"never let profitable positions turn into losing ones"

[Gordon Gekko]

we've all heard this. i know it all depends on how you trade, but how do you decide at what point you enact this rule?

right now i think my biggest weakness is when a trade goes my way a decent amount, but slowly turns into a loser.

obviously you can't say when you're ahead by 1 tick, move your stop to break even. so how do you determine when to do this?

 

[1st_samurai]

Quote from Gordon Gekko:

we've all heard this. i know it all depends on how you trade, but how do you decide at what point you enact this rule?

right now i think my biggest weakness is when a trade goes my way a decent amount, but slowly turns into a loser.

obviously you can't say when you're ahead by 1 tick, move your stop to break even. so how do you determine when to do this?

I think it's good to do some scaling. You have a sense of how far the trade can go, and if it reaches there then you take some off the table, perhaps 1/3 to 1/2 of your position. At the same time you readjust your stop. If the market moves against you, at least you've locked in some profit. If it goes for you, then your can ride the rest of your position. This strategy helps smooth out the equity curve.

 

[Mecro]

Take partials.

Period.

If the rest of your size is goin back the other way and has lost more than 50% of original profit, time to just go. You can always re-enter.

Unless you are building a intraday-daily position, but it does not sound like you do that.

You are trading ES, no reason whatsoever you should ever let a profitable trade turn into a losing one. You dont have the illiquidity, order flow abuse and price improvement issues that many times force a profitable trade into a losing one.

 

[Idoogye]

If I were permitted to have only one trading rule, that would be it.

As for where you take profit on a winner, I'd say: once your original risk is gained, move your stop to breakeven; after that just close out the trade with a market order if/when you have given back 50% of your peak profit, that's all. Full stop.

 

[mikecully]

Are you trading contracts with expirate or decaying? What amrket are you trading?

In sending signals as an advisor and trading on it, I following the 2 contract rule which in short is have two large S&P contracts when halfway followed pull back. So if the full length is not meant (which the market loves to do) you are never squashed.

-Mike

 

[Grob109]

Quote from Gordon Gekko:

we've all heard this. i know it all depends on how you trade, but how do you decide at what point you enact this rule?

Consider dropping the rule from your approach. No matter what approach a person uses, this "rule" can be dropped.

right now i think my biggest weakness is when a trade goes my way a decent amount, but slowly turns into a loser.

You have a "target" rule. Personally, I tryto make the max but you have a "belief" about what is what. Write down the value of "decent amount" and when you "see" that, exit. after a while you can find out if you exits are of value. Right now you have small targets that you usually pass it sounds like. Try for a while to exit the first time you see the value named "decent amount". Currently you are seeing it twice. Exiting the first time is best for you.

obviously you can't say when you're ahead by 1 tick, move your stop to break even. so how do you determine when to do this?

You use stops to cut losses. Mostly, when you enter and start to lose right away, you sit and lose for a while and go out on stops. this is standard for a lot of traders I hear.

You either go in and lose or you go in and pass a decent amount twice and exit after that at less than a decent amount of a loss.

There is a third way that you do not do yet. you might want to consider after you enter and a trade goes no where, exiting at no whereafter a while. Stay in as long as it is going no where but, if after a while you figure out you did not enter to go no where, you can then exit with no gain or loss. Chalk it up as an entry that just didn't do what you wanted.

As for moving stops to BE, you might want to drop that rule since the other three choices cover everything.

 

[LoosenUp]

Quote from Grob109:

Grob109,

So, what is your normal (or average) target compared to your stop loss? What I mean is what is your risk/reward ratio? Please answer in simple English.

 

[progers82]

all of these questions are answered with lots of good historical data and back testing. that will give you the answer.

 

[cooldude]

risk/reward ratio? :eek:

Would you not "accpet" 1 point/pip for "reward" because it is not worth the "risk"?

I wouldn't complain if I had 50 dumb trades per day that always turned to only 1 point/pip profit and I had to decide whether to "take" it or not.

It is the most "droppable" rule and, the most stupid ever invented by "high end" traders to scare wannabes.

PS not picking on anybody. just my $0.0000002 on risk/reward ratio

 

[stock777]

So if you think the stock is going up 1 point, and its up 10 cents, you aren't allowed to give back the 10 cents? How much of the 10 cents do you have to preserve? 9 cents, 8 , 7, 6, SELL!!!!!!!

And then it goes up the point without you.


Sadly, it's a rule that really makes no sense and can't be implemented without screwing up the method you use.