Breakeven stops

[Ali Farhad]

Should I move my stops to breakeven when in profit?

[Rishabh Tyagi]

Yes, there should be a planned strategy for managing positions once the trade is live. Breakeven stops is a good one.

Execution

If your setup indicates that the stock could move further in favor of your position, and you wish to hold, then you should adjust the stops not based on the profit/loss but according to your strategy. Identify strategic stops and move them accordingly.

In the case where your strategy does not indicate a clear favorable move, and you still wish to hold, moving your stop to breakeven level puts you at no risk and a potential rewards setup.

 

[Djamel Brahimi]

A lot of people will tell you yes, whenever your in good profit move stops to B/E. i think it isn't a good idea. I believe that you should definitely trail your stops but moving it to breakeven just to protect risk is detrimental in the long run. Especially if you move the stop too soon or when it is only in a little bit of profit. 

It is better to trail your stops according to where you believe that your trade idea is no longer valid.for example, if the market has gone in your favour by 80 pips and has smashed through a key level at 30 pips into profit. then it would be a good idea to move your stops just below or above that key level.

By moving stops too soon you also reduce the percentage chance of the trade becoming a profitable one. So only move them to b/e if there is a logical reason why, not just to reduce risk.