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Moving stops to breakeven — when?

After what kind of confirmation, never before.

8 min · Advanced

What you'll learn

• Name the two events that justify moving a stop to breakeven
• Explain why an early breakeven stop turns winners into scratches
• Place a breakeven-or-better stop behind new structure instead of at an arbitrary price

Key takeaways

• Move a stop to breakeven only after T1 is hit or new structure confirms with a close.
• Price often retests your entry area, so early breakeven stops turn winners into scratches.
• Place the new stop behind the higher low or lower high, which may lock a small gain.
• Moving a stop out of nervousness is a fear exit in slow motion.

Glossary

• Breakeven stop — A stop moved to the entry price, or slightly better, so the remaining position cannot become a loss apart from slippage.
• Scratch trade — A trade closed at or near zero, often from a stop moved to entry too early.
• Higher low — A pullback low above the previous low; in a long trade, it gives the stop a new structural home.

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