Moving Stop Losses to Break-Even

[RichardCox 10]

Trade management can be difficult for new traders, especially the traders that feel their work has been done once they have decided on which currency pair to trade and which direction they feel prices will move in the future. But the reality is that there is much more to trading than what is seen in these initial steps and in order for traders to achieve successful results on a regular and repeatable basis, each position must be actively managed from the time it is opened until the time it is officially closed.

 

The fact is that losing trades require much less active management than successful trades because there will be many cases where a trade simply moves in the “wrong” direction right from the beginning and there is little the trader can do other than wait for a stop loss to be hit and to move on to the next opportunity. To be sure, these trades can be closed early and a smaller loss can be taken but the initial exit and entry parameters are usually in place for a reason and, more times than not, it makes sense to let the market work itself out and violate your initial parameters before allowing the trade to close.

 

Essential Values of Trade Risk Management

 

Unfortunately, many traders do not learn the value of true risk management until it is far too late and account values are diminished. Proper risk management runs counter to the natural “greed impulse” that lures many people into forex trading in the first place. Since this is a characteristic of basic human nature, it can be difficult for many traders to look at this aspect of their positions in a logical and objective fashion.

 

Traders will take varying times (and varying amounts of trading losses) before they learn these lessons, so here we will look at one of the most often-used strategies for managing positions once they have been opened and achieved some success by moving into positive territory: Moving your stop loss to break-even.

 

Break-Even Stop Losses

 

So that the term is clear, it should be remembered that a break-even stop loss is used once a position has moved into positive territory (achieved an unrealized gain). Once the position has reached a certain level, the trader will move their stop loss up from negative territory and set it at the original place of the trade entry.

 

For example, if you bought EUR/USD at 1.32, and had an original stop loss set at 1.3135, you could move your stop upward (back to 1.32) once the position has achieved some level of gains. This action removes the original risk that was involved when the trade was originally placed. As long as your broker guarantees your stop losses, it will be impossible to accrue losses at this stage.

 

Common Reasons for Reluctance

 

Many new traders will be reluctant to implement this strategy, as they feel moving the stop loss to the Entry Level will increase the likelihood that the trade will be closed early and no gains will be made. While there is, of course, some truth to this, but the more important point to remember is that there is the additional likelihood that if prices return to your entry level, prices might not return to profitability. If this occurs, your original risk parameters will come back into play. So, even when a trade is stopped out at break-even it should be remembered that losses could have accrued if no action was taken in proper stop placement. Always remember, there is always another trading opportunity as long as your account remains viable.

 

When to Move a Stop Loss

 

When to move a stop loss (using a relative pip count or percentage level) will determine on your overall risk tolerance as a trader. If stop losses are moved too quickly, too many trades will be stopped out at neutral territory. Slippage is another risk factor when dealing with fast-moving markets. But at the same time, if traders inappropriately wait to move a stop loss, there is the increased chance that prices will reverse and turn your initial gains back into a loss.

 

So, the appropriate time to move your stop will depend on your trading strategy, your investment goals, and your trading style. Here we will define some potential intervals for moving stop losses based on different trading styles - aggressive, moderate and conservative:

 

Aggressive Traders: Will move stops quickly, and do so when unrealized profits reach 50% of initial risk. So, if initial stop loss is equal to 100 pips, traders will move stops to break-even when unrealized profits reach 50 pips.

 

Moderate Traders: Will move stops less quickly, and do so when unrealized profits reach 75% of initial risk. So, if initial stop loss is equal to 100 pips, traders will move stops to break-even when unrealized profits reach 75 pips.

 

Conservative Traders: Will move stops slowly, and do so when unrealized profits reach 100% of initial risk. So, if initial stop loss is equal to 100 pips, traders will move stops to break-even when unrealized profits reach 100 pips.

[Plugger 10]

Hi Richard,

 

Just wanted to add a comment to your stop loss post.

 

I agree with you on the money management requirements for a stop position to be set.

I have no problem with stops being moved to breakeven although I believe the timing of stop movement is important.

