Stop Loss to Breakeven - Should You Move Stop Loss to Breakeven - YouTube

traders on the internet make this a big issue and  if they ever listen to anyone talk about moving  

the stop loss to break even they make it sound  like it is the end of the world but is this really  

something to be really worried about or is moving  the stop loss to break even even a bad thing to  

do in trading now what if i could teach you some  unique methods of moving the stop loss to break  

even that could drastically reduce your chance of  incurring a loss and it wouldn't even hurt your  

trade so sounds good hello and welcome to forex  monopoly my name is Daksh and in this video i will  

tell you everything you need to know about moving  the stop loss to break even i will also give you  

a to-do list and a not to-do list so make sure you  watch this video all the way to the end now before  

i get on to this i just want to touch upon what  stop loss is and what break even means so stop  

loss is a way to manage risk that is whenever a  trader gets into a trade they place a buy order or  

a sell order and a stop-loss order and stop-loss  order basically helps us to protect ourselves in  

case the price does not go in our favor or in our  desired direction and we can get out of the trade  

or the situation with a very minor loss so what  is break even now break even is a situation of  

no profit and no loss so when a trader gets into  a trade at a particular level and they square off  

or close the trade at that particular price or  the same price as the entry level then the trade  

is said to be a break-even one so now that you  know what stop-loss and break-even means let us  

understand what does stop-loss to break even me so  it simply means that once you enter a position or  

once you enter a trade at a particular price level  and have your stop loss some steps away from it  

you shift the stop loss to the entry point  when the price moves ahead in your favor  

for instance let us say or let us suppose that you  see a good buy opportunity on gbp usd at let's say  

this point then you place the stop loss 50 pips  below that is at this level and then you enter the  

trade and eventually the price moves in your favor  that is to the upside and then you see this as  

then you see this as a positive sign and you shift  your stop loss to your entry level which will be  

over here so by doing this you ensure two things  the first is that you do not lose anything in the  

trade even if the price comes back to your level  and the second thing is that it also lets you  

write the trend and increase your profit potential  so now that you know what moving the stop loss to  

break even is and how does it even help you let  us now understand how you should move your stop  

loss to break even and when you should avoid it so  you cannot always set the stop loss to break even  

and if you do you might not be able to profit from  the trade and miss out on a good opportunity or on  

a good trade so here are some situations in which  you can move your stop loss to break even and  

that too successfully so the first situation  is when t1 is hit now i always say this  

whenever you get into a trade and if the trade  is in your favor or if the trade is in profit  

no matter what you always have to get something  out of it and therefore try to have a multiple  

profit targets when you trade what i mean to  say is there should be some small ones and then  

there should be some big ones depending upon  the situation and what your trade has for you  

so your t1 means first profit target so  let us take an example to understand this  

so let us say this was the level that is the  support level where you took a buy trade and then  

when the price was moving up you saw that there  are various minor resistance at different points  

so and your profit potential that is your main  target was to was over here so what you decided  

is you will close a little bit of profit when the  price reaches to this minor level and therefore  

this is your take profit one so what you can do  is when the price reaches the first target you  

can close a little bit of your trade that is you  can take a small profit and then you can set the  

stop loss to break even so by doing this you are  also able to get something out of the trade and  

you are now risk-free and you can ride the trend  successfully now the second situation is value  

area breach now value areas are the areas like  this where the price had some sudden movements in  

the past and the traders believe that something  like this could happen again in the future now  

there will always be value areas on the price  charts and if you take a long trade on a breakout  

of one value area to the upside then there will be  another value area above it somewhere above it so  

this could be the second scenario where you can  look to take the risk of removing the stop loss  

to the break even now again once the price reaches  a value area that could have made the price move  

against you what you can do is you now know that  the trade was a good one because it did move in  

your favor and you could move the stop loss to  break even for example let us say you entered a  

trade over here and then the price moved in your  favor but there was a value area above and you  

didn't know if the area will hold or it will  break because you cannot be certain if it is  

going to hold or break so in this case what you  have to do is take some of your profit over here  

and then if the area is breached by the price  only then move the stop loss to break even now  

the third one is impulse correction impulse now we  know that the price does not move in one direction  

in a straight line it moves in phases and these  phases are called as impulse and correction  

so whenever there is an impulsive move it will  always be followed by a correction and after  

the correction the price could either have the  impulse in the direction of the first impulse  

or in the opposite direction of the first impulse  so suppose you took a short trade on usd cad on  

a breakout and the price moved impulsively down  it then corrected a little which was followed by  

a strong move that is strong in impulsive move  in the downward direction you can move stop loss  

to break even in such situations as you have  confirmation that the trade is going exactly  

how you wanted it to go now this technique  might be a little confusing and tricky but  

when you will practice it it will be worth it okay  so now that you know when to move the stop loss to  

break even let us see when you should avoid moving  the stop loss to break even the first scenario is  

when the price is too close to the entry level  now i have seen traders moving the stop loss  

to break even just when the price moves a little  bit in their favor and they just want to rush in  

so that they can make that rate completely risky  now this is the worst thing you could probably  

do as you are not giving the price the room to  breathe and you need to give time to the price  

to move in your favor and if it doesn't then you  should just take the stop loss or you should let  

the price hit the stop loss and move on like  what if you moved your stop loss to break even  

too early and then the price hit your stop loss  and then went in your desired direction trust me  

it hurts you should never move the stop loss  to break even if the price is too close to your  

entry level there will always be a little risk  in trading and no matter how good uh you are at  

technical analysis you always have to accept and  cherish the rest and try to keep it to minimum but  

don't try to avoid it so the second situation when  you should not move the stop loss to peak even  

is when the price hasn't done anything significant  yet the thing is you cannot just enter a trade  

wait for it to simply move in your preferred  direction and then you just move the stop loss  

to break even doing this might get you away a few  times but eventually it will bite you really big  

what you should be doing is wait for  the price to do something significant  

and you have to act only after you listen to  what the market is doing now you could wait  

for the price to breach a value area that was in  the path or you could wait for it to correct a  

little then resume the prevailing trend and  then these may seem like a small things but  

it goes a long way not many traders do  this but that's why not many traders are