I don’t know if it’s worsened by the current market conditions and the really high volatility but I really feel like my stops are way too wide and my targets are too high. Look at this chart of a “successful” KTC trade(1), I noticed my stop could have been much tighter.

After analyzing several of my trades, I worry that my stop is way too wide. I was originally setting it much tighter but was getting annoyed seeing trends resume after I was stopped out and missing out on profits. But bottom line is my gains are fairly small, points wise, on each trade. If I only make as much as I risk on every trade, I am saying I can consistently make more winning trades than losing ones. Since I know this is not always the case and at times, I have only 40% winning trades, I might as well bring up my stop level to say 3%. Since I think I can capture, short-term, price gains of 4-6%, it puts me in place where even with 40% winning trades, I’m ahead of the game since I make more on a winning play than I lose on a losing play.

Those are all concepts I’ve read about over and over again but it’s never as clear until you recongnize them in your own trading.

(1) The chart is provided by StockTickr.com which is a great tool to track performance, adjust risk parameters and journal your trades.