and trusted my technique, and then I move on to the next.
Once I STARTED to TRUST my technique/method/chart, there was NO need for a set trail stop or hard stop.
This works for me, and it may or may not work for you....
Thanks for taking the time to reply to my thread Mike, but the tone of your post is very condescending, "parental" and at best, vague. In the seminar FT71 said that the risk management strategy a trader chooses will have a dramatic effect on their trading. Choosing a risk management model appropriate for the trader and spending time researching risk management models is a completely different (and valuable) way of spending one's time compared to tweaking indicator settings. I don't use indicators in case you're interested. Can we bring this thread back on topic?
Anyway, either everyone is on holiday or people don't have much useful input on this, in my opinion, important topic.
I have spent a considerable amount of time thinking about this and testing it. I have come up with a system to suit myself, which may or may not suit others, and will probably evolve as my trading experience grows. I am currently trading a reasonably fast timeframe, a 5min chart and I sometimes flip to a 1000 tick on the NQ depending on market conditions.
My approach is based on what the market is currently doing. I will generally have three styles and will use one of them based on my judgement of the market during the first 15-30 minutes from the regular open and the previous day's action.
1) If I think the market is trending I will look for PBs to get in with the trend and will scale in as much as possible. When it is time to add the next position, if the stop of that position means that the first position is at BE or slightly worse, then I will add and put the stop of the entire position at the same place. I will do the same for any further adds. I will take all of the position off at a logical exit point, such as a measured move, a risk multiple target or other S/R level or strong exit signal (for example a strong entry signal in the opposite direction to my position).
2) If I think the market is in a trading range, then I will take 1R trades and go all-in and all-out at a 1R limit order target with no trailing stop. I will move to breakeven if the market flirts with my target but doesn't fill it.
3) If the market is in a volatile trading range, then I may go for 2R trades and go all-in and with a 2R limit order target but with a trailing stop to breakeven once the market has reached 1R. I may take off half the position at 1R depending on conditions, but I generally try to hold.
I'm still a newbie to trading, so take what I say with a pinch of salt.
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