Thread: Stop losses?
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Old 08-22-2008, 04:34 PM
triphop triphop is offline
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Join Date: Jul 2007
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Jimmy, I liked your post - I did exactly the same as you when I started, though not coming from a programming background, it took me an eternity. I came up with a rough rule of thumb for static stop losses:

Use at least 50% of the ATR of the timeframe you expect to hold a trade for. Eg Holding a trade for a day? 50% ATR of the daily frame. Holding it for 4 hours? Use 50% ATR of the 4hr. But if in doubt, widen it out.

Too tight stop losses are really damaging to any strategy. It's the opposite of scalping with no stop loss. It eats away at your account, until one day you get a runaway success (but unlike scalping where you might let that loss blow your account, you'll close that winning trade early for fear of losing your profits ).
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