Moving your stop to breakeven: when, and does it actually help?
Breakeven stops feel safe and often aren't: they convert would-be winners into scratched trades, and the protection is partly psychological. Tested results are split, and the answer depends on the strategy's exit design.
What's your rule?
- when you move to breakeven (1R, a level, time)
- what your journal says it costs or saves
- whether you've compared breakeven against leaving the stop
The stop-loss guide covers the logic of stop management.
Background: Where to place a stop-loss: structure, volatility and time stops
A stop-loss belongs where your trade idea is proven wrong, not at a round number of pips. Here are the main methods and the mistakes that trigger stops early.
How far away should a stop-loss be?
Far enough that normal price movement doesn't reach it, at the point where the reason for the trade would be proven wrong. The position size should then be set so that distance costs a fixed share of the account.
Why was my stop-loss hit when the chart didn't reach it?
Charts usually show the bid price, but sell positions are closed at the ask. When the spread widens, the ask can reach a sell stop while the bid line on the chart stays below it.
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