Lesson 03-April-2007: Monkey around the stop
April 3, 2007 – 9:16 pm
This series of short note is to record down thoughts, skills, and any lessons that I have learned from day to day trading. I am not talking about Technical analysis. One can really learn TA by getting a good book, and practice, so nothing much to discuss here.
So, what did I learn recently?
Stop Monkey-ing around with Trailing stops in Forex trading. I know I will attract a number of attacks or debate over this topic. But wait.
I note down this, because it suits my trading style. It doesn’t mean trail your stops is wrong. There is no right or wong in trading, but only what works for you and what’s not.
I start to realise, what I really love to do is to take care about how bad /how much I will lose in a single trade instead of how much I am going to earn in a single trade. Put in the stop, that’s it. I will either close my position at profit target (which is pretty far away) or at a predefined time. It hurts me more when watching huge profit run away from me because I got stopped out prematurely by trailing stop than accepting a predefined amount of loss. I can’t nor anyone can predict where will the price go and how much space we need to give to the trade to fluctuate before continue gaining. So, it is extremely tough to design the right trailing stop techniques. It can be done, but I am not into that.
OK, that’s the lesson 1. Lesson for myself.
From the desk of Tradergav.com
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Hi, Gav
What trailing stop do you use? How do you choose the right percentage?
Hi Al Murauski,
I do not trail stop in my forex trading. I just leave my initial stop loss order at the same place and let the position grow.
Have a good day,
Gav
I might move my stop once or twice (if that) after the overnight session. I do, though, religiously sell half of my position before I go to work.
Yes I trade at night and work during the day! I close out the position (letting winners run) at lunch and move onto the next setup.