Last night I moved my EUR/USD stoploss to breakeven after the pair saw a nice decline during the day, and I moved my initial stoploss closer to my entry (but not to breakeven) on my AUD/USD position as its move, while down, was not as impressive as the Euro's move.  Well, this morning I woke up to find that both positions had been stopped out overnight.  Both pairs have continued their move down somewhat today since hitting my stops.

So, was it a mistake to move my stops on these positions so soon?  I felt a bit of regret this morning when I found that my stops had been hit, feeling that I may have moved my stops before I should have.  My reason for thinking that this may have been a mistake is because for each pair, the price to which I moved my stops was not a price at which the pair's price action would have indicated that the move is over.  Or, in other words, if the pair retraced to my stoploss, it would not have necessarily indicated a reversal in trend.

Going forward, I will try to move my stops to breakeven/closer to breakeven if one of two conditions is met:

1. I'm in profit by 1R (or, in other words, price has moved in my favor by X pips where X is the distance from my entry to my initial stoploss)
2. Price action indicates that the initial stop should be moved (i.e., above resistance or below support).

Once my stops have been moved to breakeven, I employ my trailing stop methods described in a prior post - Strategic Stops.

With that said, though, I think that when in doubt, it's better to err on the side of caution.  I'm better off making this sort of mistake (some may not even see it as a mistake), than letting a losing trade run without good stoploss strategy in place.  The AUD/USD trade ended in a small loss, and the EUR/USD trade was breakeven.

In trading, there are small wins, small losses, large wins, and large losses; keep to the first three and avoid the fourth, and you'll be in good shape!