This video lesson focuses on the proper techniques for moving stop losses when swing trading. The key takeaway is to only move your stop loss when the actual invalidation level changes, not just to break even as soon as possible. Moving stop losses prematurely can lead to getting stopped out and missing potential profits.
Timestamps:
- [00:00:25] Introduction to the common mistake of moving stop losses too quickly to break even, risking getting stopped out and missing the entire move.
- [00:02:03] Differentiating between swing trade and sculpt trade setups, which have different stop loss placements and timeframes.
- [00:04:25] Example of a swing trade setup on a one-day chart, illustrating why it makes no sense to take a quick profit at the VWAP and move the stop loss to entry.
- [00:07:29] Explanation of using a small take profit (5-10%) at the VWAP to help minimize risk, but not moving the stop loss to entry at this point.
- [00:09:18] Moving the stop loss only when the invalidation changes, such as when price reclaims the range point of control.
- [00:11:13] Tip: View current price action as a new trade setup and consider where you would place your stop loss in that scenario.
- [00:12:18] Bonus: Handling stop losses for hedged short trades, keeping them at the original invalidation point and closing manually or via stop loss on signs of strength.
- [00:14:51] Key tips and tricks summary:
- Stop trying to create "risk-free" trades.
- Keep stop losses always at invalidation levels.
- Only move stop losses when the actual invalidation changes.
If you have any questions or need clarification on these concepts, be sure to ask Trading Assistant in the trading help forum here https://discord.com/channels/524986738050072576/1078614754857328721
By breaking the habit of prematurely moving stop losses and focusing on true invalidation levels, you can improve your swing trading results and avoid missing out on potential profits.