If you have been following my blog, you will know that I have the habit of shifting my stop loss to breakeven in trading whenever the price move certain pips in my favor. This is to protect my own account as well as the account of the user of my trade copier service.
For a trader, the most important thing is not to make profit, it is to protect our account to live to trade another day. This is one thing that most new trader fail to understand.
If you have been trading, you will know that there are times where the price will move certain pips in our favor and suddenly reversed to stop you out.
After years of trading, I realized that shifting my stop loss to breakeven will reduce the losses due to such reversal.
Below is a trade that I have taken yesterday. If I did not shift the stop loss to breakeven when the price moves 30 pips in my favor, the trade will have turned into a losing trade. With this technique, the trade ended up as a breakeven trade.
**Most of you guys must have thought that I should take the profit at 30 pips instead of allowing it reverse back to breakeven.
But if I were to think the same way as you guys, I will never had my 100 pips and 150 pips profits as I will always exit at 30 pips.
That is the difference between a profitable trader and a new trader who struggle in trading.
Below is the screenshot of the trade outcome
Therefore I will advice all of you guys to shift your stop loss to breakeven when the price moves ard 25 to 30 pips in your favor to reduce losses due to such reversal.
Hi
Is it worth taking some profit if it starts to reverse and then set another buy order at the highs Incase it eventually goes in our direction? At least that way we are still in the trade?
Hi
It actually works out the same. If you take profit at some point to get some profit and then enter another trade, you will have to set another 25 pips stop loss. If it reverses, you will still lose money
Hi Kelvin, i like the idea of implementing stoploss to break even the trade but is it ok also to set the stoploss which is some where above the break even so that let said the trade reverse and hit the stoploss , we can still earn some little minor profit rather than zero profit?
Hi Shawn
I usually do that when the target profit is like 100 pips to 150 pips. I will shift the stop loss to 50 pips when the price has moved like 75 pips.
But for 50 pips target profit, it is pretty hard to do that.
Dun ponder over those small 30 profits that was taken back as we are always looking for those 50 and above pips profits
Would it not have been a better idea to take the 30 pips profit?
Hi Paul
If we always cut short our target profit, we will never be able to achieve full run to give us those 100 pips to 150 pips profits