In studies, a loss weighs on average about 1.5 to 2 times as much as a gain of the same size; estimates vary. This tempts you to sell winners early and hold losers too long, because only selling makes the loss “real”. In trading this leads to small gains and large losses – exactly the opposite of what a plan usually intends.
The stop gets moved
The price approaches the stop, and the thought comes: “Just give it a little more room.” Moving the down changes the risk in the middle of the trade. A planned loss of quickly becomes 2 or 3 R. A stop that only moves up protects the plan.
Your entry price does not matter
The market does not know your entry price. A more helpful question: would I buy this symbol today at this price, with this stop? Waiting for “back to breakeven” ties money and attention to yesterday’s decision.
Rules beforehand, not halfway through
Set stop, target and size before you buy – while your head is still clear. During the trade, the rule does the work. Our rule does the same: the stop is fixed before the entry and is later only trailed up, never set lower.