Follow Up on How Long to Leave Your Entry Order Active
By Dave Mabe
In yesterday's post on how long to leave your entry order active before canceling, I shared a simple question.
Remember, the situation is that I added a limit order to my entry order, and the stock blew through it without my order getting filled.
If your original order had been filled, would you still be in the position?
If the answer to that question is yes, then why would you NOT still have your entry order active at this point?
Another way to think about this is to imagine you ran a backtest at the moment you're trying to decide to cancel your original, unfilled entry order.
Is your backtest still going to be in the trade?
If so, why are you even considering canceling the order?
The best data you have on what you should be doing in this situation is your backtest, and it's telling you that you should be in the trade.
If you skip this trade by canceling the order, when you compare your live trades to your backtest, it's going to show a missing trade.
And by definition, these are the types of trades that are likely to be profitable.
Most traders end up canceling that entry order prematurely.
Your default should be to follow your backtest.
Why else would you have put in all the work to create one in the first place if you're not going to follow it?
-Dave
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