A profit maximizing trading system seeks a positive expectancy, or an “edge”, and then exploits that edge aggressively.  Think of the blackjack card counter, who patiently places small bets when the odds are not in his favor, but when the count turns and his edge appears, he INCREASES his bet size to fully exploit it.

With that in mind, I’ve seen a curious recurring phenomenon.  Whenever I’m attending a seminar where a speaker who professes to be a professional trader is describing some of his “winning strategies”, he often will talk about moving his stop to breakeven on a percentage of his trade as quickly as possible and letting a percentage of the trade ride with a trailing stop.  Very often, this is referred to as a free trade, because the trader has guaranteed himself a profit on the total position. 

While this approach may be intuitively appealing to risk averse traders, it is clearly a poor strategy.  If a trader’s system is his edge, he should be pushing that edge with every trade, much like the blackjack card counter will push his edge whenever it appears.  He should NOT be seeking to eliminate risk when he is trading with an edge.  Remember, above all, that the market can only reward the trader if he is willing to take the risk.

If the statements above are upsetting, then at least take the time to critically examine the effect of breakeven stops and scale out provisions in your trading system.  In the case of the Cable Glider, I’ve never found any evidence that having a special provision to get my stop to the breakeven level quickly would improve my profitability.  In my case, it will lower it, as all too often my stop will be hit and the trade will be re-entered at a worse price when the trend resumes.