Six of one, half dozen

Beginner Questions
1

…of the other?

Ok, First off, I must thank everyone here for contributing to what, I feel, is a great forum. Cool vision, and a lack of ‘noise’ compared to other forums. I’ve learned so much and been inspired just by lurking…

Hopefully my first post here is useful at best, or easy at the worst for others here. If my question is yawn-yawn, I’m hoping at minimum to get a push in the right direction to a thread which may contain what I’m looking for…

OBSERVATION: I see many people talking about/using the strategy in which they enter into a trade with multiple contracts. Then, splitting the target in X parts, they set X targets usually adjusting stop loss to break even on the remaining contract/s, thus eliminating all risk on the overall trade. I’ve used this method successfully a few times, and understand it’s premise and also efficacy to a degree.

QUESTION: If price begins to move aggressively in one’s favor after entry, couldn’t one cancel their initial TP as it is approached, and swap it for a stop loss for the same net profit behind current price while moving the stop loss for the second TP to breakeven? M.O. being to potentially snag the pips already gained & continue the entire position in the event one’s initial speculation was correct. A greedy question, but one I figured should be reviewed before attempting :slight_smile: I know many have walked the path before me.

EXAMPLE: XXX/YYY is currently trading @ 1.200 with bullish entry signal

[B]Initial[/B]
entry: 1.200 @ 2 contracts
S/L: 1.150
TP1: 1.250
TP2: 1.350 or more

[B]Modified[/B]
entry: 1.200 @ 2 contracts
S/L1: 1.200
S/L2: 1.225
TP: ??? (first sign of reversal?)

[B]Scenario[/B]- After entry, the price immediately rushes up to 1.240 and begins to slow slightly. At this point, ones initial TP is only 10 pips away. All indicators are showing more juice left in the move. If you removed the TP @ 1.250, and set a stop loss for one contract @ 1.225 this would remove the gate and “let the dog’s run” or at least shut the gate with the same net profit in the event of a reversal. Then, the remaining contract can either break even or head on to the desired TP2 level.

There’s nothing new under the sun, so I’m sure this has been discussed before, or something similar… I’m not thinking any complex math, Fibb’s, Gann’s etc, although I admit 50% retracement comes to mind. Essentially one betting on the rally continuing over price tracing back the initial sprint 50%ish.

I could see modifying one’s original plan to be going against the whole concept of discipline, and the improvisation required to manage the rest of the trade not falling into the “plan the trade, trade the plan” maxim. I also love jazz, go figure. Thoughts!?

Again, thanks to all,

Zeke Logan

2

If price begins to move aggressively in one’s favor after entry, couldn’t one cancel their initial TP as it is approached, and swap it for a stop loss for the same net profit behind current price while moving the stop loss for the second TP to breakeven? M.O. being to potentially snag the pips already gained & continue the entire position in the event one’s initial speculation was correct. A greedy question, but one I figured should be reviewed before attempting :slight_smile: I know many have walked the path before me.

This is really your trade management, while you are on the right track, something to consider using your example, the trade is moving 40pips, looks like its going to continue, so you remove your TP and set 1 lot to s/l +25 (1.225), now the trade reverses and goes against you and drops 90 taking out your s/l at +25(1.225) and the intial (1.150) = net -25pips.

I would suggest to try and remove the risk for your trade as soon as you can, so using your example again when it gets to the +40 and looks like its still going to go, set both s/l to break even, leave the intial TP and let the second one ride.

3

I think you’re at a massive advantage already by thinking in a fluid fashion. The majority of advice instills rigidity in your trading plans, so thinking counter to that is a [B][I]very good thing[/I][/B] indeed. Scaling in and out of positions, moving your TP and SL are all fine. Just keep risk at the forefront of what you’re doing and try the rest out. In my experience, good momentum breakouts favour moving your SL to B/E as soon as possible, reversals don’t unless there’s a very defined and quick point of reversal so you’re best of waiting until they’re well in the black before you do.

Give it a go, and good luck

4

Thanks for the advice, and votes of confidence.

5

FIRST, all depends on the type of trading one is doing – if scalping, one goes with the flow, up and down, as the price makes its way to your anticipated tp point. Once price hits the tp point (resistance), one plays the reversal and then any additional upside moves that can occur.

for short term position or swing trading, “normally” one sets their tp at a resistance point (assuming a long position) and waits for it to be hit but if one can tell the momentum will carry thru, then the tp point is moved to the next resistance point and the show continues on, for as long as time and momentum hold sway !

of course, this requires one to be at the computer, which your post suggests you would be, so what youre stating is a very viable alternative to how most trades are accomplished.

remember though, as each resistance point is reached, UNLESS the momentum is extremely high, there will be a retrace of part of the move as people sell off, shorts hop on for a small ride and new traders grab long positions at the bottom of the dip, so if you use a moved STOP LOSS, understand that if its too tight, YOU WILL GET STOPPED OUT ON THE RETRACE !

a number of people also take profit at the resistance point and set a BUY STOP on the other side of that resistance, but there is danger in that the price might move past resistance and gobble your BUY STOP and then make a magnificent DOWNWARD move (although this usually happens at specific times of the day)

all in all your ideas are sound and based on normally used tactics of trading !

enjoy and trade well

mp

[B][I]Within the great hall at Elfinore stands a wondrous coffer, precisely four cubits square and securely latched against the outside world. Inside that repository, shut away from impertinent eyes, abides many an intriquing trading secret garnered from around the world and over the ages !

As a child, i used to watch from the darkness as the secrets were debated and annotated by the elders. No one there held a single thought of my presence – BUT I KNOW WHERE THEY HID THE KEY !![/I][/B]