I have found that markets the majority of time tend to probe or spike multiple times in a range.

This is where traders go through emotional stress as both long and short positions move from profit to break even to loss prior to any range expansion.

If we take the view that retail traders generally lose to market professionals what market movement would cause the most pain to this group?

In the FX market I would think that a range of 25-40 pips would be where retail traders do not have enough reward to risk and would experience the most pain from multiple market rotations.

Moving stops in this area will result in a mixture of stop losses and breakeven trades and lessen the resolve of many traders to stick with their trade discipline.

On range expansion I am in favor of trailing stops up to breakeven or profit.

Where I see traders struggle is not understanding the context of the market and moving stops at inappropriate times.

I am in no way criticising your post, just adding my thoughts from hard lessons learned.

[bakrob99 11]

...

This is where traders go through emotional stress as both long and short positions move from profit to break even to loss prior to any range expansion.

 

In the FX market I would think that a range of 25-40 pips would be where retail traders do not have enough reward to risk and would experience the most pain from multiple market rotations.

 

Moving stops in this area will result in a mixture of stop losses and breakeven trades and lessen the resolve of many traders to stick with their trade discipline.

On range expansion I am in favor of trailing stops up to breakeven or profit.

 

 

These are excellent points. It's all about context.

 

In short term day trading, when you're in a trade for 10 to 60 minutes, I have found that trailing a stop is only successful after you get a breakout bar (or breakdown for shorts) with a higher close above the entry bar. Then - if the market starts making higher highs you can move your stop up. But in most of my trades, exiting at a target price or logical prior high (or low) is a good exit choice while leaving room for the trade with your risk reduced on the trailed stop.

[SunTrader 10]

I was in agreement until you got to aggressive, moderate, conservative.

 

Price doesn't know about the type of trader we are. It doesn't know about point amounts or percentages as well.

 

I set my stops based on price action such as swing highs/lows and EW count. If my count is wrong stop is hit. If my reading of PA and wave count is right stop is kept well away from market until the time is right to tighten.

 

And not just because I have so much potential profit - I might lose.

 

Note: if someone is scalping that is a whole nother ballgame.

[RichardHK 10]

Talking of scalping, as SunTrader noted above, moving to breakeven makes good sense for a scalp & run style of trading. For say 3 contracts on ES, a 2 contract scalp at 1 point could then have stop moved to BE for the remaining contract to run to either a 2-3 or more point target, or to run back to close at breakeven. This makes sure you never give anything back other than commission.

 

Also, this topic makes me think about market makers who are reported as hating losses with a vengence. Is this how they work the stops? Would they go to BE as soon as sufficient headway made, with or without taking profits?

 

For trades that go against you, it is fine to have stops at previous highs/lows or whatever price point makes sense, but why risk so much if you can just get out and re-enter again? Again, is this how a market maker operates? Do we get brainwashed into setting stop losses just to feed the pros?

 

RichardHK

[kayaktri 10]

For my trading, I have been using (with an acceptable degree of success) a combination of what you are referring to as conservative and aggressive approach.

 

Prior to entry, I determine my Risk ®. When price moves in my direction .5R, I move my stop to -.5R. When price moves in my direction 1R, I move my stop 0R (which is break even). In doing so, I certainly risk the chance of getting stopped out a trade that would otherwise be successful, however, it rarely stops a high spirited gainer, and it greatly minimizes my daily exposure. Today for example, I had 13 trades. By using this style of stop management, I had 4 trades that washed out (at BE), 4 trades that were losers, and 5 that were winners.

 

For my trades today:

 

The 4 washes were BE (no gain/no loss) so 0R

The 4 losses totaled -1.37R (if they would have hit full stop it would be -4R).

 

I conduct post trading analysis at the end of every day to determine if I am following my system well, and if my exit management needs to be adjusted (over a large sample size mind you). If I would have allowed the original stops (set at -1R) to remain for all trades, and exited - 1) when the stop was hit, or 2) at better price based upon PA that came after I set the new stop, or 3) at the end of day (RTH), my results for today would have been the following:

 

The 4 Wash trades resulted in net of -1.3R

The 4 losing trades would have resulted in a net of -2.8R

 

This totals a daily net of -4.1R, which is an additional loss of -2.73R over actual.

