Do you follow any stop loss rule ?
For example, 100 pip stop or some sort of % stop loss …
I am asking this is because sometimes traders dont take a trade if he/she finds that asset already shot up and stop loss becoming large.
So how much % stop loss is good for healthy trading ? Is there any rule ?
I know every people have their own separate stop loss tolerance level…but I am asking this from Risk Management perspective…a threshold which should be maintained to manage risk
Think you know the answer to this one bro. Horses for courses my friend.
My rule don’t stop just because you have a loss
Hey Godzilla,
So how much % stop loss is good for healthy trading ? Is there any rule ?
I think, that the % in your stop-loss is not as important as the RATIO that you use (“RR-risk ratio”, or “RM - risk management”).
I always advise (specially day-traders) to use 1:4-5 (stop:take profit) Ratio.
That way, one take-profit will “buy you” 4-5 mistakes that you can make.
Good Luck
Great rule, I am also based on that!
rule 1. Stop loss should be in a place that if it gets hit you know your original trade idea was wrong.
rule 2. If you move your stop loss, you are only allowed to move it closer to the trade, not farther away.
rule 3. If stop loss gets hit you lost the trade, that’s the cost of doing business, get over it.
SL @ -2% of capital.
Don’t use stop loss more than 03% of your capital. We have very good comments here. Hope you follow them
+1 1000%. However. . .Before you can apply that rule, you have to learn how to and where to place a tight stop loss, a stop loss that allows for short term market swings. Once you can understand and do that, then apply bobbillbrowne’s rule, but not before of course that’s just my opinion.
I do agree with bobibillbrowne, when it comes to using stop losses. Otherwise I’m hedging my positions and I use stop loss only to protect my profits.
I agree with Talond and peryyfx, but I make sure I set my stop loss based on support/resistance levels, Then I put my take profit based on 1:2 risk-reward level (or higher - it’s also based on S/R levels). This is especially important for me because I trade higher timeframes and I can lose larger amounts of money if I don’t follow these rules. This is one of the most common mistakes beginners make when trading…they put a tight stop loss, they move their stop loss farther away from their trade and they give up (exit their trades) to early!
Stop loss is just there to prevent outright loss of account; your stop loss depends mainly on the size of your account and your risk taking capacity; but personally, I make sure that I place the stop loss on 5 % of my account. This way, if the market goes the wrong direction than I predicted, I will not loss out on much.
I also use s/r levels both for sl and tp. That’s part of my rule #1 although not explicitly stated. Actually rule#1 should be trust your lines. Rule #2 don’t listen to anything Rred says. Then come the other rules.
lol, little inside joke there.
Once again gp0003 is right on the mark. Its such a fine line between a tight stop loss and being stopped out because of a short term swing. We have all been there. And as others suggest your stop loss will vary in different market conditions so matching your % risk is all part of it.
But at some point soon you have to say right, I’ve got a set of rules now I have to trade exactly to that set of rules and collect some data. Review each trade along the way, what work, what didn’t. Then act on those results, make the necessary changes. Start all over again. It was described to me once as the PDCA cycle. Plan, do, check,act. The good news is planning is about 70% of the total effort. And anyone following your progression has seen your putting in some work behind the scene.
So go do some trading bro and see what you can do. Be it demo or a small micro account (my personal choice). I think you’ll surprise yourself.
Keep posting but
Bob