OK maybe a weird header, but I couldn’t figure out how to keep it simple. So hopefully it brought you here to read on.
I have searched in the forum but can’t find anything about this. So I’m now asking, and please bare with me, if this has been a common question in the forum.
I would like to ask if you guys have any minimum or maximum Stop Loss and Take Profit for specific time frames?
I mean the higher time frame you trade on, the higher stop loss you need to have.
I’m a newbie, and wanna learn this game! In five years I have found some way to do it the profitable way.
I have done some backtesting lately. I have traded with 10 pips stop loss on H1, and I mean this i clearly not enough space for the trade to run on, before it can hit take profit. So mostly when I tried with stop loss at 10 pips I lost, and then to see it could have hit take profit, if I just had widened my stop loss a bit.
So my question, as I wrote earlier is, do you guys trade with any minimum or maximum Stop Loss and Take Profit for specific time frames?
Lets say:
H1 at least 20 pips stop loss
M30 at least 15 pips stop loss
etc.
Hope that I’m clear, english isn’t my native language
In my experience thats not a very good way of trading… Putting a random number isnt just the way to go… Stop losses need to be put on a significant levels on the chart… i.e pivot points if your using fibonacci stop loss should be just below the significant levels, what I do for example is I will try to find a significant pivot point+ a significant fib value to put a stop loss the number of pips does not matter what does matter is where the stop loss is placed in relation to the chart… + i also take into consideration whether its a fast moving currency pair or a slow moving pair, i.e GBPNZD moves on average 150-200 pips in a day and on a good day can move 500 pips where as EURUSD moves between 50-120 pips… Let me repeat what I just said… The number of pips does not matter. Where however you put a SL in relation to where you are on the chat does… Stop losses need to be put below significant levels on the chart … Now you also need to take into consideration position sizing (1K, 5K etc.) as that will control what your risk management is…
Personal opinion because whos to stop you from entering a 4hr chart setup on a 5 min trigger chart with a stop loss of 3 pips. The elliot wave boys do that kinda of thing on wall street. I personally like the risk 1 dollar for 3 or more bucks. Thats just where i feel comfortable. At the end of the day its where you feel comfortable as long as the trade risk-reward is worth it to you.
+1 on that. Placing random numbers makes no sense and traders need to trade what is there on the chart and not what they want to see. In the end it all boils down to risk management which will dictate positions size and therefore all other relevant levels for the trade.
but if I’m trading price action, I maybe wouldn’t be using pivot or fibo levels. I wouldn’t either say that my stop loss was random, if I said it just should as a minimum on a H1 chart be 20 pips. In my opinion it would more be like a safety boundary.
If you are looking on a trade and your fibo levels tells you that your stop loss would be 10 pips on the H1, you just wouldn’t take the trade, because of a too tight stop loss.
But I see it really also depends on the trading pair and as you mention your position size.
Touché on that one. Of course it depends on where you feel comfortable. Thanks
I’m not talking about placing random numbers, more about implementing it as a part of your risk management. I have written about it in the answer to orionanglo
I think you should approach each trade based on what you see on your chart and not have a set number in mind; I think the only static number should be your risk management. Don’t lose more than what you have set out to lose per trade.
If you want to use just a hard stop for a given time frame then perhaps look at an Average True Range indicator. It will be more beneficial than plucking numbers out of thin air, which is essentially what happens when your not trading price.
I just read an article (here at babypips), about max stop loss as you mention, kind of here. And I really see your point in this. My question was about the opposite, a minimum, but yeah I understand that it is best to set it, so it fit the day, trade and so on
Thanks for the input and reminder, just forgot this from the school
I don’t know if another trader could have different opinion with my own. For me, there is no specific number of pips for setting Stop Loss and Take profit in every time frame but generally, low time frame has lower setting for SL and TP point. But I don’t think if there is fixed number of pips for setting SL and TP point in each time frame. For me, setting for TP and SL will depend on method of trading. If you’re intraday trader so the setting for SL and TP will be around 40-100 pips in each transaction. But if you’re scalpers so it will be around 10-20 pips in each transaction.
There is no one rule about what is the correct way of placing stops but you need to be consistent so that you can monitor your trading results.
Like someone said before, ATR is good. I like to pick bottoms in uptrends and tops in donwtrends so I will enter my trade and place a 2ATR stop. This is usually enough for me not to get stopped out due to volatility and will only get stopped out if my trade idea is wrong. I then aim for minimum 2ATR profit but usually can get 3-4ATR. If you have a consistent method of managing your risk and take profit levels then you will become a better trader.
Alternatively you could just place stops visually by picking out key support and resistance levels and placing your stops above or below depending on trade direction.
Not only time frames but it also differs from pair to pair. If you are setting your stop loss of 25 pips on eur/usd at H1 time frame then you cannot do the same for gbp/jpy on H1 time frame, its because gj is way more volatile than eu.
Time frame also effect to decide how far the stop loss and take profit was set up , its depends on the style of each traders , commonly the bigger time frame will use more pips cause when the traders use bigger time frame its mean they use day trader even swing style which the target also have bigger points
With bigger time frames its obvious that we need bigger stop losses and take profit. If you trade on small time frames then you need to use small sl and tp.
Echoing what seems to be the common talking point here: There is no number. Each trade you should set the stop loss for that trade independent of all other trades. I trade with price action and use support and resistance to set my stop losses. I would suggest you learn support and resistance concepts to do the same, but that may not work as well for your method of trading. I trade off daily charts and rarely go intra day.
Another idea would be to place your stop below/above any recent lows/highs. For me the main reason for using a stop loss is to get out of a trade whenever that trade idea has become invalidated. So breaking a support below the trade means I was wrong and it’s time to get out.
I agree stop losses need to be dynamic and suit the market conditions, but does the market know where your stops are? by the sounds of it if your stop is just below a resistance line then its there for the taking. it has happened to me a few times.
Can you see stops getting hit on charts? if so would it look like this?
It is a well known story, if you are experiencing such stop loss hunting then you should widen your stops a bit and also check on any other broker for similar condition. May be your broker seems to be a stop loss hunter.
