The risk-based stop is the one we all hope we will have the discipline to place and not have to use. Transitioning from a risk-based stop to a breakeven stop is done only when the trade moves in our favor and to the first stop loss.
The way you place your profit target, the thinking behind their location, is what will set your risk management in motion.
This is lost on far too many traders. This is how far too many traders let a winner turn into a loser.
The most popular variation is the exponential moving average (EMA). This version addresses a double count error in the original calculation and produces a reading that responds more quickly than the original math.
Since the early bird tends to get the market worm, the exponential setting is now the most popular choice in the professional community. It’s also the way I look at the market.