If I have a 50 pip stop, once my entry is 20+ pip positive I will close out 80% of my entry and leave the remaining 20% with a don't care mind frame. I can do this because the 80% has paid for the 20%'s stop. HUH??
Trading a standard it will look like this:
50 Pip Stop
@ 20 pips close 80% (or $8)
20 pip
$8
$160 Banked
50 pip stop remains
$2 left in trade
$100 Risked
So I banked $160 and have $2 running in the trade. If the market never comes back, I'm a happy camper. If it comes back and stops me out, I still would have made $60 or what usually winds up being a lil over 1%.
Does that make sense? I'm sure there is some great math formula but I try to keep it simple.
The Rule:
"Once the market pays you 40-50% of you stop, close 80% of your entry. Leave the remaining 20% and do not move your stop until new resistance/support has been created"
I don't use trailing stops because in my opinion its about support and resistance. And since I base my stops at those levels, a trailing stop would have me kicked out of the market before the real move can happen.
That's one of my TP rules. I'm working on the FIB entry blog and should have that done by tomorrow.
A very wise (and old) trader once said "Nothing wrong with taken profits."
I'd like to add "Nothing wrong with leaving a lil to see what happens"
Pip T
