The break even stop is a psychological crutch employed by newbies and sub-par traders in order to not lose money and feel good about themselves, but is actually more effective in keeping the trader from realizing extended gains. The trader who is using the break even stop is playing to not lose instead of playing to win. The break even stop rarely has any basis in fact with regard to market activity or support and resistance levels. The market doesn't care where your break even stop is. The market doesn't know or care what your account size is and whether or not you are wildly overextended. Suggestion: Abandon the use of this worthless and ineffectual tactic and set your stop according to market levels, using correct position size for your account. Get right.
The Break Even Stop is a Psychological Crutch for Newbies
- Thread starter Buy1Sell2
- Start date
Disagree.
Stops are to preserve capital and their exact placements are subjective.
Some are more logical that others, but the basic point is to "not let losses run too much against you". No science to it.
Last edited:
Stop goes where the signal / trade - breaks down / is invalidated (rather 1 cent / tick the other side of this)
Could be B/E..., could be a few cents / ticks away from B/E
Depends entirely on price entered / type of trade - momo trade is a different animal than the run of the mill directional trade
Anything else is pissin money..., and emotional capital away (death from a thousand cuts..., or death by one huge knife to the chest (large loser) - it still death)
RN
Could be B/E..., could be a few cents / ticks away from B/E
Depends entirely on price entered / type of trade - momo trade is a different animal than the run of the mill directional trade
Anything else is pissin money..., and emotional capital away (death from a thousand cuts..., or death by one huge knife to the chest (large loser) - it still death)
RN
I've found the period of time immediately after the trade starts working to be among the most difficult things, psychologically.
Entering, no problem. Talking a loss if the initial stop is hit, normally no problem. Managing a trade that works as well as expected or better, no problem.
It's that just-out-of-the-gates uncertainty where it's the hardest, and setting a ~ break-even (often at some minor technical level) stop is something I do, but admittedly in a very discretionary fashion, and often ineffectively.
Entering, no problem. Talking a loss if the initial stop is hit, normally no problem. Managing a trade that works as well as expected or better, no problem.
It's that just-out-of-the-gates uncertainty where it's the hardest, and setting a ~ break-even (often at some minor technical level) stop is something I do, but admittedly in a very discretionary fashion, and often ineffectively.
Last edited:
If you make a play... and stop out at "break even"... you haven't done yourself any harm. Sure, you might have had the stop a bit elsewhere and "avoided a stop-out loss and captured a bit of a profit", but that isn't the point.
Ahhh yes - that special time when uncertainty reigns ubber supreme
Trade fails quickly (relatively speaking) - we know
Trade works quickly (relatively speaking) - we know
Hell..., even a trade fails - and we're losing money - yet not exiting - we still know (which is why I think at least some choose to remain - the knowing is easier than not - a hideous situation to say the least)
It that special time - the time when after we're entered... price futzes around and the outcome unknown - meanwhile we sit there staring at the screen - with nothing but the not knowing..., the uncertainty
Couple of suggestions Sir
Set an alarm for when either the SL or PT hit - it sounds - then get up and walk away
or
Draw your attention to..., and focus on the PA (just be careful not to become biased by it)
And
In the meantime - come to accept uncertainty - because other than dying..., we were born (otherwise we wouldn't be reading this)..., and the fact we need air..., food..., water to survive - there isn't much that is certain
That time when price futzing around is the bitch time - come to embrace it Sir
RN
Last edited:
A trailing stop makes sense.
A break even stop rarely does, the market often meanders back and forth around the entry price.
If it has gone up a lot and you dont want to give back profits you should have a trailing stop That might at times be higher than you break even point or below your break even point, the break even point is irrelevant to your trailing stop.
If your trade was good enough to take on in the first place, you might have spent days waiting for the perfect setup, you should have faith in it and not get shaken out by a bit of noise.
A break even stop rarely does, the market often meanders back and forth around the entry price.
If it has gone up a lot and you dont want to give back profits you should have a trailing stop That might at times be higher than you break even point or below your break even point, the break even point is irrelevant to your trailing stop.
If your trade was good enough to take on in the first place, you might have spent days waiting for the perfect setup, you should have faith in it and not get shaken out by a bit of noise.
As others have said, I think it all depends on your premise. If you're short term daytrading something, trying to be in it right as it's making the move, I think a very tight stop loss is a good idea.
If you're holding overnight, longer term, you would probably need to give it more room.
If you enter because you think it's going up, and it doesn't, and it goes below your entry... why are you still in the trade?
If you're holding overnight, longer term, you would probably need to give it more room.
If you enter because you think it's going up, and it doesn't, and it goes below your entry... why are you still in the trade?