When day trading what is the minimum amount of pips you would consider for a stop loss?
Use one to tight you may get stopped out by spread fluctuations
To far away and you may find even although your trade set up was correct price failed to reach the target.
Many people i seen use 20% ADR,mostly 20 pips
Mine based on ATR(14) ± high/low,from signal candle.
Usually from 10-25 pips
Many strategies rely on the bar range. So if your system lets you notice a bar that signals a long entry when price breaches its high, many traders will use the low of the same bar or perhaps a preceding lower low as the stop-loss price level.
Don’t forget to allow for the spread. Most charts are drawn off the sell price.
Just to clarify I am not asking where a stop should go, But just how many pips would be a minimum.
For example I found a swing point on the 5min chart last night, But if I was to place the s/l under the recent low it would only of been 2.3 pips which would of meant if I took the trade even a small fluctuation in spread my stop would of been hit even although price did move up as predicted.
So what I am curious to know is if any traders have a minimum amount of pip for a s/l that if the natural place to place a s/l falls below that they either wont take the trade or trade but add a few more pips to bring it up to the minimum.
Yep. Depends on your broker and what they’re minimum spread is. What you can do is take the trade at the minimum pips your broker allows but manually stop it if it goes up to your mental stop loss. You have to follow your strategy or test both methods.
If I do that I would be stopped out as soon as I place the trade
I just tested as I just realised I wasn’t sure what the brokers min would be, Turns it its just one pip even although the spread is 1.5 pips for GBP/USD
Thank you for the offer, But that’s not really what I’m looking for.
Just wanting to know if anyone has a minimum amount of pips they would use for a s/l
Myself personally wouldn’t use less than 8 pips
Yes minimum pips depends on your spreads. You should keep minimum 10 pips if you scapling. And it also depends in what pair your dealing with. If the pair is high in volatility then the distance should be about 20 to 30 pips
That’s tricky because there are so many different variables, as you’ve seen here. You also have to consider your position size, the larger the position size the faster you’ll get stopped out.
If a trade goes my way and I’m happy with the profits I’ll set a trailing stop at 5 pips, that way the max I’ll lose would only be 5 pips, but it still allows for further gains.
*Edit…GBP/USD is volatile and can move very fast, another thing to consider. It can move 10 pips compared to USD/CAD which will move just 1.
Thanks for your reply MattyMoney
That’s why I picked GBP/USD was just to see what lowest amount of pips my broker would allow. I would never dream of only using one pip, Needs some wiggle room.
My minimum is simply based upon risk/reward allowed ratio and my analysis of where the market is going. I normally pick the low candle in the current trend I’m picking up on which normally happens to be about 8 pips off from my entry. However, there are cases the Risk/Reward ratio is not acceptable to the take profit I’m trying to take. If that is the case I do not take the trade.
This is what I’ve been trying to do for a strategy in trying to make, I wanted them right to give myself a better risk reward ratio but in testing some was too tight the trade went my way but it was stopped out too early.
It’s worth backtesting I find, which I need to do myself, but I think it’s also different with other currencies also.
I’ve found the ATR indicator quite useful for this as it’s the range on the candles for a certain period and I’m trying at the moment 1 x ATR which can be anything from 40pips -100+ depending on the pair.
I have been trying a completely different strategy that I don’t see here. My experience with Forex over the past 1 1/2 years is that the MM’s see EVERYTHING and when I analyze my lost trades, it is almost always because they send a wick up or down, take you out and then continue on their merry way. Some people I trade with use no stop loss. That scares me because I have seen them once in a while, slam it one way or the other to extremes to knock out traders/take profit. My strategy now is to use a ‘catasrophic’ stop loss. In other words, calculate how much of your account you would be willing to lose and position a stop loss that would not be normally hit (they always can and do go 45 PIPS or more) but over 100 is not that common. That way you can ride out the pullbacks and fluctuations and stay in the trade and if they do slam it at some point, you don’t blow your whole account just the portion you were willing to lose. I have been doing this on a demo for a couple of months and have yet to experience a ‘catastrophic’ event.
Yeah I guess it all depends on the system and how confident you are the trade will go your way?
The one thing I’ve found is if it does hit this bigger stops it obviously is a lot more lost in a trade and less reward ratio. And trading on the daily it looms alot of money as it’s moving away from you.
Agree the wicks can take ppl out quite easy though