Is there a perfect answer for this timeless question? Not really.
But at the same time, trade management will make or break you over the long haul.
Ideally, we want to advance our stop levels to breakeven and then into the profit zone as quickly and efficiently as possible.
At the same time, however, we want to give the trade room to breathe.
Those who advance their stops too quickly have a higher chance of getting prematurely stopped out.
Those who advance too slowly, are leaving too much risk on the table.
Practice Makes Perfect
It takes time and experience to know when and where to advance your stop.
So, take the time to go back and analyze your old trades.
Now that there’s no money on the line, decide when and where you’d be advancing your stop, and check your progress.
I’ve prepared a chart in a real live trade that I’m actively watching as an example, so let’s take a look…
Above is a daily chart of Valero Energy Corporation (VLO).
This trade triggered an entry based on my standard 1%+ confirmation. I have a clear stop loss and a clear target.
This trade has progressed nearly to its target at the time of me writing this article. I couldn’t imagine allowing this trade to fail at this point.
As you can see, I’ve advanced my stop to the $100 level, which is in the profit zone above my entry price.
I placed it right under where the price had spent approximately 10 trading days consolidating.
There’s a fairly good chance that if price does retrace along the way, the area I’ve identified will likely hold and hopefully reverse the price and push it back up from there.
If it doesn’t, I’m perfectly fine with exiting the trade with a small profit as opposed to allowing it to potentially turn into a loss.
Remember… Our number-one job as traders and investors is preservation of capital.
Without our capital, we’re effectively out of business and can no longer live to trade another day…
Join Us On Tuesday
It’s set to make history. And it begins now, right here, where you have a chance to become one of the first people in the world to trade “options on micro futures.”
As you’ll see in this special event, you can learn how to make these futures trades again and again – in about 20 minutes, one day a week.
You’ll want to save you spot, because every seat will be taken, and fast, for this epic event.
Rules to Live By
“A person’s a person, no matter how small.” Dr. Seuss
Until next time, I wish you a beautiful and blessed day!
Yours In Trading Success,
Anthony Speciale Jr.