Do you know the feeling when prices come back after a solid entry?
You already had a profit and then somehow prices came back to your entry level.
You have moved your stop to breakeven already, so the market pushes you out of your position, only to continue strongly in your direction!
Traders naturally do not want to end up with a losing trade after the clever entry had worked.
So they might move the stop quickly to breakeven. Now you can relax and watch the trend continue in your direction?
Nope. Because very often the trend will continue, but without you.
This market behavior is normal in efficient markets, because traders get paid for risk and embracing pain.
Let's look at some examples in the chart, four longs and one short.
The entries are solid price action signals (circles): Mostly second entries after pullbacks to the EMA or trendline.
So when can you move your stop to breakeven?
I would suggest you wait for prices to hit your entry price again, before you move the stop to breakeven!
In the chart I have shown these pullbacks to your entry level with an arrow. The entry prices are shown with dotted horizontal lines.
You could even increase your position at this time. Notice how the trend continues each time!
Can you avoid this whole issue of vanishing open profits?
Yes, it just depends on your trade management. That means you could scalp for a smaller profit.
In this case you would get out quickly, preferably at a predefined target.
You lock in profits before before the pullback hurts you!
With this strategy you would give up some more profit potential if the trend continues without a pullback.
You can also try to get the best of both worlds:
Take out a part of your position at your target and try to ride the trend to the moon with a runner!
Feel free to comment or ask my anything via PM. Or just follow me ;)
You already had a profit and then somehow prices came back to your entry level.
You have moved your stop to breakeven already, so the market pushes you out of your position, only to continue strongly in your direction!
Traders naturally do not want to end up with a losing trade after the clever entry had worked.
So they might move the stop quickly to breakeven. Now you can relax and watch the trend continue in your direction?
Nope. Because very often the trend will continue, but without you.
This market behavior is normal in efficient markets, because traders get paid for risk and embracing pain.
Let's look at some examples in the chart, four longs and one short.
The entries are solid price action signals (circles): Mostly second entries after pullbacks to the EMA or trendline.
So when can you move your stop to breakeven?
I would suggest you wait for prices to hit your entry price again, before you move the stop to breakeven!
In the chart I have shown these pullbacks to your entry level with an arrow. The entry prices are shown with dotted horizontal lines.
You could even increase your position at this time. Notice how the trend continues each time!
Can you avoid this whole issue of vanishing open profits?
Yes, it just depends on your trade management. That means you could scalp for a smaller profit.
In this case you would get out quickly, preferably at a predefined target.
You lock in profits before before the pullback hurts you!
With this strategy you would give up some more profit potential if the trend continues without a pullback.
You can also try to get the best of both worlds:
Take out a part of your position at your target and try to ride the trend to the moon with a runner!
Feel free to comment or ask my anything via PM. Or just follow me ;)
