Bad Stop Loss Habits
by Trader Rich
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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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
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
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)
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
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
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)