July 4th, 2010
Posted in Source: Forex Trading Scalper
Naturally, all traders know that you need to set a limit order or at least include a nice profit aim or closing signal in your intention and keep to it. It is critical not to keep a winning trade open until the instant ‘feels right’. There are several options for the positioning of the new stop and it is a smart idea to back test these for your particular system. First option, if your stop was originally 20 pips out from your opening position, it now moves to twenty pips from the price at which you just closed half of the order.
Second option, your stop moves to your entry position plus or minus the spread. So if the trend now turns on you, you will have a reasonable profit on the 1st half of your trade and break even on the second half. Third option, the stop moves to half way between the opening price and the existing price . What is best is dependent on the first position of your stop.
Similarly, never be tempted to apply this technique to a losing trade. It would be a gigantic mistake to only close 1/2 a trade when it hit your stop, unless you are testing different positions for the stop.
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