Posted by: joetradingplace | May 19, 2015

SL and Cutting Losses

From those followers who are not on forexfactory, i have posted some good posts on placing SL using marker structure…and also how i manage my trades to but my losses. I will copy and paste them here

Looking at the chart below, i just took a short position in the green box @ 98.50, i wouldn’t place my SL above the minor resistance (red arrow), the reasons being that there is a more significant resistance level above it (@99.00), so price is more likely to react to that level than the minor level. So i would rather have my SL well above the significant level. A lot failing traders place their SL just above the recent high/low, and what usually happens is that they got stopped out and a few pips the market will turn back in their direction, and they say that the broker is there to get them by stop running. I don’t know a broker who will target to stop run small 0.01 cent per pip trades.Now lets say price breaks through the 99.00 level with strong momentum, i will be watching price closely to see if there is some follow through and i don’t want to be in that trade, so i cut my loss. Hope its explained well.

Screen Shot 2015-05-19 at 17.05.10

How I cut my losses…look at the chart below, lets say i sell on the red box, if price moves in my favour (1) and then comes back to my entry point, then moves back in my favour again (2) then comes back to my entry, and then moves back in my favour for the third time )3)…i will move my SL to break-even, you see how i am using price action to manage my trades, usually price tries to do something 2-3 times and if it fails it usually moves the opposite direction. you can see how both trades could have been break-even trades by managing them reading price action.Sometimes if price goes in my favour twice i move SL to BE, depending on how far it moves on the second drop (2). Imagine if price drops 20 pips in my favour (1), then come back to my entry, then drops again maybe 60-80 pips (2)…in this case i wouldn’t wait for a third drop, i will quickly move my SL to BE, because usually when price drops significantly if it reverses it usually moves so fast in the opposite direction. So i wouldn’t want to be caught in that reversal. Hope yu undertand what i am trying to explain.

Screen Shot 2015-05-19 at 17.18.23

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