 

Of the 4 wash trades, 2 remained a wash, and the other 2 accounted for the -1.3R. Of the 4 losing trades, 1 had a gain of .2R, and the others would have hit full stops shortly after my new stops were implemented, resulting in a -3R loss (netting -2.8R).

 

This is pretty indicative of what happens on a daily basis for me, hence the reason for my making these changes to the stops (note: I never increase the risk, only reduce it based upon the PA).

 

Best Wishes ....

[Predictor 11]

RichardHK

 

Great questions. Absolutely moving a stop loss to break even is a sure fire way to lose. The market makers target BE stops extensively. The market doesn't let you get out for risk free.. come on now! Also if your entry is good then often others will enter around that position.

 

Market makers absolutely do not trade this way. Market makers are arbitraging or working positions around an average price... i.e averaging/martingaling. My guess is that most market makers don't set stop losses but rather scale around positions over time.. like playing a massive game. They take a lot more risk too.

 

Your idea of moving stop losses to break even quickly will surely result in many small losses when the trades would have worked out and many larger losses when it never goes in your favor.

 

There is a time to move the stop to break even. It is useful but its not easy to define when it is appropriate. Typically it is better to take a profit off at the best point then wait for it come back down and just take a meager profit.

 

Really there are 2 cases for moving a stop to break even.

 

#1 the trade has ran extensively in your favor and the hypothesis is already played out. You can't see the market returning to your stop and if it does you want to be out of the market.

 

#2 The trade is showing signs of trouble. You believe the trade isn't like to work out but aren't sure enough to take it off right then. This is pretty close to just taking the trade off because you don't think its working.

 

You would never move a stop to break even (quickly) if you feel the trade is likely to work

out.

 

As for re-entering after a tight stop loss, it is possible but you will often lose ticks due to the excessive market orders. This will become very costly very quickly. Small stop losses can become very costly very quickly.. A loss is a loss. You may want to check my article 2 dark swans of stops... it is possible to use tight stops but the market needs to be volatile enough to give you a big winner to offset the losses. That means tight stops are better used in high risk markets.. where you are more likely to be able to obtain huge Reward to Risk ratios.

 

 

Talking of scalping, as SunTrader noted above, moving to breakeven makes good sense for a scalp & run style of trading. For say 3 contracts on ES, a 2 contract scalp at 1 point could then have stop moved to BE for the remaining contract to run to either a 2-3 or more point target, or to run back to close at breakeven. This makes sure you never give anything back other than commission.

 

Also, this topic makes me think about market makers who are reported as hating losses with a vengence. Is this how they work the stops? Would they go to BE as soon as sufficient headway made, with or without taking profits?

 

For trades that go against you, it is fine to have stops at previous highs/lows or whatever price point makes sense, but why risk so much if you can just get out and re-enter again? Again, is this how a market maker operates? Do we get brainwashed into setting stop losses just to feed the pros?

 

RichardHK

Edited August 31, 2012 by Predictor

[bakrob99 11]

For me, I trail my stop loss below bars which close higher than a prior bar;s high AFTER my entry (for longs). This may not be Breakeven, and most times it's not but a decent entry of a pullback can be managed this way successfully (on a short timeframe - example: 10K volume bar on ES).

 

Breakout entries ... designed to go with momentum - I find youmust leave your stop alone until the breakout has moved significantly in your favour (ES minimum 8 ticks)

 

So it's mostly reducing risk while leaving some risk on rather than going to BreakEven right away.

[MightyMouse 12]

RichardHK

 

Great questions. Absolutely moving a stop loss to break even is a sure fire way to lose. The market makers target BE stops extensively. The market doesn't let you get out for risk free.. come on now! Also if your entry is good then often others will enter around that position.

