I have a bad habit of making a trade, seeing the trade go my way and then setting a stop loss at the price at which I opened the position.

I shorted the GBP/USD this morning at 1.7615.  The pair declined over 30 pips so I decided to set a stop loss at 1.7615.  I figured if it went back up to my open price, the position would close and I wouldn't lose anything (or profit anything either.)

I can say from my experience that this is almost always a bad idea.  The pair has traded as low as 1.7524 since my stop was hit.  I gave up almost 100 pips.  

I've made this mistake multiple times and it always turns out to be a mistake.  I had an initial stop that I calculated from the charts and didn't stick with it.

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No. 1 :

Having a trailing stop is not a bad idea. The entry point of your trade is arbitrary however; you are right to want to pick a better indicator.

http://speculationrules.blogspot.com/

Best.

Allan

Submitted by allan • 2005-12-20 17:54:13

No. 2 :

I tend to do the same thing too. with GBPUSD being so volatile it seems it always happens. I think in this time of year trading is going to be choppy and if we keep moving our stops to B/E then it's going to happen more times than not...so it might be a good idea to stay with intial stops. we'll see

Tradervlad

tradervlad.blogspot.com

Submitted by TraderVlad • 2005-12-20 19:33:54

No. 3 :

shucks, u know what?? same thing happened to me!! i shifted my stop to BE.. and then the market hit it soon after - and then came back down again... (I shorted as well in this trade)

Submitted by Jeff • 2005-12-21 09:56:19

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