>> And so with this in mind I figured the best way to preserve capital would be to move your stop loss to breakeven whenever your trade starts to go your way (I usually move it to breakeven after I gain 5points).
It really depends on your strategy. I'm gathering you are having issues with "am I really accepting the risk when I put on a trade"?
If you sit "in nail biting fear", just waiting to get the initital Stop to your Entry Point then say "phew, I'm on free money money", then most likely you have not accepted the risk of the trade and are trading with a high level of fear.
A clear strategy should spell out a trade EVEN before it happens, so there really should be no fear, but more a dull mechanical following of the rules.
Example:
*) Go Long Oil with a buy-stop at 97.80 and an initial stop of 97.20
*) If Price rises to 98.50, then pulls back to 98.10 then moves past 98.50 THEN move stop to entry AND add in a limit order at 99.0
etc.. (I'm just making this up as I go along).
Clearly in this case, a plan is in place so you have rules to follow.
Protect Your Capital is True. But at what cost? Take cash out and put it under your bed in a jar? (what if it's stolen? devaluation?). Buy physical gold with it and store it at th bank (what happens if gold crashes, or the bank if broken into?)
There is no failsafe protection of capital. No matter what you do with it, it involves a level of risk. Trade with it, and you need to define your risk, how much you are willing to lose at a chance to win. Then once defined you need to accept the risk completely.
Personally, I do not move my stops. Once in a postion, it's either all (Limit) or nothing (Stop). But that is my system. Keep your mind long term. Most half way decent strategy's generally lose more than they win. If you get rattled out of the market after a few losses, you will lose out on the winning streaks. Just keep plugging away, control your risk, and follow your rules.
If there is a perfect system that once bought, a stop was put in place at the same price, then price took off never looking back... please let me know. It would make my life a lot easier
Good luck!
It really depends on your strategy. I'm gathering you are having issues with "am I really accepting the risk when I put on a trade"?
If you sit "in nail biting fear", just waiting to get the initital Stop to your Entry Point then say "phew, I'm on free money money", then most likely you have not accepted the risk of the trade and are trading with a high level of fear.
A clear strategy should spell out a trade EVEN before it happens, so there really should be no fear, but more a dull mechanical following of the rules.
Example:
*) Go Long Oil with a buy-stop at 97.80 and an initial stop of 97.20
*) If Price rises to 98.50, then pulls back to 98.10 then moves past 98.50 THEN move stop to entry AND add in a limit order at 99.0
etc.. (I'm just making this up as I go along).
Clearly in this case, a plan is in place so you have rules to follow.
Protect Your Capital is True. But at what cost? Take cash out and put it under your bed in a jar? (what if it's stolen? devaluation?). Buy physical gold with it and store it at th bank (what happens if gold crashes, or the bank if broken into?)
There is no failsafe protection of capital. No matter what you do with it, it involves a level of risk. Trade with it, and you need to define your risk, how much you are willing to lose at a chance to win. Then once defined you need to accept the risk completely.
Personally, I do not move my stops. Once in a postion, it's either all (Limit) or nothing (Stop). But that is my system. Keep your mind long term. Most half way decent strategy's generally lose more than they win. If you get rattled out of the market after a few losses, you will lose out on the winning streaks. Just keep plugging away, control your risk, and follow your rules.
If there is a perfect system that once bought, a stop was put in place at the same price, then price took off never looking back... please let me know. It would make my life a lot easier
Good luck!