 

 

There is absolutely nothing wrong with moving a stop to breakeven as long as the trader is willing to accept the potential consequences of such action. If you are going to take an action and then cry about it, then you aren't ready for trading in the first place.

 

Your logic is crazy flawed. The market makers will seek stop orders no matter where you put them; besides, your stop loss order of 5, 6, or 8 ticks could very well be my BE stop order. Your quoted statement makes no sense. Sorry.

[DbPhoenix 42]

Except for Mighty Mouse', none of these responses make any sense. The trader who uses a tight stop, much less moves it to BE or anywhere else, is acknowledging that he is not competent to manage the trade and that he has no control over his own actions (that one has no control over the market is a given).

 

If the trade -- or part of it -- needs to be exited, then the trader should exit. If it doesn't need to be exited, then the trader should sit on his hands and monitor the trade's progress. But none of this has anything to do with stops. The only stop that is of any practical use is the catastrophe stop, but that has nothing to do with trade management per se.

 

Db

[Predictor 11]

MightyMouse,

 

Think about this, a trader enters a trade with a reason -- the actual reason doesn't matter. What we can say is that probably if the trade starts to move in their favor or at least doesn't move a much against them that they have a better chance of being right then if the trade runs in the opposite direction. This will always be true if they use a stop loss. (The closer the price is to the stop the higher the probability the stop will be hit.. see binary options/binary tree distribution for more insight.. although the payoff changes dynamically such as to make all bets 50/50 assuming EMH)

 

What most traders do is push the stop to break even as fast as possible.. what is that in essence doing and what is happening?

 

A. The market is indicating at a higher probability the trader is right because it moved in his favor.

 

B. The trader by moving his stop loss to break even has just now increased the chances that he will be stopped out because its going to be so close to where the current price is.

 

Another way to think about this... is that the market judges in accordance with the claims made. If I can call a bottom to within 2 points right then the market judges based on that. If If I claim that I can call a bottom to within 2 points and that I know that the market won't retrace after moving 1 point then my claim has more stipulations... That's going to be infinitely more difficult...

 

I stand by what I originally claimed that moving stop losses to BE will in most cases result in many small wins and larger losses.

 

This does not mean that there isn't a time/place to move stop loss to BE -- which I do. However, typically it is because I know I'm likely to get stopped out and should just go ahead and take the max profit that I can. Or the market is undergoing some sort of change and I have booked plenty of profits and don't exact the market to go against me and don't want to be there if it does.. A good example where it makes sense to move a stop to break even is that I'm in a trade before a report with good profits and I expect the report to be good or have no effect. The BE stop can make sense in that case. Another example is that I think that a trade that went in my favor may be nearing its end.

 

PS:You would be surprised also that the market makers/the market "we"/pitboys/whatever have you often see do see EXACTLY where most traders enter.. and most traders enter at obvious places.

 

 

 

There is absolutely nothing wrong with moving a stop to breakeven as long as the trader is willing to accept the potential consequences of such action. If you are going to take an action and then cry about it, then you aren't ready for trading in the first place.

 

Your logic is crazy flawed. The market makers will seek stop orders no matter where you put them; besides, your stop loss order of 5, 6, or 8 ticks could very well be my BE stop order. Your quoted statement makes no sense. Sorry.

Edited August 31, 2012 by Predictor

[MightyMouse 12]

 

 

I stand by what I originally claimed that moving stop losses to BE will in most cases result in many small wins and larger losses.

 

 

Holding everything else constant, moving a stop to break even once a trade is profitable will lead to lost opportunities and lots of small losses. Large wins are still very possible. The use of a stop, anywhere in a trade, generally, eliminates the possibility of a large loss. You need to make additional assumptions about the trader's behavior to arrive at your claim.

 

If they are moving their stops and letting losses run for fear of being wrong, then, yes, they will have large losses. If they are getting out of gains too early, then, yes, they will have small gains. But moving a stop to BE by itself will not cause what you claim. You need to combine it with other insecure trading behaviors.

