[wsam29]

This has gotten me think.

The point is not the tightness or loosness of the stop, its getting your trade to BE as soon as possible but also the risk involved to make that last bit.

A couple of recent grain trades has gotten me to think about those trades, so thanks for being Devil's Advocate. The direction for both trades were correct The management of the beans trade was horrible.

went long july corn around 427 (on 23 Jan 07)with a stop of 5 cents ($250), that got taken out the next day or so, but it was pretty quick. sit on hands and hum and ha about what corn is doing, not much, trading sideways.

later beans made a move, jumped on around 748 (on 30 Jan 07), with a 10 cent stop ($500), the management was poor due to thoughts about keeping the small 8 cent profit that I had and thoughts about what beans may do, each down tick confirmed what I had in my head, what else to do but bail out. beans over 800 right now or $2500 from my entry per contract.

that's besides the point.

I'll use YM as an example of my madness.

10 risk
10 reward target

1:1 initial risk, reward ratio

even if you scale out of a trade with multiple of 2 lots, you can still implement a BE trade by moving your stop, but I'll just use an all in, all out example.

market goes +8 on your trade, now if you are hard headed and want those last few ticks, well, you know what you are. if you don't move your stop to BE, your risk has increased! for those last 2 ticks, you're willing to risk 18 ticks! whats that a 9:1 risk:reward, the trade will still cost you from your own account 10 ticks for find out, 8 from the market or $90 per contract.

with the BE management, your risk now becomes 4:1, if you're willing to risk the 8 that you've gained for another 2 ticks, but what will it cost you from your own account to find out??? nothing other than commissions and possible "slippage", ok so a trade will never be risk free, but its been reduced big time!!! But the thing is willing to give up a winning trade for your target.

Even if you scale out, this can still be implemented.
2 lot multiple.

risk 10 or ($100 per 2 lots)
half target +5
move stop BE -5
other half target your call, trade is risk free now.

The issue at hand is getting stopped out for scratch trade and the market takes off. How to deal with that is a psychological issue, not a entry, exit technique or method.

The size of your stop is a risk tolerance subject or what you feel is suitable for a trade to work out.

The desire for the trade to work out will also affect your judgement of whether to move the stop or not and to what point.

Hope for huge profits, expect a scratch trade. The worst case is you exerted some mental energy and it did not cost you too much money.

[brownsfan019]

Winfred - that's partly why I suggested a BE minus 2 setup.

Trading is hard enough as it is and when you turn a 'winner' into a tiny, tiny win it will really mess with your psyche as you saw with your ag trades.

Good Trading!

[wsam29]

meh, I've come to terms with stuff like that. It does not bother me like it used to.

I just look in the mirror and know who to blame.

[Rocky Mtn Trader]

Here is what I've been using on stops and targets.

Lets say your trading 2 contracts on the ES.

My stop loss is -1.5 points on both. Worst case scenario....-3.0 loss

My first target is +1. After this, I move my stop to -1.25 or -1.0 or -.75. In other words...I'm still giving the trade some "wiggle" room, and if I get stopped out, the loss is minimal.

If you are getting in your trades at the right time, getting covered at +1 on your first contract is a high percentage. It also is good on the phyche.

After the trade is moving in the right direction, I move my stop to B/E when it gets to +2, +2.5 or +3.0. I also watch where retracements are to move my stop with the trade. I have found that I'm better to take +3 or +4 on my 2nd contract, than have the trade move back to -1 and stop me out. That drives you nuts.

My 2nd contract target is +5. If I don't get much heat on my entry, then I know the trade has a good chance to move +5 points. If I take -1 heat, then I usually take + 4 profit. A lot depends on what action is happening toward the end.

I have found that if I move my stop to B/E too early, sure enough it will come back and stop me out. On the ES, once the trade gets past +3 points, the retracement back has a good chance from never reaching your entry.

Bottom line...The market does what it wants to do. When I get a lot of heat right from the beginning, chances are this was not the best entry and I'll get stopped out regardless. Part of trading.

Like Soul Trader, my problem is getting out too early and not let the winners run.

Try this sometime. If your Sim trading....get in a trade, after you cover your +1, move your stop to -1 or -.75. Figure where your profit target "should be", and then get up and walk away. Do this a couple of times...you will be amazed at how often this trade will pay off.

If your trading 4 contracts...target first 2 contracts at +1 points, 1 at +2.5 points, then move your stop to B/E, and let the 4th contract hit your final target. This trade actually has better ratios than using 2 contracts. You may get stopped out on the 4th contract at B/E, but you get your 2 at +1 and 1 at +2.5 a lot of the time. That's a +4.5. You will also be surprised how many times you get +9.5.

Hopefully this might help someone.
.

[solfest]

I trade crude oil and have always used a BE + 1 stop. I am only trading one contract and do not use a target for exiting the trade.

So I find that getting to BE helps to give me some "emotional capital" to stay with the trade as it is now theoretically risk free.

I have not done the statistical analysis I should have on this but my memory database (which is flawed) keeps the BE move in the plan.

I am trading range bars and go to BE + 1 after 13 ticks, the size of the range bar traded.

http://tradingcrude.blogspot.com/