Once You're in the money. Stop wise

December 13th, 2012, 02:33 PM

Currently, the only thing I trade is the emini s&P. I normally open a position with a least a 3 point stop loss. Sometimes a bit more. Most of my setups are good, but I know that I need to wait sometimes for the market to come my way. ( not that I am not often wrong also. But so far things seem okay)

The hardest moments for me are when my position has turned profitable and I need to think about moving my stops to protect profit. I really hate lose money on a trade that was already profitable. But on other hand moving it to quickly can get you stopped out early. With a small profit yes, but you often miss the longer run.
I mean if the trade is good for 1 point and I move my stop to where I secure .25, I am almost certainly going to hit my stop in normal fluctuation. If the price runs I will not see it. But on the other hand .25 is better than a poke in the eye.
There probably is no hard rule for when to move the stop to profit level, or when to exactly to cash. But I do wonder how others have resolved this difficult stage when the trade has just turned profitable.

December 14th, 2012, 12:34 AM

Sounds like you are only using a single contract at a time so you are either in the market or out. If it were myself I would concentrate on what the market would have to do in order for the trade to not keep going my way. Obviously harder to do than to say. I don't trade the S&P but in my case oil likes to move in 40 cent waves so I keep that in mind when setting my targets. So if there is a consistent "move" that the S&P makes than that should help you to decide where to place the target.

But in the end it should all be based on what the market is doing, for example if you trade reversals then once you enter on the long side, you are waiting for a reversal down to sell the contract you are holding and sell an additional contract for the ride down. Obviously, this is very simply stated but something to ponder.

I think getting into a trade is easy, deciding where you get out is the toughest part, or better summed up, managing the trade.

December 14th, 2012, 03:41 AM

I've learned the hard way to never move my stop until my RULES tell me to. I think that if you are moving your stop to take the pressure off yourself then you are potentially stopping out a trade that might have been a big gainer. I instead propose that you since you risked the $ amount to your first stop, because you liked something about the setup. If something has changed then sure, just exit the trade a winner and don't even use a stop.

But if all that has happened is the trade moved in your direction enough for you to reach a profit, then how does that alone warrant moving your stop up to BE?

Just curious?

January 6th, 2013, 10:24 AM

this is a tough decision for me also. There are so many variables that can screw with your decision to take the trade. There is no cut and dry answer for you. It is a personal decision and it will constantly evolve as you evolve.
As for me? I look for the price action and decipher where the sellers or buyers could not get through. If I cannot afford that stop I dont take the trade.
This discussion of Now your in the money... how soon do I move my stop? There are those that will tell you your target must be twice your stop or at least 1.5 times your stop.
Accept that loss just as you would when you put a quarter into a slot machine in Vegas. VOID OF ALL EMOTION. IT IS WHAT IT IS. KISS IT GOODBYE! If you lose than so what. thats called gambling.

And then there are those who will tell you that statistically speaking thier edge says that the odds a trade will pay them over a long time period of time allows them to place bigger stops and ascertain profits on nearly half of that stop.
To put it more plainly. Placing a 25 tic stop and taking profits at 10-12.

There is another side of placing a stop and accepting the loss... Now think about this for a minute.. You place a trade and accept the loss. That does not mean you must take the loss.... If typically speaking the price moves in the direction of your trade but for some damn reason is sputtering slower than normal..... Close the trade. What I mean is you need to learn the INs and OUTs of your instrument you are trading. They all have thier own personality and react differently but all in all they are really the same. If you had a 6 charts with just price action on them, they would all look the same.

Sorry if I confused you. I am in the same set of shoes you are. It really just boils down to fear and greed right?

I keep telling myself this is a Marathon and not a race. Celebrate what you have learned and continue to learn.
There is not going to be a day of arrival... Holy cow man, I am a PRO trader and make a ton of cash doing it!
Thats not the end of this Journey. Its not about the cash.
Marathon runners may finish a race and take a couple of days off training but they start traing for the next event soon after.

Once You're in the money. Stop wise

Discussion in Psychology and Money Management

Once You're in the money. Stop wise