It has been noticed that sometimes long tail candle comes down sharply and take stop. How do you manage such risk ?
Option 1: Take a smaller position size and move the stop wider so it does not get taken out.
Option 2: “To avoid whipsaw losses, stop trading.” -Ed Seykota
Option 3: execute stops manually after a candle closes below the trigger level (this option is used by many traders in many instruments).
Thanks for the comments
Completely agree that whipshaws happen but personally I would (if this happens a lot) watch the close of the first candle without a sl so you don’t get whipshawed straight away. Also if you lock in some pips later on in the trade and it happens at least you’re in profit! I feel that for all newbies the most important thing is learning risk management but also how to maintain what you feel is a winning trade. "Let your winners run and not your losses"
If you need anymore help feel free to pm me
~ImBatman
maybe instead of thinking what you could have done instead to “win the trade”, realize that your trade was just wrong, which is why you lost (then move onto the next trade). Hindsight trading is always going to be 100% better than live trading.
Placing the stoploss is also and important factor, you will learn it through experience.
Perfectly right! The Stop placement is the single most important thing. Increases the probability of a trade closing out at a profit.
Trade as light as possible until you are making money on consistent basis.
I agree with Arbitrager and the others!
Lots of good advice.
Also, it depends on the time-frame: a ‘whipsaw’ on a 5m chart may not even register on a higher time-frame…
So, setting the stops wider using a higher time-frame’s levels may help avoiding constantly being stopped out…
Also, money-flow happens 24/7, but if you KNOW that it will have a more likely upsurge at a certain time of
the week or of a day, for example during a big news announcement by a central bank, then avoid either opening
a position during that event or close to the event, in the knowledge that your expected average range may be
disregarded…
Everything happens for a reason, but sometimes we are not party to that reason, and we are just left to wonder
where we have gone wrong: the difference between a cyclist surviving a minor crash relatively unscathed and
one ending up with brain injuries lies in the wearing of a crash helmet… Given equal skills and awareness, being
knocked down by a freak accident caused by an unseen road defect or by an inattentive car driver opening the door
suddenly or swerving out is always something that even the best rider cannot predict all the time and avoid…
Similarly, even the best trader with the best tools and the most reliable news feed in the world cannot predict
why a sudden money flow dumped a massive tumble or a massive upward spike on his/her trading instrument:
however, when such unforeseen moments do occur, we will need something to protect us, namely a stop-loss order…
Tick charts have played a roll in this area especiallialy in the futures market.
By looking at tick based charts as opposed to time based we can now see areas of potential price agreements allowing for more realistic stop placements. What is the idea of a stop? In many ways it is acknowledging you are wrong and exiting your position rather than incur unecessary losses.
Brokers have done their utmost to market stops as a fixture of trading that must be placed based on just the idea of capital preservation (in effect, you going to loose anayway so just focus on extending your inevitable end by taking tiny losses with the occasional win).
This is just silly because professionals see stops as a way of controling risk by first taking the appropriate position based on Dollar risk accomodation, then deciding stops based on volatility of the current market and thirdly considering areas were buyers and sellers had the most agreement as an equillibrium area (congestion or balance zones). Stops above these areas suggest that if the market goes above a previous area of agreement, it must find the next area of agreement in search of buyers or sellers, so if price does reach that area, then the chances you will lose on that trade increase.
Back to tick charts or volume profile charts, the charts are based on number of contracts traded to form the bar. This in turn can easily show you the area that buyers and sellers where most active allowing for better stop placement.
Never manufacture a trade, the same goes for TP’s.
Godzilla, try using the 14 or 15 ATR * 2 to decide on stop necessary. This is the simplest way. I personally like them above areas of previous agreement in price.
Thanks for the tip. It was very much helpful. This helped me a lot.
What’s wrong with that actually:33: ?
In these times I only pray Hotforex closes them not biting off unnecessary pips aka slippage 
S@@@@ happens. Get used to it.
I have also have a same question, take example the Swiss uphealval, if the price move exceed my stop loss, will my trades close at my specified stop loss or the new price (that could make my account get negative balance)?
This falls under risk management strategy. Something all traders should have.
This is the best advice he could get on this. Will help alot more traders too.
Please Google “darkstar the structure of forex brokers” and read through the entire posts that darkstar has to say. Fundamentally this will be one of the most informative things you will find in your forex journey+it will answer the question you have
Yes, maybe it’s better to adjust the stop loss but it really varies depending on the strategy you are using, the broker or even the platform.
Thanks for your post, and I have visited it but it’s too long and my English is not well enough to read all it. Can you tell the answer for me or tell me which paragraph I should read to know the answer for my quest?