"Serious traders place stops the moment they enter a trade. As time passes, stops need to be adjusted to reduce the amount of money at risk and to protect a bigger chunk of profit. STOPS SHOULD BE MOVED ONLY ONE WAY - IN THE DIRECTION OF THE TRADE. We all like to hope that a trade will succeed - and a stop is a piece of reality that prevents traders from hanging on to empty hope.When you are long, you may keep your stops in place or raise them but never lower them. When you are short, you may keep your stops in place or lower them but never raise them. Cutting extra slack to a losing trade is a loser's game. If a trade is not working out, it shows that your analysis was flawed or the market has changed. Then it is time to run fast. Serious traders use stops the way sailors use ratchets - to take out the slack in sails. Losers who move stops away from the market vote in favour of fantasy and against reality."Ref: 'Trading for a Living' - Dr. Alexander Elder.
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