If you have a hard profit target then you can have the luxury of posting the bid or offer with a limit order and let the trade come to you. However if you are taking a stop then you have to take the bid or ask, otherwise you're 'hoping' for a sudden short term change in the momentum and oftentimes will just end up chasing.
How do you close a losing trade?
- Thread starter Robert Weinstein
- Start date
The problem with using "hard targets" for exits is that you become inactive, and do not respond to market changes when need by. This is similar to the "buy and hold" strategies that have cost so many investors so much money.
This is akin to putting in stop losses, which we rarely do when trading on consistent basis....market conditions change, and often times we don't want to be "stopped out" (like a "block print" down .50 cents in a stock and other 1 time events like this morning in the E's).
I agree that targets are fine for longer term trades at times....but I prefer that our people keep an eye on their positions and adjust according to market conditions. You'd be surprised at how much money is made/saved by closing a trade and getting back in a point or two lower....
Don
If you have a methodology that works using hard stops, then there is nothing wrong with using them. There are many different ways to trade. I have found that for 'my' trading hard stops are more profitable. I can't speak for anyone else however. My point was that "IF" you use hard stops then that would be a reason for posting a bid or offer rather than taking a bid or offer.
I also don't think that using a limit order for a profit target is akin to using a stop loss. With a limit order at a profit target I am hoping that someone will take me out of the trade (sometimes even praying), whereas with a stop loss I would be hoping to stay in the trade. I agree that it may not be a good idea to advertise a stop loss, but I will have my profit target exit in the system as soon as I enter the trade to get in line early at that price.
Take it off fast and don't look back!
I use a mental stop. When a trade is going against me with momentum, I send a market order just before my mental stop and 98% of the time I'm executed @ or around my stop loss(mental). That's in a fast market. A slow one is a no brainer
It is also a problem I have. However if one cannot afford to pay the spread, then one is in the wrong game.
I play the bonds, one tick is 31.25, a little more expensive but it can move 5-6 rather quickly. After a couple ticks down I find myself getting "comfortable" with the loss. I "feel" it should come back, so I hope for a retrace to get out, and then lose another 2 ticks. Down 125 I finally hit the market and lose an extra tick. Stupidity. Lately been learning to take the 2 and get out.
Make 'em pretty, Chris