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"To Stop or NOT to Stop" That is the question

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  • "To Stop or NOT to Stop" That is the question

    Lately, I've been getting asked the same question, and from novice and experience traders, surprisingly. "I don’t use stops. Or should I use hard stops?" I thought this was common rule 95% of traders abide by. But evidently it isn't so, let’s discuss. The short answer is simple, Y-E-S. It is a MUST do, and especially this week’s market action, is a perfect example. If you did not use hard stops, you had the potential to have a VERY bad day with the accelerated price movement.

    Using an OCO (One-Cancels-the-Other) or "bracket order" is optimal, because it is automatic. If your platform has this feature you should be taking advantage of it. It sends (3) prices in with ONE keystroke. Your buy or sell entry order, and both the stop loss price and the limit order (profit target price) as resting orders, based on your pre-sets. If you trade from the DOM, you will see where you were filled with the stop and target prices marked. You will have the flexibility to move them during the trade to manage with the markets action. All this is a good thing.
    Reasons traders don’t use stops: 1) Stops are for wimp and I brave 2) It’s too much work 3) My system doesn’t have the feature (I don’t think?) 4) It doesn’t do anything 5) I’m locked in, no flexibility 6) I don’t see the advantage
    Reasons traders MUST use stops: 1) Since electronic trading got more sophisticated, markets now run the risk of a “flash crash” at any moment 2) Computers at Investment Firms using ALGO’s have the ability to pump enormous size into the markets that are hidden UNTIL and can move prices in seconds, when submitted. As we saw this week with moves of 30-40 handles. 3) As an individual trader playing with the big guys YOU must protect yourself. 4) It will relieve the emotional pressure one gets once the trade is placed 5) It makes managing the prices easier in the DOM 6) It’s easier to trade

    Please don’t let your EGO get the best of you. Be a smart trader instead. Individuals traders work too hard to have their account be wiped out in one whoosh of swift price action.

    I hope I’ve convinced you. In the meantime, Great Trading! Check www.robindayne.com free Emotional Trading Test on home page and Free Videos in media>videos. Ask about the exclusive 30-Day Trade Accelerators Series if you’re serious about taking your trading to the next level. Email comments, questions to: [email protected]

  • #2
    Please don’t let your EGO get the best of you. Be a smart trader instead true statement Coach Robin too many traders feel they know internally when to pull the trigger and get out of a loss...instead they keep moving their threshold until the account is wiped out. accept the loss...next trade.

    Comment


    • Coach Robin
      Coach Robin commented
      Editing a comment
      Collin - A great observation and can be the end of a trader in a "flash". Mental control of fears is the key. If you are not in control you have a fear based block all your thoughts and actions are being filtering through, but most traders have NO IDEA this is the reason why and blame it on something else. It's the market it's the the system my set-up....BUT reality .....it's the trader mindset. Minimize the loss> examine the WHY> and say "NEXT" (trade) EXAMINE each loss for trading "pearls" It ONLY takes ONE great one to make a major change in profits. Thanks

  • #3
    Very true and great answer to Collin's as well I used to not set stops but after Oct of last year I figured its pry a good idea I've been setting trailing stops that are back far enough that I can't use the excuse that the algos sniffed me out lol but also set to each product that way if a flash does happen or if I get dazed for any reason I at least have a safety net cause I've blow out more then one account before and it's never fun GL to both of you

    Comment

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