Getting Shaken Out at Breakeven

Filed under: Learn Forex Trading |


In today’s live trade update (on the XAG/USD pair), I talked about being shaken out at breakeven after moving my stop loss. I did this to protect my bank, and to get in on a risk-free trade once it was comfortably in profit. However, the market became volatile and I was shaken out for a breakeven trade.


Screen shot 2013-02-08 at 11.14.20The issue of moving stops to breakeven is one that I come back to time and time again. Common sense dictates that when you are in decent profits, that you should protect some of those profits, or at the very least, prevent a winner from turning into a loser. In fact, this is one of the most common phrases among trading gurus: “Do not let a winner turn into a loser”. However, in the long run, I am not wholly sure that this gives us an edge, because very often, moving a stop and exiting at breakeven can stop us from getting big profits.


When the markets are particularly volatile (as shown in the live trade update today), stops can be taken out very quickly. However, if you take a long-term approach, then protecting your bank has got to be on the agenda, and as such, moving stops to breakeven can be an option. I think the key is to let the market move significantly before moving your stop to breakeven, and think that – ‘If the market moved back to this level – would I want to be out of this trade?’. If the answer is ‘yes’, then by all means move that stop to breakeven. It will give you peace of mind when you go to bed, knowing that your bank is protected. Generally, when a trade moves into profits of two times my risk, I move my stop to breakeven. I think this is a good rule of thumb to have, because anything less and you are risking the market taking you out of too many trades.

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