Arts of stop placment and profit target

[kingking]

In the forum, I have notice some threads discuss the management of stop loss and profit target. I still want to strat a thread on this issue and hope to hear the advice of the seasoned traders. I am still trading 1 contract on the YM and trade mostly on the small time frame

My current stop placement is 10-12 points. I rarely change it unless a support or ressitacne is 1-2 points around. In such a case, I will place a 14points stop placment. Neve adjust it

When I have 8 points gain I will adjust my breakeven to +2 to lock in my profit. I do not trail.

My profit target is 12 points but will adjust according to the market condition to only widen the target for another 10 points. e.g 22 points, 32 points

My struggle with this setup is that there are times I will be knock out prematurely for only 2 points (adjust to 2 when a gain of 8) while the market can offer me 12 points and sometime even more 22 points or 32 points. It piss me off!
But I am glad at other times because I captured 2 points instead of losing 10 points with the setup.

Is there a better setup to refine my current strategy?

[wsam29]

	Quote:	kingking
	In the forum, I have notice some threads discuss the management of stop loss and profit target. I still want to strat a thread on this issue and hope to hear the advice of the seasoned traders. I am still trading 1 contract on the YM and trade mostly on the small time frame My current stop placement is 10-12 points. I rarely change it unless a support or ressitacne is 1-2 points around. In such a case, I will place a 14points stop placment. Neve adjust it When I have 8 points gain I will adjust my breakeven to +2 to lock in my profit. I do not trail. My profit target is 12 points but will adjust according to the market condition to only widen the target for another 10 points. e.g 22 points, 32 points My struggle with this setup is that there are times I will be knock out prematurely for only 2 points (adjust to 2 when a gain of 8) while the market can offer me 12 points and sometime even more 22 points or 32 points. It piss me off! But I am glad at other times because I captured 2 points instead of losing 10 points with the setup. Is there a better setup to refine my current strategy?

The problem is not your trade management, its your acceptance to being taken out and the market running in your direction. there is no right or wrong to your management style, just what is between your head and the way you think.

expect and accept trades will have that outcome.

[wsam29]

You the right idea about moving your stop up the moment the markets gives you a risk free trade. Just work on your mental part of the game.

If you need to smash your fist through a wall, break some key boards, do it, as long as you're not "pissed" at the market, you'll have a clear head to see what the market is actually doing.

But this is my routine, after closing a trade out, win or lose, I take a 10 minute mental break, I do anything else other than watch price action. Surf the net for porn, check email, check this site, do anything else other than watch what the market continues to do after your exit.

Why, I used to have this same issue you are dealing with right now.

Trading one lot is restricting.

What you could also do if you come to terms with it, is have an open target, just a stop in place and the moment the market gives you that risk free trade, move your stop and ACCEPT the worst case is a BE trade in which the market paid for your use of some mental energy.

Now I already have a good idea as to what you may be thinking while in a trade like this. you might think, "I have a profit, I should take it, but what if the market goes against me, I'll lose what I have right now, but, but, but..."

There are many factors other than market related issues that cause you to action or inaction. Just monitor yourself more closely each trade and you'll pick up your habits of thinking.

[brownsfan019]

King - I think wsam has it for you. Either you have to accept this or change it. It really comes down to testing multiple stop movement setups and see what works best for you over time. Nothing is bullet proof.

Here's what I found. Either:

1. Take trades going for a 'smaller' profit target with multiple trades
2. Take trades looking to catch the bigger moves and a lower amount of trades

Now, once you decide on what type of trader you are, that can help dictate what type of stop movement you use. For example - if you decide that you want smaller profits but multiple trades, then you should be aggressive with your stop movement or simply exit at a predetermined profit target. Or you can be 'generous' with your stop looking to catch the bigger move.

I have found that it's very, very difficult to catch the bigger move and have an aggressive stop. The chance for a small retracement is just too strong, unless of course trading around econ news.

Just keep in mind that while I am sure you will get some good advice here, you have to test and prove to yourself what is best for you. Sorry to sound like a broken record, but I really believe in proving a strategy to yourself. We can provide guidance here, but until you are on board, it's going to have a hard time working.

[walterw]

King, Stops should be placed in relation to price action (pivots) and not a fixed value... same is true for profits, price action should tell you when the move is over and not a pre fixed target... fixed targets its like spoiled kid that wants something (candy).... markets dont give some times what you want... market has a dynamic you want to simply follow... I here a lot here on TL about 10 12 points targets on YM.... thats some how pretty foolish, because some times you will get a 30 move and you leave money on the table... and some times market made a nice 8 point move and you didnt get it and waited to get mowed with - 10 -12.... price action is the best way you can manage a trade in terms of stop/trail.... if the market wants to give you a lot of profit he will give you, if he doesnt want to give you much profit... want give you... now never forget this : RRR = live or die.... cheers Walter

[walterw]

	Quote:	wsam29
	Just work on your mental part of the game. If you need to smash your fist through a wall, break some key boards, do it, . Surf the net for porn

Well thats new for me, sounds very proffessional jejejej.....

