The Break Even Stop is a Psychological Crutch for Newbies
- Thread starter Buy1Sell2
- Start date
Many have this after taking time off and it comes from past in your thoughts constantly, and it could be your method you been testing not as good subconsciously as you would like. So you develop a method that seldom loses or trade stocks long term till you build up confidence and you can also do hypnosis.
Many back test wrong and work on entries being most important, it is good to get in at right time/price, but enough money management rules in place make the difference. Often times traders are 1.5 trades a day from breakeven on the day, so knowing when to NOT take a signal is as important as when to take a signal. I am not huge into Elliott wave, but knowing where price is relative where signal is one reason I will pass on a trade. Say I get a long signal and get three previous pivot highs are being broken by couple ticks, any indicator will see this as divergence, it is starting to show on charts as rounding, so I will either pass on the trade or get in and not use 3 bar rule of being at breakeven plus one, any hint of coming back-am out.
This is where trading is night/day, when one position trades, usually is like set it and forget it and try to hang on for 2-3 year trade. I use what I have always used, get to breakeven plus a small amount and never move it till I get reason to get out, too much testing for what I do shows I screw myself getting out of good trades using trailing stops, once in a long term trade, exits can only happen on last day of trading week fifteen minutes before close.
Day trading or scalping for 1-8 ticks or $100 what I do, I simple don't use stops as I am hitting bids/asks and keeps me concentrating hard at price. I think using stops too often for many as areas of where mental pain ends, I have seen many watch till price stops them out like a deer in head lites and are relieved they took a loss. I believe younger trader to have catastrophic stops of triple what is logical so they an active part to current trade. I know many will disagree, but trading still comes down to way too many "try" it and way short on learning about charts. Inexperience is like bait to sharks, have seen newbs spend 3 months sim trading well and burn their account in a day, exchanges makes it too easy for anyone to open an account.
Isn't the reason that newbs burn out an account in one day because they don't use stops?
More like lack of knowing what to do before it happens. Too many use stops as "hoping" tool like price is going to stop right there when price could have said five minutes ago it was bouncing into resistance.
Would you agree that the proper use of stops will prevent a newb from blowing up in one day?
To me a stop is placed where I know that the trade is not working the way I planned for it to work. If I don't take that stop then I'm "hoping" that the trade will turn around and putting more of my capital at risk.
I doubt stops be helpful whether they blow it in one day or couple months, those who lack so much, stops won't help and those who are well prepared it might help. I remember my early days of day trading, I was often deer in head lites just waiting for stop to get hit to give me a sense of ahhhhh it is over and I knew price action well enough, but knowing is different than doing.
Exactimundo.
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The name ''break even'' usually doesnt take into consideration costs like power or ink pens...............................