I see what you’re saying, but what would you say would be the best approach if one is about to go to sleep or work or otherwise leave his computer for an extended period of time? No manually adjusted or automatic trailing stop? Simply leave the original stop untouched? I have a hard time wrapping my head around that. What would you do?
Thanks again,
Norm
I admit I go to and fro with stops and what I do varies across the weeks.
But I’m not saying have no stops. As I favour trend trading, its easy for me to see on the chart a level at which the trend could be counted as being probably broken, and setting a stop there. It would never be lower (in an uptrend) than the original stop on the first entry, but it could be a physically wider stop once price has run up some gains: once the trade has reached profit equivalent to the original risk I’m going to double up anyway.
But I sometimes break my own rules. Often, when I double up with a second trade I move the SL of Trade 1 to b/e and place the SL of Trade 2 at Trade 1’s entry, so I would have 2 trades open but the same loss risk as with one. Of course, this disregards the TA as it has changed since Trade 1 was opened but that just demonstrates how hard it is to be rigid about stops. I cannot definitively decide which is best approach.
Sorry, I didn’t mean I double up at b/e, I have changed the post to double up once profit equal to the original risk is reached, that’s when I double up.
Thanks Norm, I will review the articles this week. Looks like from the thread and is true in all aspects of FX trading that there is no one size fits all with any approach including exiting trades.
You need to have a purposely designed exit strategy for every trade.
One idea I have come across is “scout trades” Placing a 1/3 of your trade down with a large stop, then if the trend is your friend add to your position with 2 more 1/3 trades & tightening up your stop - link below
You’re absolutely right. In every aspect of trading, there are so many diametrically contradictory approaches promoted that you can go crazy trying to sort it out. What it boils down to is what works for you. Sounds trite, but it’s true. It’s a matter of testing things out and holding on to what works. You’d think that there would be definitive tests proving once and for all which approaches are best, but even the “definitive” tests that I’ve read are contradictory!
I’ve thought about the method proposed in the video, and it has its merits. One thing, though: If you enter with only a portion of your full amount, though your potential loss will be reduced, so will your potential profit should that portion of your trade go into profit. Not sure how the math would work out on that, whether it would work out for better or for worse in the long run. On the other hand, it would definitely be easier on the emotions!
Perhaps, but certainly an exit strategy for every trading strategy. Tests were done by William Eckhard, a math superbrain very successful trader, and he said - exact quote: “Although the performance in my account [on trades in which he intervened as the trade progressed] was good, the account trading entirely on the mechanical system [sticking strictly with the plan] definitely did better (New Market Wizards, p. 118).” Of course, one needs to develop such a dependable system, first, and that requires testing a significant sample for each aspect of the trade: currency pair, time frame, stop loss size, etc. - enter Forex Tester, as I suggested!
It takes time. Don’t despair.
Happy trading,
Norm
Well, we’re in the same club. For me, the two approaches that are currently duking it out are 1. repeatedly moving the stop behind the new key level (whether price or fib), and 2. periodically adjusting the stop to a certain distance behind price. Needless to say, each approach is promoted by very successful traders.
I suppose I’ll sort this out, same as I’ve sorted out other aspects of trading.
Best of luck,
Norm
that first article you provided explained it perfectly lol 
Hi alphahavoc,
Wouldn’t setting stops and targets based on multiples of ATR neutralize the effect of an already volatile market on them? Of course, it wouldn’t help with an unexpected spike that exceeds your ATR multiple. What do you think?
Norm
Sorry but i don’t understand your statement
Hi alphahavoc,
Forgive me if you understand this already, but the ATR is the average range of the candles on your chart for the last 14 or 20 periods, however many you set it to. The greater the volatility, the greater the ATR reading. Many determine stop distance by multiplying the ATR reading by two or another factor; so if the ATR reads, e.g., .0044, and you multiply it by 2, you get 88 pips, which can be used as your stop distance, putting you way out of the probable range of any candle in your trade, keeping you from getting stopped out. (Some use an ATR multiple, whether greater or lesser than 1, for targets, also.) Such a setting will protect against many spikes but, of course, a spike equal to or greater than the 88 pips will stop you out - but again, it’s a way of greatly reducing the probability of getting stopped out.
