Breakeven stops: when moving them early costs more than it saves

[FXS London Scalper]

Moving the stop to breakeven quickly feels safe. On short timeframes it can turn winners into scratches.

How to check with your own data:

• For each trade, note the point at which the stop moved to breakeven, for example at +1R or +5 pips.
• Record how many trades were then stopped at breakeven and later went on to reach the original target.

If many breakeven stop-outs later reach target, the stop moved too early.

A worked example with hypothetical figures: 100 trades, 60 reach +0.5R. Moving to breakeven at +0.5R, 20 of those are stopped at zero; 12 of those 20 later reach the 1.5R target. That's 18R given up to save, at most, the losses of those 8 that would have reversed.

Alternatives:

• Move to breakeven later, at +1R.
• Move the stop to a small loss rather than exactly breakeven.
• Trail behind structure rather than a fixed distance.

Whatever rule you choose, apply it the same way for a full sample before judging it, since a handful of trades will mislead.

When do you move your stop?