On strategy I have used successfully off and on for a long time is to always maintain a 1:1 RR.
For example, if your initial stop is 40 pips, and your target is 80 pips, thats 2x reward for 1x risk
120 pip total movement possible…the stop, plus the target = 120 pips.
So, lets say the trade moves in your favor 40 pips. You are now going for a remaning target of 40 pips, but your potential risk is now 80 pips! (the 40 you already got, plus 40 more to your stop)
So, in that case, move your stop to BE. now, you are risking 40 pips paper profit, for a remaining potential 40 pips of reward.
Lets say it moves another 20 pips toward your target…in other words…you have 60 pips of an original possible 80 for a target.
At this, you have 20 pips more to potential gain… you should make sure you are not risking more than this! So, move your stop up 20 pips behind current price (which is about +40 pips)
Lets say it moves 10 pips closer to your target…you now have 70 pips out of a possible 80. So, move your stop to +60.
You could potentially gain 10 more…so don’t risk any more than 10 additional from where price currently is!
when your 5 pips from targe,t your stop should be 5 pips from current price. Risking 5 to get 5 more.
When your 2 pips from target…your stop should be trailing so darn tight you get stopped out at +76 pips a lot…
I get stopped more than i actually hit my profit target this way. I get stopped out about 80%+ of the time.
HOWEVER, I capture the vast majority of the move to my original target…i never let a decent winner become a loser, and I have a mathmatical methodology to keep a well balanced risk reward at ALLL times…not JUST when i started the trade.
Create a situation where you don’t have to be 100% right to make money. If your 80% right…you should make at least 50% money. If your 60% right…you should walk with at least a small profit.
It’s not about hitting some arbitrary pip target. It’s about making money, and not losing money. This stop trailing method i laid out above will give you more of both - making money, and losing less.
Just a thought…
Jay