Line Your Own Pockets Is Moving Your Stop To Breakeven a Mistake?
Nov 24, 2025
The discussion dives into the psychological comfort behind moving stops to breakeven and its potential pitfalls. Traders often act out of pain avoidance, which can lead to unprofitable decisions. Testing stop-moving strategies reveals added complexity that can destabilize trading systems. The hosts advocate for taking smaller trades to minimize emotional burden and highlight the benefits of predefined exit plans. They also explore using trailing stops as a less complex alternative to enhance trading strategies.
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Move-To-Breakeven Is A Comfort Trick
- Moving stops to breakeven is mainly a psychological comfort tactic that reduces pain, not necessarily P&L.
- Profitable trading requires tolerating discomfort and occasional near-miss winners turning into losers.
Pain Avoidance Drives Harmful Decisions
- Traders move stops to breakeven to avoid the pain of a winner turning into a loser, a cognitive bias shown in loss aversion experiments.
- This behavior sacrifices long-term edge for short-term emotional relief.
Backtest Stop-Move Behavior Explicitly
- Add a post-trade column to your backtest to measure stop-moving behavior and compare outcomes.
- Isolate trades that exhibited the behavior and quantify the effect before changing live rules.