[RichardHK 10]

Holding everything else constant, moving a stop to break even once a trade is profitable will lead to lost opportunities and lots of small losses. Large wins are still very possible. The use of a stop, anywhere in a trade, generally, eliminates the possibility of a large loss. You need to make additional assumptions about the trader's behavior to arrive at your claim. ... ...

 

Thanks all for your input on this topic. Still digesting the comments and just one point for now.

 

Comment above from MightyMouse does fit my original query well. If one of the main reasons for amateurs to lose money is 'not cutting losses, and not letting profitable trades run' then by tackling this directly - ie cutting losses aggressively (giving up lost opportunities after being taken out) and letting profitable trades run, we should be able to make money. This is what I feel the pros are doing, and the majority (losers) just follow the accepted analyst type behavior of managing their trades with fancy stops, etc.

 

Various pro traders make these same points now and again, John Carter for example, which is why I am studying same. John Carter tells us that most traders are simply 'analysts', rather than operating like 'market makers' who hate losses. What's wrong with that idea? Seems to make good sense to me, hence my original query.

 

I do not wish to sit at computer all day long trading (12 hours ahead of EST for one) and just need several good trades a day and the occasional elephant walking by. Further, as for Al Brooks too, my number 1 goal is not losing money, making money is goal #2, and making lots of money goal #3. This suggests cutting losses quickly, etc... ... I should quiz Al more on topic as I cannot see him sitting through many pullbacks.

 

Would be interested to read more about DbPhoenix's money management ideas. Like where do you put a catastrophic loss, for example. And how do these stops not get hit on stocks that are flash crash whipsawed by greedy HFT algos, a common issue these days. I trade the ES for now but looking at stocks there is no safe way to leave a trade on overnight given the opening lack of liquidity thanks to HFTs. See premarketinfo.com for lots of examples of this unfair/illegal market behavior.

 

Thanks again for your inputs guys. Much appreciated.

[Predictor 11]

Yeah, I'd be careful of anything JC and HC says, they are big time vendors. I already told you that market makers don't use stops. They don't use stops at all.

 

Okay, first the futures doesn't have market makers but there are liquidity providers. These LQ providers are typically going to be shorting when the market goes up and buying when it goes down. They average into trades and have enough fire power to push the market around at times to run stops. This is just one type of LQ provider. Another other type of LQ provider is going to be arbitraging the ES against a basket of stocks. Many LQ providers are running HFT systems. They use any number of methods to maintain net neutral at all times. They might hold a position for as long as a few seconds at most.

 

Traditional market makers in stocks have an advantage that you don't have. They get to see the orders before they are transacted. They also don't use stops! They are required to make a market at all time. That means they have to be on both sides at all times. Stops would be pointless. They just adjust how much they buy/sell based on the demand and their edge.

 

The first goal for any business is to produce a profit. Do you know what happens to all businesses that just manage to break even? They go bankrupt.

 

I know you are well intention.. but hopefully this will get you thinking. Good luck.

[SunTrader 10]

Yeah, I'd be careful of anything JC and HC says, they are big time vendors. I already told you that market makers don't use stops. They don't use stops at all..

And they don't look for big winners, period, Market makers are the all-you-can-eat-buffett operators of trading.

 

We can't trade like them so IMHO we should not take anything they do, without testing it ourselves, as an example to emulate. Most of what they do we can't.

 

Also JC is a vendor that also has a lot of market knowledge. Does he try to make a buck off it. You bet. Shocking isn't it.

[Predictor 11]

Right... market makers try to profit from the spread and their edge, which is the ability to see the order flow (resting and incoming). There is no way that you can do that. As a note, they are always taking the other side to the order flow. So they have to sell when it goes up and buy when it goes down. They can see the resting orders and the incoming orders and so they can adjust how much they buy/sell. They also have to put customers orders first -- although they've been known to cheat. ;0

 

I'm a vendor too. However, I'm just stating that JC/HC are big time "sales people". They have some good free info on their site but I know I was really impressed with them when I was a total greenhorn. Today with more experience, I wouldn't even assume that they could trade their way out of a paper bag. It is nothing personal but I've just been around longer. Most of the good info on their site can be found for free on CME anyway.

