If you find yourself changing your plan in the middle of a trade, you’re probably trading too large, i.e., the dollar risk that you’ve chosen to trade is not a comfortable amount to lose. You have to figure out, through trial and error, how much you’re happy to lose. This is the secret to sticking to your trading plan.
Say you start out risking $1,000 a trade (the distance between your entry and your stop) and you find yourself pulling or moving the stop, or adding to the position so you can adjust the stop to lose the originally planned amount (a.k.a., averaging a loser), then you know you’re risking too much, trading too large, and you’re not able to stick to the plan. Try risking $750 the next time and see if the same thing happens. If the problem persists, keep cutting your dollar risk until you get to the level where you stick to your planned loss.
Maybe you discover that it’s $100 where you’re finally comfortable with the risk. There’s no shame in trading small. In fact, it’s trading smart because you finally know the amount of dollar risk where you’ll stick to your plan, and you’ll see the gains begin to accumulate over time. As you gain confidence, you can increase your dollar risk little by little, until you find you’re uncomfortable again (by not sticking to the plan), then bring it back down to the last dollar amount where you never monkeyed with the stop or were tempted to add to a loser.