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...Until my stop is hit, I am not wrong. I do need my stop to be taken out to show me that I am wrong. Until then, I have a great possibility of reaching profit. |
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If your stop is placed at a point where the conditions for the trade become invalid at your stop level that would be one thing. But you still should be able to see you are wrong on timing and Possibly right on direction.
Most people, however, use money stops. They base stops on the size of their account or on some risk to reward matrix. If your stop is based on how much you are able to lose, why not exit sooner once you realize that you are on the wrong side. You don't have to lose all of what you risked to be wrong.
This is one of the times that you can limit your losses. Sometimes the market will move against you and hit your stop. Other times the move towards it will be gradual and you can save capital by an early exit. CAPITAL PRESERVATION IS THE NAME OF THE GAME, AFTER ALL.
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I would rather get to the party 'early' than too late. Now, if you work under the assumption that your direction is correct, then why on Earth exit the trade? If you are correct, but early - why can't you just sit tight and give it some time?... |
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As a trader I need movement. If the market is not moving then nothing is being done. If you believe that one of the edges an off the floor trader has, is trend, then why enter a trade when trend in not present? Yes, the assumption was that the direction is correct. What is not known is how long the distribution/accumulation phase will be. While you're sitting tight waiting for the market to be marked up or down, there may be another market being marked up or marked down.
***As for profit target exits:
I am glad they work for you. I believe exiting at a target is speculating on the future when it is not necessary to do so.
*****One more thing: I am very glad that we are able to have a civil debate on a topic without the name calling and boorish insults of the other sites. Thank you Soultrader for community such as this.