 

just my 2 cents... trying to provide some real information here. As i said, there aren't any dedicated market makers in the futures anyway. A lot of vendors will try to use cool phrases like algo, market maker, hft, or "retail traders" to try to sound smart/insider/etc. But because they don't have a clue what they are talking about and use the terms in a completely wrong way.. which gives them away.

 

And they don't look for big winners, period, Market makers are the all-you-can-eat-buffett operators of trading.

 

We can't trade like them so IMHO we should not take anything they do, without testing it ourselves, as an example to emulate. Most of what they do we can't.

 

Also JC is a vendor that also has a lot of market knowledge. Does he try to make a buck off it. You bet. Shocking isn't it.

Edited September 1, 2012 by Predictor

[SunTrader 10]

Well difference of opinion then.

 

"I've been around longer" too and respect them. No matter the hucksters there are or appear to be.

 

Knowledge gained is valuable however it is gained.

 

I can add this though, for all the early years in my trading education (free from them) that I used to follow them, I never knew them to take swipes at other vendor/teacher/educator's.

 

But I have seen many a pot shot at them.

[RichardHK 10]

I enjoy listening to JC and HS but can switch off OK when it gets to the sales pitch. Spent 2 days in their trading room recently on a freebie and did learn a few things. Market was very dull as it has been so no good setups. I did learn that JC loses too though, but it didn't stop him placing another trade soon after. I still suffer from needing time to reassess market after exiting a trade.

 

Got a webinar invite from Barchart.com tonight and would you believe it is called "STOP USING STOP LOSSES - Learn To Turn Your Losing Trades Into Winners Instead". Amazing coincidence! I am guessing they will cover hedging with options (as webinar sponsored by OptionsAnimal) and similar which is what JC has mentioned several times in his free videos and free webinars over the last few months. I was going to try hedging the ES with the SPY but need a little more time to get more fluid with order entries.

 

There's not much out there on hedging techniques so I am guessing (again) that there must be something valuable in it. I might need another monitor or two though.

Edited September 1, 2012 by RichardHK

[zdo 20]

Whether moving stop to BE works or not is highly system specific.

 

If it matters to you, search it. Across the years I’ve posted more detailed rants about the sheer uselessness of yammering about stop placement in the absence of context.

 

Ie Moving stops to BE works – for a very few systems and then only in certain contexts within those systems.

If you go back through the posts in this thread you will find that only one person even vaguely mentioned the underlying system behind where moving stop to BE would work … virtually all the other posts surmise that since it works for one of their systems the info is ubiquitous for all systems (with one poster finding it didn’t work for his approach, so he posted that it wouldn’t work for any systems ever – same diff … incomplete msgs)

 

 

 

... I still suffer from needing time to reassess market after exiting a trade...

 

... a telling sign of a combination of attempting to apply system(s) not in alignment with your true nature and(/or) pre-existing hindbrain and limbic brain patterns that you brought to the game... usually it's both and will require some serious work in both... else you are at risk of developing chronic 'minimization of conflict' patterns - which will lead to a sad end of your trading activiites...

 

...Got a webinar invite from Barchart.com tonight and would you believe it is called "STOP USING STOP LOSSES - Learn To Turn Your Losing Trades Into Winners Instead". Amazing coincidence! I am guessing they will cover hedging with options (as webinar sponsored by OptionsAnimal) and similar which is what JC has mentioned several times in his free videos and free webinars over the last few months. I was going to try hedging the ES with the SPY but need a little more time to get more fluid with order entries.

 

There's not much out there on hedging techniques so I am guessing (again) that there must be something valuable in it. I might need another monitor or two though.

 

This is also highly system specific.

In the real world I think you will find that this type of “hedging” in lieu of normal stops typically 1) puts you in the rt position of having to manage two positions instead of one. and 2) increases your costs and 3) commits capital that could (most of the time) be much better used elsewhere…

ie it doesn’t work out practically any way like it was initially ‘imagined’.

