Take profit or let stop loss be triggered?

GtGatsby

Trader
Oct 26, 2012
5
0
12
I always try to hit a 1:2.5+ risk/reward ratio.

1. Should I accept that a stop loss "has a job to do" and just let it do it, i.e. if it gets triggered, so be it? Or should I close my position when things appear to be going against me? Personally, I'm inclined to let a SL be triggered in order to try and reach my RR.

2. When people say, "cut your losses" is that the same as saying, "have a stop loss"? Or are they saying you should try to avoid having the SL triggered?

I welcome your opinions. I think a SL should be seen as a sunk cost, the price of entering a position and once you're in a trade, to let it run for better or worse. What do you think?
 

Robert

Trader
Oct 24, 2012
53
0
22
I trade using the MT4. If I open a trade of 0.10 lots (for example) and I set a stop of -50 pips and a take profit of +200 pips. If I am now in a profit of +120 pips and I feel the market may move against me. I can always raise my stop above the entry (let's say I lock +70 pips) and close parts of the open trades. I can close 1/2, 1/3, how much I want. You can do the same thing with losing trades, minimize the exposure (or cut losses)
 

Rob Taylor

Active Trader
Oct 14, 2012
131
2
37
UK
www.tradeforexmakemoney.co.uk
I always try to hit a 1:2.5+ risk/reward ratio.

1. Should I accept that a stop loss "has a job to do" and just let it do it, i.e. if it gets triggered, so be it? Or should I close my position when things appear to be going against me? Personally, I'm inclined to let a SL be triggered in order to try and reach my RR.

2. When people say, "cut your losses" is that the same as saying, "have a stop loss"? Or are they saying you should try to avoid having the SL triggered?

I welcome your opinions. I think a SL should be seen as a sunk cost, the price of entering a position and once you're in a trade, to let it run for better or worse. What do you think?


I don't trade with a fixed stop loss. My stop loss is always based on price action, so i will only close a trade if my set up fails. I will not set a stop and wait for it to get hit, that's just giving money away in my opinion.
 

GtGatsby

Trader
Oct 26, 2012
5
0
12
I hear what you're saying. I find it tricky though - in the past there have been several occasions where if I had just left things alone the SL would have held up (albeit very nearly triggered) and then the price rallies hugely - 1:6 or even 1:8 - but I've closed the trade early.

Personally, I try to be in a position where I can move a SL to break-even. That to me is almost as good as profit as I have faith that my strategy is profitable in the long run ;)
 

Enivid

Administrator
Staff member
Nov 30, 2008
16,039
817
144
Odessa
www.earnforex.com
I would recommend sticking with your stop-loss to get your positions closed. You have put it there for a reason, why ignore it and cancel the trade at some other level? Of course, if the original signal didn't play according to scenario and some new price level is now more justified as a stop-loss, you can move it there.
 

Fxpipper

Master Trader
Oct 26, 2011
1,132
3
49
I would wait for the SL to get triggered as would most traders..for the simple reason that we cannot monitor the trade on every minute. But you can exit the trade early, but I have had quite a few trades do the "retracement" just before the SL got hit..so it all depends
 

TheLastBear

Banned
Jul 11, 2012
192
0
0
I never use stop loss levels and leave that to the amateurs. I hedge my positions and use take profit levels. Those who use stop loss levels need to judge if they want to wait for it to be triggered and why they set it where they did. It is foolish to exit it prematurely as it may rebound and turn losses into profits. Those who just set stop loss level for the sake of it because they read that amateur traders use them without putting any thought into it (50pips, 75pips, etc.) are better of to stop trading altogether.
 

Robert

Trader
Oct 24, 2012
53
0
22
If you don't use a stop loss you need to trade other instrments to hedge yourself successfully. If you hedge your trades within the Forex market there will be a day where you will blow your entire account due to a margin call. It's not about the skill, it's when the market will turn its back on you
 

inggo

Master Trader
Jan 13, 2012
493
12
59
Philippinese
I usually adjust my SL on a winning trade but leave it if the trade goes against me, before palcing an order you set you SL at a certain number pips given that if you lose you know howw much it will cost you so let it be triggered. but what i do the the trade goes for my favor i tend to adt my SL and TP and keep it at a positive. :D I know it may not be the right thing to do but its still a win win situation right? :)
 

Fxpipper

Master Trader
Oct 26, 2011
1,132
3
49
I know, it is just silly to exit a position before the SL is triggered. If you look at the recent Euro movements, the retracements it just makes more sense to wait for SL to be triggered or opt for some other strategy.
 

