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Why I Only Trail Stops to Breakeven

August 30, 2012

By the time we opened the market was making new lows. I sold a pullback to the EMA, was filled at my profit target, and then shorted again on the next pullback to the resistance line. The risk/reward was a little dubious on this position, but it worked out. The third short was also off the same resistance line.

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Daytrading Strategy 30th August

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Once the bar highs fell below my entry I brought my stop-loss to breakeven – with two profitable trades in the bank, my main priority was to protect these gains. I could also have tightened my profit target, but I didn’t. Over the long run I know that it’s better to leave my target down at the lows where the potential reward for my risk is greatest (in this case a full 4.50 points). Remember: the maximum risk that you assume during the trade is the risk that counts. Trailing my stop to breakeven is irrelevant – I could have been stopped out for a full 1.50 point loss immediately after entry, and this is the amount that I must weigh against the potential reward.

+2.75

+2.25

+0.00 (scratched at breakeven)

(+5.00)

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