The way that you place your stop can have a significant outcome on the results of your trade. I just coached a client through this, and it had such a positive impact on him I decided to share it.
How do you place the stop? Do you place the stop at the start of the trade? Or, do you watch the trade, wait for price to hit your stop location, and then manually and quickly place the stop?
I know there are reasons traders wait to place to stop. But, is this really supporting you?
Waiting to place your stop can raise your anxiety and make the trade less successful. The way I see it, there’s a number of reasons why. .
One–you need to be physically sitting at the computer when price reaches the proposed stop level so you can place the stop.
Two–traders tend to get anxious having to decide quickly when and where to place the stop in the moment, especially in high volatility. Who needs more anxiety!
Three–you are making a decision on the fly. It becomes harder to stick with your initial trade plan (and stop target).
Some of you will start bargaining with yourself, then move the stop, double down, etc. and potentially watch the trade go downhill. Now your plan is out the window and you are in precarious territory.
I am suggesting, therefore, that you place your stop initially when you place the trade. Then, you have the ability to leave the office . . . get some coffee . . or even go to the gym! Let the trade run on its own.
Your anxiety level will likely go down. And, this will push you to clarify the trade’s exit before you take it. It’s critical to plan out your trade, establish your targets, and then trust it to play out.
For my client, the impact was significant. His anxiety went way down. His ability to take the intended stop became easier and more solid. He was trusting the plan and himself and he felt a new level of success not having to struggle with his stop.
If you’re having any of the above challenges placing your stop, give this a try.
I invite you to contact me for a free 20 minute consultation if you haven’t achieved your desired results.