[Soultrader]

I am surprised to see the numerous amount of traders who trail there stops based on percentage or points. From my experience trailing stops blindly is a sure way to get stopped out just to see a further move in your favor.

When I trade the Dow mini's I will always use a smart stop. Instead of trailing a stop by certain amount of points, I will manually move them 3 ticks above a pivot point. For example, if I am short the Dow and the market breaks below S1, I will move my stop +3pts above S1. If if then breaks S2, I will move my stop +3pts above S2.

Another method I use is by taking the 50% range from the point of entry and the price where the Dow is currently trading at. For example, if my entry is at 11200 and the market is trading at 11150, I will move my stop to 11175. The idea behind this is that if the markets retrace by more than 50%, the down trend is no longer valid.

Note: I scale out on all my trades. My basic rule of thumb is to scale out half at +10, a quarter at +20, and the last quarter using smart stops.