Yes I agree that moving the stop loss to breakeven is fearful decision. At one point it makes us restless. When you are opening a trade you should open it by knowing the risk.
I use four indicators to confirm a signal whether a trend is weakening, and which would hit my winning trade profit if I let it run, or even adding another position on it continuing.
MACD 3-10-16 histogram bars - very good for early entry.
PSAR 0.10,0.40 directional change - but lags the most.
RSI 50 line only. Above = upward trend, and below = downward trend
The ATR signal line shows strength of price action volatility.
Of course, correlated signals are never ever a 100% assurance, but IMO, the probability of a winning trade weakening and becoming a victim of retracement or reversal is to be carefully watched especially if it hasn’t reached your RRR T/P level.
I also use three MAs to show me support & resistance signals, but that’s another story.
Yes, @steve369, that is entirely the point. I see too many traders focusing mainly, or even solely, on their entry strategies whilst neglecting their exit strategies. But whilst exit strategies are harder to define, they are even more important in terms of optimisation than the entry criteria.
And it is the lack of clear exit principles that leads to the tendency to take quick profits if the market is not doing what we expected, when we expected. (I did exactly that this week with SP500! I was 99.9% totally convinced that we would hit 4000. It was such a powerful number and its magnetism would draw it there even if the fundamentals didn’t justify it. But when it stalled several times below this level, and with the Biden infrastructure bill, NFP, and Easter break looming, I took my profit even though I had absolutely no technical signal to do so. Had I waited, I would have been 300 pips better off when it broke above 4000, but I could say, " it is never wrong to take a profit!" haha! )
But the three legs of the “trading stool” include money management as the third leg alongside entries and exits, and clipping profits early from the overall trading strategy is very detrimental to the long term profitability and can easily turn a winning formula into a losing one. Without all three legs the stool collapses.
The fourth element in the trading stool scenario is the floor it is standing on which is a sound mindset/psychology. If that is not in place then the trading strategy will probably end up purely theoretical anyway as the mind overrides the rules and creates a “jumping in / jumping out” scenario instead.
I should add, @steve369, that you also fully understand these things, I am just writing generally!
HI. You give me too much credit. I am privileged to be able to follow a trade. My win rate is terrible, but it’s compensated by being more profitable than the losing trades. Once you know how to money manage trades, it’s simple.
As an aside, there is no need for a RRR at any time. I will always set my very tight S/L as a starter just in case my trades are losers, when I cut. That’s easy. I never target a T/P as no one knows how profitable it would be. Let these trades run.
I’m trading 1 HR time frame, always. IMO, it’s profitable for intraday traders.
As a beginner, you may not be very sure whether you are doing the right thing or not. This is why it is suggested that traders first gain experience and then take big risks. You may or may not make any profits with small amounts but the knowledge you gain is more than any profit or loss you would have made.
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