[wsam29]

thanks for paraphrasing my quote.

[Soultrader]

	Quote:	walterw
	King, Stops should be placed in relation to price action (pivots) and not a fixed value... same is true for profits, price action should tell you when the move is over and not a pre fixed target... fixed targets its like spoiled kid that wants something (candy).... markets dont give some times what you want... market has a dynamic you want to simply follow... I here a lot here on TL about 10 12 points targets on YM.... thats some how pretty foolish, because some times you will get a 30 move and you leave money on the table... and some times market made a nice 8 point move and you didnt get it and waited to get mowed with - 10 -12.... price action is the best way you can manage a trade in terms of stop/trail.... if the market wants to give you a lot of profit he will give you, if he doesnt want to give you much profit... want give you... now never forget this : RRR = live or die.... cheers Walter

Now becareful there walterw I wouldnt say 10-12 pt targets are foolish. Well... yes and no. Let me explain. King mentioned that he trades 1 contract. Now when I used to trade 1 contract my mentor recommended me to take 10-15pt targets. This to me makes perfect sense. You mentioned, "because sometimes you will get a 30 move". Exactly.. only sometimes. For those who trade 2 or more contracts, taking 10-12pts is somewhat too small. I personally scale out half at +10 and try to hold my other half for 20-30+pts. I do this to eliminate risk completely... because I move my stop to b/e after exiting half.

King, trading 1 contract in my opinion is fairly difficult. I usually recommend new traders to start with 2 contracts because you can scale out and learn to ring the register. Maybe the ER (russell) provides a better opportunity for 1 lot traders? (because it moves) Brownsfan pretty much nailed it to the point. Maybe adjust your trade setups that can focus on larger moves instead of your 12 pt setups. Unlearn and learn.

[ashmat]

Hi King,

Stops and targets were a huge struggle for me in my early years of trading and it can be really difficult, but not impossible to overcome. I like brownsfan's reply when he mentioned the time frame.

Here's what I found. Either:

1. Take trades going for a 'smaller' profit target with multiple trades
2. Take trades looking to catch the bigger moves and a lower amount of trades

So I think it is very important to decide what type of trader you are. I am pretty much a pure scalper and my stops are very tight, but I am seldom in a trade for more than a few minutes. I just found that after trying several methods and time frames, this style suited me.

I have a question as well. Have you looked to see how often you score on the larger movements versus the smaller ones? i.e. What is the ratio to the 2+ trades, 10+ trades, etc. If you aren't getting a good ratio of the bigger moves, you may need to look at tweaking your entry system. If you are getting a good percentage of the larger moves, then the smaller hits are just part of trading.

Finally, It sounds like you have good discipline, which is 1/2 the battle. Just watch the emotions and tweak your setups until you feel comfortable.

Hope I could help a bit. You'll get a lot of great advice from this forum and hopefully you can find some things that work for you.

Good Luck (I like the idea of the "stops" thread)

Ashmat

[Anonymous]

Thanks to the wonderful people on this forum, I have been able to readdress this issue. In truth, I went back to a book that really shaped my belief system.

We all trade our belief systems.

I believe in surrendering to the market, in following it.

I believe in wanting what the market wants, not what I want.

I liken myself to a salmon egg floating down stream, going with the water. I do not know my destination, but I know the stream will get me there. The other traders are more like the adult salmon. Swimming against the current. Struggling to go up when the path of least resistance is down. For the egg, the destination is new life. For the adult, it is not.

Okay, so how does this work in terms of stops?

Once in a trade, I will only move my stop in the direction of the trade. As I said in another thread, I will only exit a trade with a profit by letting my stop get hit.

Exiting at a profit target is speculating on the future when it is not necessary to do so. Allowing the market to take you out, is dealing with things as they are, not as they should be.

On time stops. Here is where I had to go back and think about what I believe. If I exit at a time stop, then It is not about what the market wants but what I want. A time stop is saying, " I want x amount of handles/ticks/pips in x amount of time". The market does not care about what I want. It will take care of me, but on its terms not mine.

Things are different, however, when the trade moves against you from the start. I believe it is possible to know that you are on the wrong side of the trade PRIOR to your stop being hit. One does not have to wait for his stop to be hit to know he is at least wrong on timing and possibly right on direction. If your stop is 15 ticks away, I find it hard to believe you don't know you are wrong when price is 3 ticks away from your stop.

Can the market move 1 tick to your stop and then turn around? Certainly. So have the ability to get back into the market. If you are unable to get back in, well, there will always be more moves. The market will provide.

Don't concern yourself with "missed points". Stay in the moment. The real error is not what is "missed/given back" on this trade, it is not being in position to take advantage of the next opportunity because you were not in the moment. But rather still in the past asking "what if".