Long Term Trading- Capital Protection

[Sledge 13]

As we know their tend to be a few camps of traders. Within them the two camps that tend to make up the vast majority lie in:

1. Scalpers (5 to 15 min charts)

2. Longer Term Trend Traders (Daily, Weekly Charts)

 

I am interested in a discussion about protecting capital on a Longer Term Trade and what techniques some folks may utilize. Their are a few different methods out there. Some include:

(Say this is a bull trend for example purposes)

1. Move your stop up to the low of the last day

2. Use some percentage of the Average True Range (ATR)

3. Last Swing Point

 

This is an area that coming into my own as a longer term trader has not yet been honed. That fine line between setting the Stop too high and not letting the trade breathe, and too far away that you just lost all that you had in profit.

 

Any experienced longer term traders-- I welcome your insight and possibly a nudge in a general direction for me to do the research and work- I have no problem with that at all.

 

I may have to run through two or 3 different "techniques" until I find the one that works for me personally.

 

Regards,

Aaron

[fifty2aces 10]

My opinion would be that it depends on the style of trading - the stop loss should be at the point where it becomes apparent that the reasoning behind the trade is no longer valid.

[brownsfan019 17]

I think a longer term 'trade' must have profit target(s) and stop loss put in place before the trade is even taken. In other words, not only do you need to place the stop loss, but you need to know where you are getting out and why.

 

Once that is done, if you believe in the trade and your analysis, it's easy - let it go. Either the the profits are hit or the stop loss.

 

Now if you do not enter with profit target(s), you have to be more proactive on the trailing stop but as you pointed out Aaron, I believe it's difficult between placing too close or too far...

[Sledge 13]

Bf-

Thank you for the reply. Ok may I ask you this then: Say you enter at 1.9900 and you set a target for 2.0400. Once it gets to 2.0100, you must move your S/L to some "point" to preserve what you have already worked for though yes?

 

That is probably the best way to phrase it. I have been working very hard to hone my entry skills. By reading price action, I have been able to gauge a neighborhood that I want to shop in for the trade. If it gets there- I take the entry, if it decides not too- no trade and I assess what I read incorrectly (but no harm no foul- I just missed the boat) EUR/USD did this to me a day or so ago, I was looking for a retrace to draw out supply, that didn't pan out-no biggie, I just missed the boat on that pair.

 

But once I establish the position, I am trying to hone the skill of "letting it breathe" and "letting it run" Seems their is not a whole lot of discussion out there on the web about nurturing a winning position. As the vast majority of information out there on the web is pointed at the scalper and day trader sect of traders.

 

Once I establish a position, I am looking to ride the trend. My issue at this point is when I see the price action telling me that:

A. It went into the correct direction

Then

B. It is stalling out and will retrace.

 

Is staying in the trade through the retrace. I woke up yesterday AM too all 4 of my positions that went trend friendly overnight in London. All showed exhaustion, but I said "Hell I'm trying to ride the trend" so I let them "be" I went home at EOD- and the $ I was up, was reduced to a about 1/5th the amount. I was not pleased. Anyways, I'm getting my own thread OT.

 

I was hoping you would chime in as I know you are a longer term trader. Also trying to see if I leave some milk and cookies if Db will be attracted over here to join in the conversation.

 

Much Thanks!

Aaron

[brownsfan019 17]

Bf-

Thank you for the reply. Ok may I ask you this then: Say you enter at 1.9900 and you set a target for 2.0400. Once it gets to 2.0100, you must move your S/L to some "point" to preserve what you have already worked for though yes?

 

NO.

 

Unless your methodology calls for this, the answer is no. As you mentioned above, if you get too aggressive w/ that stop, it's a recipe for a losing trade.

 

But once I establish the position, I am trying to hone the skill of "letting it breathe" and "letting it run" Seems their is not a whole lot of discussion out there on the web about nurturing a winning position. As the vast majority of information out there on the web is pointed at the scalper and day trader sect of traders.

 

Probably b/c exiting a position is an art, not a science.

 

Once I establish a position, I am looking to ride the trend. My issue at this point is when I see the price action telling me that:

A. It went into the correct direction

Then

B. It is stalling out and will retrace.

 

Is staying in the trade through the retrace. I woke up yesterday AM too all 4 of my positions that went trend friendly overnight in London. All showed exhaustion, but I said "Hell I'm trying to ride the trend" so I let them "be" I went home at EOD- and the $ I was up, was reduced to a about 1/5th the amount. I was not pleased. Anyways, I'm getting my own thread OT.

 

I was hoping you would chime in as I know you are a longer term trader. Also trying to see if I leave some milk and cookies if Db will be attracted over here to join in the conversation.

 

Much Thanks!

Aaron

 

I don't trade much longer term anymore actually. But as you saw in your trade, you have a decision to make - either try to catch the move (hit the homerun) or set those target(s) (hit the singles) as discussed over here.

[Guest forsearch]

Bf-

Thank you for the reply. Ok may I ask you this then: Say you enter at 1.9900 and you set a target for 2.0400. Once it gets to 2.0100, you must move your S/L to some "point" to preserve what you have already worked for though yes?

 

That is probably the best way to phrase it. I have been working very hard to hone my entry skills. By reading price action, I have been able to gauge a neighborhood that I want to shop in for the trade. If it gets there- I take the entry, if it decides not too- no trade and I assess what I read incorrectly (but no harm no foul- I just missed the boat) EUR/USD did this to me a day or so ago, I was looking for a retrace to draw out supply, that didn't pan out-no biggie, I just missed the boat on that pair.

 

But once I establish the position, I am trying to hone the skill of "letting it breathe" and "letting it run" Seems their is not a whole lot of discussion out there on the web about nurturing a winning position. As the vast majority of information out there on the web is pointed at the scalper and day trader sect of traders.

 

Once I establish a position, I am looking to ride the trend. My issue at this point is when I see the price action telling me that:

A. It went into the correct direction

Then

B. It is stalling out and will retrace.

 

Is staying in the trade through the retrace. I woke up yesterday AM too all 4 of my positions that went trend friendly overnight in London. All showed exhaustion, but I said "Hell I'm trying to ride the trend" so I let them "be" I went home at EOD- and the $ I was up, was reduced to a about 1/5th the amount. I was not pleased. Anyways, I'm getting my own thread OT.

 

I was hoping you would chime in as I know you are a longer term trader. Also trying to see if I leave some milk and cookies if Db will be attracted over here to join in the conversation.

 

Much Thanks!

Aaron

 

I sent you a PM with some info about this type of setup.

 

-fs