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2015issue C0736-44

Precommit stop-loss, trailing-stop, and time-stop rules before entry

Widening a stop after a first-trade gain can erase that gain and then remaining capital. The archive correction is to refuse entry without a stop-loss and to choose the initial, trailing, and time exits before the first fill.

  • Widening a stop after a first-trade gain can let a reversal erase that gain and then the remaining capital.
  • Never enter without a stop-loss. Choose the initial stop, trailing stop, profit-target stop, or time-based stop before entry.
  • An initial stop can cap a hit at a pre-allocated slice of trading capital. At breakeven including brokerage fees, a trailing stop can follow a volatility or percentage rule.
  • If breakeven has not arrived within 10 days, a time stop can free the same capital instead of waiting for a price stop that may never hit.
Entries in this reading3 entries
Current trackTime stop24 readingsTrailing stop122 readingsStop-loss order297 readings

A movable stop after a first gain

After a first-trade gain, widening a stop after entry can let a reversal erase that gain and then the remaining capital.

A later rule of never entering without a stop-loss is presented as the correction to that earlier, movable-stop failure. A stop-loss is a pre-placed price or capital bound that closes or caps a position so a single trade cannot spend more than the loss already allocated from account equity.

Choose the exit before the fill

Stop placement can be chosen before entry as an initial stop, a trailing stop, a profit-target stop, or a time-based stop.

An initial stop can be set so that a hit cannot spend more than a pre-allocated slice of trading capital, or a trader can type a preferred initial stop instead. That choice is risk-and-sizing: converting account equity, volatility, stop distance, and exposure into a position size and exit plan before entry and keeping that plan in force while the trade is open.

Switch to a trailing stop at breakeven

Once price reaches a calculated breakeven level that includes brokerage fees, the exit can switch from the initial stop to a trailing stop.

A trailing-stop stays inactive until price reaches a planned cushion, then follows price using a volatility or percentage rule so open profit is protected without rewriting the original risk budget. That trailing stop can follow a modified average-true-range calculation or a fixed percentage, using whichever rule is judged to give the safer profit cushion.

Time stops, daily review, and consecutive losses

If a position has not reached breakeven within 10 days, a time stop can recommend exit so the same capital can be used elsewhere. A time-stop is a calendar or holding-period exit that closes a trade if it has not reached a planned condition by a set date, freeing capital instead of waiting for a price stop that may never hit.

When no stop has been hit, the daily review can leave the position open. When a stop level is reached, the next decision is whether to exit or stay.

A risk-tolerance view can show how much account equity consecutive losses would remove and what compounding would require after those losses.

Educational research material, not investment advice. Historical source context does not establish present-day performance.
13 of 15 in the Time stop track
20187-7 pp.Next on Time stopAuditing rank-rotation tests for time-stop and slot rulesEditorial: write the time-stop, daily fill rule, and capital-slot budget into the mechanical-trading-system so a rank-rotation test can be audited as one procedure.
All readings on this track · 15 readings
  1. 1989Preflight checklist, time-stops, and stand-aside rules
  2. 1991Parameter windows for averages, option overlays and time stops
  3. 1995Three setup gates and a session-count clock complete a long bottom
  4. 1995Evaluating index futures OHLC reversals with RSI and time stops
  5. 1995A weekly two-close breakout and an eight-week time stop
  6. 2000Constructing breakout entry rules and time stops
  7. 2004Constructing action-reaction swing targets and time stops
  8. 2005Constructing breakout entries with trailing and time stops
  9. 2006Evaluating a restrictive range entry with a timed exit
  10. 2008Evaluating point-and-figure column breaks with time stops
  11. 2011Intraday gold swing with a daily entry limit, a time-stop, and a fixed stop-loss
  12. 2012Last-hour entries with a book-level loss bound and a next-open time stop
  13. 2015Precommit stop-loss, trailing-stop, and time-stop rules before entry
  14. 2018Auditing rank-rotation tests for time-stop and slot rules
  15. 2019Confirmation-first pyramiding with price and time stops
By fieldStops and loss limits76 readingsBy year2015181 readings
All 24 readings tagged Time stop
Also on Time stop5 readings
2005Constructing breakout entries with trailing and time stops1992Evaluating maximum-adverse-excursion stop reversals with short time stops1998Exit rules evaluated with a fixed random entry2002Construct the stay-or-flatten decision before entry2011Intraday gold swing with a daily entry limit, a time-stop, and a fixed stop-loss