Maria08

Banned
Oct 23, 2012
49
0
0
I always try to hit a 1:2.5+ risk/reward ratio.

1. Should I accept that a stop loss "has a job to do" and just let it do it, i.e. if it gets triggered, so be it? Or should I close my position when things appear to be going against me? Personally, I'm inclined to let a SL be triggered in order to try and reach my RR.

2. When people say, "cut your losses" is that the same as saying, "have a stop loss"? Or are they saying you should try to avoid having the SL triggered?

I welcome your opinions. I think a SL should be seen as a sunk cost, the price of entering a position and once you're in a trade, to let it run for better or worse. What do you think?

Have twice your stoploss Take Profit is risky because it means that for each move stoploss, you are thrown twice the pips you do. Ideally, the stoploss should be nearly the same size as your profit taking or less. I use a 30 pip stoploss and my range of 50-80 pips Take Profit.
 

TheLastBear

Banned
Jul 11, 2012
192
0
0
If you don't use a stop loss you need to trade other instrments to hedge yourself successfully. If you hedge your trades within the Forex market there will be a day where you will blow your entire account due to a margin call. It's not about the skill, it's when the market will turn its back on you

It comes down to understanding the market. In case you don't then use your stop loss, as I said retail traders use it and there is nothing wrong with that. It comes down to skill and knowledge.
 

ShevvyFX

Trader
Oct 29, 2012
3
0
12
I place stop losses on every trade. My stop losses are statistically predefined for each time frame I trade in:

15 minutes = 30 pips, 30 minutes= 40 pips, 1 hour = 65 pips and 4 hours = 100 pips

Using these stop losses ensures that 90% of all trades that go against me recover to become profitable.

I never use take profit orders but prefer to use a trailing stop, changing the limit if the profit increases.

With an average of 25 trades a day I have to be sure to cover everything just in case something goes wrong.
 

PaladinFX

Active Trader
Nov 21, 2012
76
0
27
Germany
www.paladin-consultants.com
I always try to hit a 1:2.5+ risk/reward ratio.

1. Should I accept that a stop loss "has a job to do" and just let it do it, i.e. if it gets triggered, so be it? Or should I close my position when things appear to be going against me? Personally, I'm inclined to let a SL be triggered in order to try and reach my RR.

2. When people say, "cut your losses" is that the same as saying, "have a stop loss"? Or are they saying you should try to avoid having the SL triggered?

I welcome your opinions. I think a SL should be seen as a sunk cost, the price of entering a position and once you're in a trade, to let it run for better or worse. What do you think?


When I read the title of this thread, 'Take profit or let stop loss be triggered?', my first answer was 'I'd rather take the profit' ... lol

Okay, on a serious note:
Re 1: You plan your trade, i.e. you have sound reasons to enter a trade, you define your target (T/P) and exit (S/L) and then you let it run!
Once you have determined stop-loss and take profit, you should never touch them, because it will interfere with your money management. Exceptions (the only acceptable ones) are the use of trailing stop and the shifting of S/L to BE.

Re 2: 'Cutting your losses' means accepting that not every trade is a winner. Every order needs a stop-loss, to ensure that setbacks can be controlled and don't seriously deplete an account.
If the S/L is triggered ... so be it. Analyze the trade, to make sure it was executed in accordance with your Trading Plan, learn from it, and then move on to the next setup.

Even Mr Soros, who has made a buck or two trading forex, hehe, had trades that hit his S/L by just a pip or two and then turned 200 pips in the 'right' direction, surpassing his (by now defunct) T/P by a factor of three.
It just happens, to everybody.

The important thing is to have a sound strategy and solid money management.
With those two things functioning properly, money is being made in forex, regardless of 20-30% losing trades.


Cheers,
P.