Managing trades

[gifropan]

This is quite a vexing question and I was wondering what other trader's view on it is.

Suppose you initiate a trade, place your stop loss and also put in a profit take order assuming/hoping your trade is successful. If the price starts going agains you you will get stopped out. The difficulty is what to do when the market starts moving in your favour. There is no guarantee that your profilt take will get hit. It is also quite disheartenning to see the price go very close to your profit take and then reverse and stop you out. The question is this: At what point would it be wise to bring your stop down to break even so that if your profit take is not reached at least you don't loose on the trade. This follows the old adage that preservation of capital should be top priority and that if one preserves capital profits follow. If one brings the break even stop too soon you get stopped out due to the normal noise of the market and perhaps loose the opportunity of profiting from the trade. If the stop is not move at all, you risk turning a winning trade into a loss maker. Realising that there is no perfect strategy to deal with this problem What do you think would the most optimum strategy

 

[flipflopper]

Quote from gifropan:

This is quite a vexing question and I was wondering what other trader's view on it is.

Suppose you initiate a trade, place your stop loss and also put in a profit take order assuming/hoping your trade is successful. If the price starts going agains you you will get stopped out. The difficulty is what to do when the market starts moving in your favour. There is no guarantee that your profilt take will get hit. It is also quite disheartenning to see the price go very close to your profit take and then reverse and stop you out. The question is this: At what point would it be wise to bring your stop down to break even so that if your profit take is not reached at least you don't loose on the trade. This follows the old adage that preservation of capital should be top priority and that if one preserves capital profits follow. If one brings the break even stop too soon you get stopped out due to the normal noise of the market and perhaps loose the opportunity of profiting from the trade. If the stop is not move at all, you risk turning a winning trade into a loss maker. Realising that there is no perfect strategy to deal with this problem What do you think would the most optimum strategy

Only tons of screentime will answer that. Make sure your expectations are reasonable and logical.

My only advice is ALWAYS take your stoploss at the exact price you set... EVERYTIME.

You can be more flexible on your targets.

 

[tradingbug]

I read in a book recently that a stocks movement is 70% dependant on the general market movement. What this means is that one should watch the general market first before starting to pick your individual stock trades. Timing is everything. If you are able to time the general market first before timing your individual stock trades, then be right and sit tight......where the old adage of letting winners run and cutting losses short.

Livermore is timeless and always a great read.

 

[riskfreetrading]

Quote from tradingbug:

I read in a book recently that a stocks movement is 70% dependant on the general market movement. What this means is that one should watch the general market first before starting to pick your individual stock trades. Timing is everything. If you are able to time the general market first before timing your individual stock trades, then be right and sit tight......where the old adage of letting winners run and cutting losses short.

Livermore is timeless and always a great read.

that is what they mean by beta, and beta is a lot larger than alpha on timeframes that matter to trading.

 

[amitman]

Hi,
I suggest picking a some stocks and learning them to know what profit targets are usually reached (usually means at least 70% if the times) then when you know just about what your targets should be i suggest taking the first target to be a 1:1 with your stop loss (unless it's higher then the usual PT you exmined) and then scaling out the rest, depends on your strategy.
For example, if you know a stock moves about 15-25 cents in a wave then your Max target should be 25c (according to you stop loss) and a Min 15c (again according to your SL) after this is reached you move to stop to B/E and gets out with rest according to your strategy to gain higher profits, this way you get a Risk-Free trade and also follow the "cut losses short, let profit runs" etc.
From my limited experience you should never just adjust your stop, but you need to make shure you understand why the stop is there and why only if the stock reached that line it means you were wrong and not before.
A third method i think is reducing position at B/E if your not comftrable with where the trade is going this way if you eventually lost you lost only half and if the trade did went in your direction you will have some profits.