The Break Even Stop is a Psychological Crutch for Newbies

[Turveyd]

Ya I know what you mean, aware of the setup concept.

But I also have rules, where it's going to be a trend move.

IE Down 20pips, back up 6pips and stall, jump on that failed up move short, did it on the DAX earlier, $120 in 31seconds, it drops fast so the people buying the first reversal don't get time to get out and slippage on the SL likely creating a bigger loss.

Market is full of tricks, learn to go with them to profit.

 

[Autodidact]

But I also have rules, where it's going to be a trend move.

IE Down 20pips, back up 6pips and stall, jump on that failed up move short, did it on the DAX earlier, $120 in 31seconds, it drops fast so the people buying the first reversal don't get time to get out and slippage on the SL likely creating a bigger loss.

Market is full of tricks, learn to go with them to profit.

We cannot trade without rules.

 

[Buy1Sell2]

For the life of me,I can not fathom why these threads exist with strong opinions and not a single shred of any credible statistical analysis validating ones beliefs.

My main focus when posting on ET, is to post items that are rooted in common sense. It is a given that if you place a breakeven stop and that breakeven stop is inside the noise, you will most likely do just that---break even (before commissions).

 

[taowave]

My main focus when posting on ET, is to post items that are rooted in common sense. It is a given that if you place a breakeven stop and that breakeven stop is inside the noise, you will most likely do just that---break even (before commissions).

Common sense validated by statistical analysis makes sense.Anything else is a belief,and most likely has a 50 percent chance of being corrrect.

If trailing stops/breakeven stops don't work for YOUR style of trading, so be it,but that is as far as it goes unless you can prove otherwise.

You assessment that successful traders do not employ break even trailing stops is not accurate.Far from the truth,and to imply that one should set stops at support resistance levels is opening the flood gates for those more quantitatively oriented to debate.

 

[Buy1Sell2]

Stops are to be set outside the noise, not at support resistance levels. A stop that is inside the noise will be very likely taken out. I know this, as do other successful traders, from experience and common sense. This is correct on any style of trading. The market doesn't know your breakeven point. It doesn't care. If that breakeven point is inside the noise and you have set a stop there, you will be taken out likely before the trade has time to work.

 

[garachen]

You shouldn't trade price. You should trade price deviation from value. I think stops are inherently harmfull. They are too blunt an instrument. It's like detonating a bomb in your trading account. That's why hunting for stops is reasonably profitable. Taking the other side of stop orders is free money.

But, yeah, keep using them... I'm sure somebody who's "the exception" will have some justification.

 

[Buy1Sell2]

Stops set outside the noise are rarely taken out by stop hunting. Stop hunting is relatively easy when the stops are inside the noise or right near support/resistance levels.

 

[i960]

I don't set stops inside the noise. I do at times move stops to BE when they've moved outside the noise but haven't entirely completed the projected move yet. I feel that's a sane use of BE stops and not a crutch.

 

[Buy1Sell2]

I don't set stops inside the noise. I do at times move stops to BE when they've moved outside the noise but haven't entirely completed the projected move yet. I feel that's a sane use of BE stops and not a crutch.

If the stop selected outside the noise happens to fall at breakeven, then that is the only time that a breakeven stop makes sense. Even so, it is only coincidental that the appropriate stop lands on your breakeven point.--so somewhat agree with your posting.

 

[ScottColeFTA]

Common sense validated by statistical analysis makes sense.Anything else is a belief,and most likely has a 50 percent chance of being corrrect.

If trailing stops/breakeven stops don't work for YOUR style of trading, so be it,but that is as far as it goes unless you can prove otherwise.

You assessment that successful traders do not employ break even trailing stops is not accurate.Far from the truth,and to imply that one should set stops at support resistance levels is opening the flood gates for those more quantitatively oriented to debate.

My sentiments exactly. Lots of successful quant traders don't bother with the perceived "support and resistance levels" referred to in the OPs posts. In fact, I know of some strategies employed by some of these very successful hedge funds that utilize time based exits, regardless if the market is blasting off in the direction of the position or not.

Bottom line is if you haven't quantified whether a breakeven type of stop will cost money or not, then you really don't know, whether you think it is common sense or not. Whoever said the markets have common sense anyway?

The ultimate goal is to simply make money, and it really doesn't matter how you do it. Whatever works, and to each his own.