Why is it easier hitting a Stop then a Limit???

Hi,

I'm relatively new to FX trading and currently working through the battles of becoming a better trader & building an effective strategy.

One of my weaknesses at the moment is dealing with trades going in my favor! I'ts crazy to think i'm comfortable with a trade hitting my stop, because I have already accepted the risk and the amount i'm willing to lose. But when a trade is going in my favor my behavior changes and I start questioning myself 'Should I change the limit?' or 'When should I place a trailing stop?' 'Should I just leave it?'

I understand that placing a trailing-stop will depend on the volatility of the currency pair however I am just interested to see if anyone else has had the same psychological problem?

If you have, do you have any words of wisdom you could share?

Thanks,

Ben

Hi Benjam,

I can relate to this 100%. I felt like the universe was always against me.

Perhaps, once T/P and S/L are placed - do not move it.
Or, if you be more satisfied when the price is coming to your T/P level, just close a half of the positions, take some profit and then move the Limit to another level :)

If you are in demo
If your mind is upside down while trading, try for fun to reverse your psychology.

If your risk reward is 1:2 => do the opposite 2:1 so for example SL = 100 & TP = 50
Never touch your SL.
when trade isn't in your favor... reduce tp even below entry price for Long or above entry price for sell....when your initial SL level should have been hit.
This way while losing, you will try to exist with minimun loss with volatility.

After sometime, see how you feel.... isn't still easier to hit SL?

The spread always makes it more likely that the stop loss will be hit then the take profit.

I agree with BaldoN here. Closing part of the order is one way to take more profit. Just do not panic or start acting with enthusiasm. Like how you accepted the S/L level when placing the order, accept the take profit level too. Leave it like it is or close the order partially and continue to monitor.

BaldoN posted:
Perhaps, once T/P and S/L are placed - do not move it.
Or, if you be more satisfied when the price is coming to your T/P level, just close a half of the positions, take some profit and then move the Limit to another level :)

Thanks for the advice! I have tried this on my recent profitable trades and by securing profit while staying in the trade definitely makes placing the second limit easier.

Thanks

CrazyTrader posted:
If you are in demo
If your mind is upside down while trading, try for fun to reverse your psychology.

If your risk reward is 1:2 => do the opposite 2:1 so for example SL = 100 & TP = 50
Never touch your SL.
when trade isn't in your favor... reduce tp even below entry price for Long or above entry price for sell....when your initial SL level should have been hit.
This way while losing, you will try to exist with minimun loss with volatility.

After sometime, see how you feel.... isn't still easier to hit SL?

I like your thinking here! Unfortunately not in a demo, however I will give this a shot with a small amount, I am open to trying anything if it will help me improve.

Thanks,

Ben

Aleixo1 posted:
The spread always makes it more likely that the stop loss will be hit then the take profit.

Hi Aleixo1,

Sorry I didn't make it clear. The point i'm making is when I setup a SL & TP, if the trade is going against me physiologically i'm good and don't move my stop and clearly have accepted I was wrong and the amount i'm happy to lose. BUT when the trade is in the direction of my TP, I am constantly second guessing if it's in the right spot, should I change to a dynamic trailing stop......

Just wondering if the indecision is something all traders are facing? or just me lol

Thanks,

Ben

well we all face the same dilemma I guess you need to analyze your currency and identify exit signals. that way once they materialize you exit.

Hey Ben, that is normal for beginning traders ,here's a few tips: One way to lessen the doubt over limit is use the longer time frames and check the Fib levels/support /resistance you shouldn't really set a TP limit but have a set limit in your mind and watch the trade when it gets close to that level, I wouldn't really advise a trailing stop but its personal choice, cutting 3/4 of a position is normal practice,you should be more worried about it hitting your stop, protecting capital is key,that way you will make wiser trades and more profitable.

I would highly recommend trading a demo account. It lets you learn without having to much emotion involved. My growth as a trader only really took place on demo because I was much more objective in my trades. Also under a demo account I would suggest doing a set and forget practice. That is where you identify a trade and let the trade play out without touching the TP or SL. It forces you to make better decisions and it teaches you how to handle your emotions. I did 300 trades like this and went back and analyzed the trades which gave me great insight into my strengths and weaknesses. I was less concerned with the outcome and more concerned about learning. Just my 2 cents.

snapdragon1970 posted:
Hey Ben, that is normal for beginning traders ,here's a few tips: One way to lessen the doubt over limit is use the longer time frames and check the Fib levels/support /resistance you shouldn't really set a TP limit but have a set limit in your mind and watch the trade when it gets close to that level, I wouldn't really advise a trailing stop but its personal choice, cutting 3/4 of a position is normal practice,you should be more worried about it hitting your stop, protecting capital is key,that way you will make wiser trades and more profitable.

Hi Kieran, thanks for your input. Two goals for me next week;

1: Don't place a TP initially, only price alerts. When a price alert is hit, at this point I will place the TP.

2: Focus on the pip value rather than the $ value, I am keen to see how this effects my way of thinking!

Really appreciate your comments & everyone else taking the time to respond.

Thanks,

Ben

panovak2 posted:
I would highly recommend trading a demo account. It lets you learn without having to much emotion involved. My growth as a trader only really took place on demo because I was much more objective in my trades. Also under a demo account I would suggest doing a set and forget practice. That is where you identify a trade and let the trade play out without touching the TP or SL. It forces you to make better decisions and it teaches you how to handle your emotions. I did 300 trades like this and went back and analyzed the trades which gave me great insight into my strengths and weaknesses. I was less concerned with the outcome and more concerned about learning. Just my 2 cents.

Hi Panovak, appreciate the 2 cents! I do agree that trading with a demo enables you to learn without to much emotion involved & the set & forget has been added to the list! No doubt I will be switching between Demo & Live over the coming months while I am still learning, and testing different methods. Is this what you did? Or continue to do? (Trade both demo & Live)

I have fully accepted that even going back to the drawing board & spending greater time on a demo, initially I will make mistakes, wrong decisions..... But I intend to document it, & learn from it.

Who knows, I may not have what it takes! but I will give it a good shot.

Thanks,

Ben