Why I Use Hard Stops

[eldad 10]

Hi,

 

This week JUNO was on my short watch list, it started a gap up but close it and went lower very nice, I watched it and looked for a short entry, but I was lucky before I got in some crazy candle of almost 4$ came in and blow the stock up, making new highs for the day (see attached pic),

 

This reminded me once again why I always place a hard stop,

 

I remember more than few webinars that I watched listening to some excellent traders/instructors saying they don’t place hard stop but have a mental one, if the price will reach their mental stop they will close the position, I know some traders are sure the market makers see their stops and are just driving them out, I don’t know if it is true now days, but most of the time the stops are according to some technical analysis that everybody can say where the stops are placed whether you place it or not,

 

I would like you all to think what a candle like this one will make to your account, think about the number of shares you have once it got up and very fast up, you are -2$ for XXX shares, can you close it ? Can you close it? Do you have the mental power to fight the urge to wait and see if it can get back lower? Just to see it was halted, will your emotional system will survive such a blow?

 

In the business of risk management you can’t take a risk that will kill your business, you can play Russian roulette and make a lot of money but just once is enough to be out for good, this is why you must ask yourself can you handle a loss that big, can you handle the emotional distress in a losing position that just get bigger and fast?

 

For most developing traders this specific trade without a hard stop would take them out, might be the money or it might be the pain of such a big loser, don’t go there, place a stop, accept the loss and move on, you are alive to trade for another day and this is the most important thing,

 

Make the odds in your favor Day Trade

 

Eldad Nahmany

 

#tobecomeadaytrader

[CrazyCzarina 17]

Is there any advantage to moving SL to breakeven or using trailing stop. I want to ask the experienced traders here which type of SL is best.

[barako 10]

usually i do, it has something to do with final result at the end of the week/month, by moving SL you limit the probability of loses.. at least thats what i do with my hotforex account

[aimhi 10]

SL and TP are the basics every traders have to keep in their mind while trading otherwise no trades, no losses, no profits etc..

[tradeforever 10]

You have to keep watching your trades closely to set Trailing Stops to minimize the loss or reach out TP.

[fxeconomist 11]

You have to keep watching your trades closely to set Trailing Stops to minimize the loss or reach out TP.

 

Do you use only Trailing stops or fixed stops too? What is better to use for scalping?

[CrazyCzarina 17]

I use stops according to my strategy that I think works well with the currrent market. I have never fixed any stop calculation for my trading work.