I was wondering whether it meant a trailed stop to break-even, purely on a monetary basis.
On the basis that the market doesn't respect where you entered, doesn't it make sense to take the approach of always having the stop in a technical position?
Surley it's better to have a 30% chance of losing 0.5 if it rises again, rather than a 100% chance of being breakeven?
If price starts moving in my direction for a reasonable amount I move my stop to BE. I'd rather re-enter at a better price than have the chance of taking a loss. Sure, I have a lot of breakevens, but over the long run I am pretty sure that trading this style of trading will provide a continuously rising equity curve.
You must also take into consideration that I moved to my stop to breakeven at a point where some people would have already taken profits. I see no technical nor monetary argument for having a profit turn into a loss. The argument that a "potential" bigger profit lies around the corner is invalid, because if you need to get a loss first, it means you're entry wasn't right in the first place. And if it's not, that means the market will provide a better opportunity to get it right the second time.
Have to agree with Joey here. Technical stops are always the best. Too many people rush their stop to break even so that it is a "free" trade which I think is possibly one of the biggest mistakes you can make.
Let's talk practical, would you rather have: -50, +300 or 0/0/0/0/+300? Sure, it might take me more time and sure you might need to re-enter, but I'd rather protect my account from an unnecessary loss.
But in defence of FW, since his theoretical entry is so tight, a breakeven stop makes sense because if the market comes all the way back up there, the probability is highely likely the trade will be wrong as the market is not acting "right".
Yes, indeed. Take the GBP/JPY short, had the market come back up to 129.50 and than plunged to 126 you would've had to let a profit of +100 pips turn into a loss, only to gain more. While I would've made those +100 on a scale out, turned the rest to BE and re-entered to get +300.
It really depends on your entry. If you enter AT a resistance and the market comes off sharply from it, then a breakeven makes more sense because you wouldn't want to be in if the market comes back there.
If you enter 50 ticks later, after a resistance has been confirmed and the market then continues to come off for a bit, then a breakeven stop makes no sense because going offside (losing money) means nothing. You are not wrong until the resistance is broken.
Indeed. If you enter late, and move to BE, it's a recipe for getting stopped out. That's why I was pointing out that there was little reason to wait 4 hours because by then the trade had already gone...
I'm not here to make my case, if you enter differently, you need to adjust your stops & targets accordingly. I was only illustrating that there is little need to take a loss when the market offers you a profit.