Norm
Only very sllghtly, Norm. It’s not nearly as good as putting an initial SL just above a swing-high (short trade) or just below a swing-low (short trade). That’s letting support and resistance guide your SL placement rather than clutching at an indicator-based approximation of current volatility. It’s even easier to do, and way better.
Only people who’ve learned to trade from forums or Youtube videos. It’s not something any professional would use: it’s both more complicated and worse-performing - a pretty bad combination of attributes.
I see now. I didn’t know about setting stop like this. I usually set at swing high or swing low as Stop.
Back to your question if you set your stop base on ATR, it seems to me as a very adaptable way to set stop. Its should neutralize the effect of an already volatile market except for an unexpected spike.
Unless you program an EA to do the job. It will be a bit of a hassle to edit it at every market opening hour. You will need to be present at every market open. I doubt there is any broker whereby there is a default adaptable stop adjusting code available.
Yes. Some say that the ATR 20 (periods) as opposed to 14, another standard way, is the best. Also, the greater the number of periods the ATR is based on, the less variation there will be between time intervals. It may even stay the same reading over a certain number of periods; and even if it changes, the changes may be slight from change to change. That’s the way it was when I took ATR readings on the EURUSD daily about a week ago. For two or three days it didn’t change; the next day the change was slight. Test it.
Perhaps you can. I don’t know.
I think you’re right.
I just read post 29 by TacitaTrader. It’s definitely worth considering. I’m inquiring more about it.
Take care,
Norm
Hi TT,
I don’t understand why only slightly except in the case of a large spike. When you mention placing an initial SL, do you mean to just leave it there, or do you mean moving it as new support/resistance levels are reached? Have you tested these methods against each other? If so, please describe how you tested it - how many sample trades, etc. - and details of the results. Hope this is not too much to ask. I’d truly appreciate it.
Thank you,
Norm
Hi Norm - I just put the word “initial” in there to include the situation if you want to move it as the trade progresses.[quote=“NormanA, post:32, topic:114716”]
Have you tested these methods against each other?
[/quote]
I have for my trading method, but that’s not helpful to you, because we trade differently.
I have a high strike-rate method and compared the effect of fixed stops with trailing stops (two different kinds) over 200 trades. Fixed stops were the big, clear winner. I haven’t got figures in front of me, now, but it wasn’t close.
I’ve seen several members I trust and respect here saying that they’ve never yet seen or come across any system which benefits, overall, from an automated trailing stop, and that’s what I believe on the basis of all the books I’ve read, too. Forum opinions, as so often, can be rather different.
Hi Tacita Trader,
For all concerned, I think I erred in not making myself clear from the beginning. I never had in mind automated trailing stops. I always had in mind manual trailing stops. I just fixed it in the thread title and my first post. Would you say that not moving your stop works better overall than well-placed manual trailing stops?
Thanks for all your input.
Norm
Sorry, Norm, but I don’t have enough experience to answer this. I’ve only been a profitable trader for a few months, and have only ever found one profitable method (which I found here and just copied, actually - I didn’t make the system myself).
I honestly doubt whether there’s a correct “overall” answer: my guess is that it depends how you’re trading and exactly what you’re doing.
For me, manual adjustment (just beyond swings high and low) works best, but I don’t try to do that until I’ve had two profitable trades each day with fixed targets and stop-losses. Or two net positive results, anyway. After that, I try to catch runners, when it makes sense to trail your stop manually. But that’s just the method I happen to use.
Hi Tacita Trader,
Thank you for all of your sharing. It seems like our conversation is winding down, but I’d like to request one thing: If you’d copy the link to where you found your profitable trading method, I’d appreciate it.
Thanks again,
Norm
Thank you. I’ll take a good look at it.
Take care,
Norm