Moving the Stop Loss

In a post a few day's ago entitled Probability and the Art of placing Stop Loss , we discussed some subtle aspects of placing and moving stop loss. One of the points mentioned is the importance of not placing a stop loss too close.

Coincidentally, Brett Steenbarger in his blog dated 6 June talks about a similar aspect of stop loss - that of not moving it too often. He says and I quote

"I generally will move a stop only once: when a trade has traveled roughly halfway to its intended target, I will move the stop to breakeven. In other words, if the market is validating my idea, I don't want to overstay my welcome to the point where a winning trade turns into a losing one. Nor, however, do I want to move the stop prematurely and exit a trade because of normal, expectable noise that would precede a move to my target. Knowing where my target is (based upon identified support/resistance, edges of ranges, pivot points, etc.) is key to knowing where to place my stop: I always want more reward in the trade than risk"

You can read his complete post here.