You are here: Educational Videos » Bulls 'n Bears » Initial Stop-Loss Order Placement
Track 'n Trade Bulls 'n Bears Trading System
Trading Demonstration: Initial Stop-Loss Order Placement
Video Transcript
In this Track 'n Trade Trading Training video, I want to take the same scenario, the same trade, and let's add a few features to it. Let's add a little bit to it. The first thing I want to do, is I want to talk about Stop Orders.
Remember the saying, the old adage, "Cut your losses short, let your winners run." The only time that we have the opportunity to cut our losses short, is when we first get into the market. We have to hold our stops very close, or relatively close, so that if the market does come against us, we can cut our losses short. Let's go ahead and look at a scenario where we might be able to do that.
Using the Bulls 'n Bears, let's step the market forward. We got our Buy signal, just like in the previous video. We're going to come in here, and we're going to place our order, just like we did before. We're going to Buy 1, and we're going to go ahead and we're going to Confirm that. Step the market forward, and we're into the market. Now, we need to decide where we're going to place our Stop order.
We have multiple locations that we can place our Stop order. I'm going to show you each one of the locations, and then you can decide for yourself which one works into your trading strategy or your risk tolerance, better. I'll show you the ones I like the best.
The first place is behind the entry point or behind the low of the Price Bar, in which we got into the market. When I do that, it's because this market has moved quite significantly higher. Generally, if this is a longer Price Bar, and the Price Bar's closed a little bit closer to the top of the market, I'll put it right behind the entry Price Bar. Generally, more typically, I'll put my stop behind the previous Price Bar, which is the first green Price Bar. That's where I like to put my stop. The traditional area is behind the first yellow Price Bar. That's a good spot, too. Depending, again, on the Risk vs. Reward ratio, and how much money you're willing to risk. Then there's some other spots we'll talk about in just a minute.
So, let's go ahead and place a stop order. Let's place our stop order just behind the first green Price Bar. We're going to put that Sell 1 Stop. We're just getting in with one contract or one lot. Let's go ahead and hit Confirm. We're going to step the market forward.
As that market moves forward, and back against us, once again. We can actually move our stop up, slide that up, to take advantage of these different market movements. We're protecting ourselves, against having a loss or taking too big of loss. This is how we want to protect ourselves, against the loss.
As that market starts to move forward, I like to move my stop forward. Once I get it to break even, and that's my initial goal. I want to get my order to break even. Once I get my order to break even, I can be pretty aggressive moving that up to break even. I can wipe the sweat off of my brow. At that point I can let the market kind of start to move, because I'm not going to risk a whole lot of money. Right? It would be a scratch trade, if it came back against me at this point. I'm not risking any of my initial capital.
Now, I can let that market move back a little bit, and give it some room to grow. We know that markets move in waves. Two steps forward, one step back. We have to give it the opportunity to make some moves like that. Then start to advance once again. It's made a nice little area of resistance, we can move our market, our stop up a little closer. Now, locking in a little bit of profit. Now, this trade is actually profitable. We've actually locked in the difference between where we would get out if the market came against us and where we got in. So, we've got a profitable trade.
As that market continues to move in waves, moves back and forth, we can then move our stop up and lock in additional profit.
That's how we would use a Stop Loss order and an entry point with the Bulls 'n Bears.