Yes. No.
Sure, cutting losers immediately is vital. On the NDX mini for example, I try not to use a stop greater than 6 points. That's pretty tight, but if you are picking *your* setups and not chasing, then this is usually enough. This is the risk side.
However, unless I have a strong notion of the potential of the move, I can not know how to mange my trailing stop and whether I want to leg in with more contracts on pullbacks. If I opine we are moving the way the market wants to go (or the setup tells me we should make a decent move), then I'll be more liberal with the trailing stop so I don't get whipped out. On the other hand, if I feel the move I am in is corrective, then I will get out quickly on a decent gain. This is the reward side and you have to have a sense of where things are going in order to gauge this side.
Also, if I am confident about the next big move (direction), then I am willing to wait for a good entry and forgo moves in the wrong direction so that I concentrate only on getting in for the move I expect. I am willing to try up to 3 times -- after that, I fell that I am wrong about the direction.
Cheers |