Often these techniques are better utilized as a way to lock in outlier profits than as a way to "lock in a loss" :helloooo:

 

hth

[BlueHorseshoe 10]

Right... market makers try to profit from the spread and their edge, which is the ability to see the order flow (resting and incoming). There is no way that you can do that. As a note, they are always taking the other side to the order flow. So they have to sell when it goes up and buy when it goes down.

 

Regardless of whether you can see order flow or not, you can certainly sell when it goes up and buy when it goes down. And doing this can form the basis of a viable approach, especially if you align yourself with the longer term trend. The problem with many vendors (not directed at you!) is that they advocate momentum based systems for inappropriate markets. In the ES, most of the time, by the time you've had triple confirmation from all their indicators that the market is moving in your direction, then the move is over. The ES never really goes anywhere (you can prove that to yourself with very simple statistics) - much better to short it when it's rising and buy it when it's falling.

 

I totally agree with you on Carter and a wet paper bag though.

 

ZDO - I agree with you on 'context' and stops - although in a previous thread I think I once disagreed with you on this point. I changed my mind

 

Managing an exit in the way that DB suggests is probably a good route, but I think that he underestimates how much experience and confidence is required to do that with consistency.

 

BlueHorseshoe

Edited September 4, 2012 by BlueHorseshoe

[RichardHK 10]

>Originally Posted by RichardHK »

... I still suffer from needing time to reassess market after exiting a trade...<<

 

... a telling sign of a combination of attempting to apply system(s) not in alignment with your true nature and(/or) pre-existing hindbrain and limbic brain patterns that you brought to the game... usually it's both and will require some serious work in both... else you are at risk of developing chronic 'minimization of conflict' patterns - which will lead to a sad end of your trading activiites...

 

Correct ZDO... the limbic brain patterns are responsible for my issues, as for 98% of all other humans doing trading I would say. My system is fine and works well if implemented in a timely fashion! Working on my self-awareness through mindfulness to fix the psyche issues, which I will. Really should be more emphasis on fixing our reptile brains as part of developing a trading system. Too much BS on the need to lose money to learn trading.

 

That STOP USING STOP LOSSES webinar was Ok but really selling their spread options methodology so not much use to me at the moment. I started with FXCM end last year on forex and in Hong Kong we can have long and short trades on together for simple hedging. It was easy to manage on one chart. So do not see any major problem handling the ES vs SPY or YM with two charts.

 

Still cannot see why some of you think index hedging is so complex. If I go short say, on YM to ride out a 5 point pullback on an ES long, and then the market turns around, I take profits on the YM and even go long on YM if market indications support long direction. Not rocket science as we say. Funds used for hedging this way are not wasted if they minimize/prevent losses while earning extra returns in the process. A catastrophe stop is then second level protection.

[MightyMouse 12]

Correct ZDO... the limbic brain patterns are responsible for my issues, as for 98% of all other humans doing trading I would say. My system is fine and works well if implemented in a timely fashion! Working on my self-awareness through mindfulness to fix the psyche issues, which I will. Really should be more emphasis on fixing our reptile brains as part of developing a trading system. Too much BS on the need to lose money to learn trading.

 

That STOP USING STOP LOSSES webinar was Ok but really selling their spread options methodology so not much use to me at the moment. I started with FXCM end last year on forex and in Hong Kong we can have long and short trades on together for simple hedging. It was easy to manage on one chart. So do not see any major problem handling the ES vs SPY or YM with two charts.

 

Still cannot see why some of you think index hedging is so complex. If I go short say, on YM to ride out a 5 point pullback on an ES long, and then the market turns around, I take profits on the YM and even go long on YM if market indications support long direction. Not rocket science as we say. Funds used for hedging this way are not wasted if they minimize/prevent losses while earning extra returns in the process. A catastrophe stop is then second level protection.

As an FYI, since you mentioned etfs, you can only effectively hedge with futures or options. In spite of the liquidity of spy and dia, they are not always available to short.

[goodoboy 10]

For me, I trade the ES.

 

I bring to breakeven, once price moves 3 points in my favor.