Dynamic Stop's and Take Profit's

Hello, i was wondering how other traders determined their stops and take profits as opposed to setting rigid flat numbers for their stops and take profits, what i have been doing is backtesting a slew of possible stops and take profits over the past 4 weeks of data to determine what would be optimal for my trading method but i am looking for other more dynamic ways currently, what do you use to set your stops and take profits? what about atr stops and tp’s?

I set my SLs and TPs based on previous S&R levels and adjust my position sizing according to the risk I am willing to take. I also adjust the SLs upwards as the market moves in my direction or if I see some signs that the move is slowing and possibly reversing, this to me is “dynamic”.

ATR SLs and TPs are also dynamic in a sense and the main advantage over flat SLs and TPs is that they take into consideration volatility which is very important. A 50 pip SL may be fine for a low volatility market but may be too tight in high volatility conditions. ATR helps with making adjustments to these conditions so they are advantageous.

Hi Sithjawa,
I have found Dynamic stops to get triggered much too often and often before the trade is in positive territory, esp in fast markets. i tend to tread like Mikhail and do like to split my positions so that once in profit 9heaven forbid), i take half and then trail my stop manually. on occasions i do use trailing stops but set the stop wider than the default 10 pips (on movement). It all comes down to the time frames you are trading and how conservative you feel: i like the ATR method described above to give a sense of how wide the stop should/could be. good luck with your testing

I use different stops depending on the entry.

The majority of my stops are at 2x ATR (40), and I move it at the close of each candle to the best close since the start of the trade. On lots of my trades I’ll re-enter the trade if the signals are there once this stop passes my original entry, locking in profit of original entry, and keeping risk at ~1% whilst compounding returns.

On channel trades my stop will be on the ‘back’ of the entry candle till either the channel picks up the stop and starts carrying it, or I make an entry that then uses a 2x ATR or other closer stop. I will also exit this trade if it doesn’t hold its breakout. All my entries have the stops consolidated to the one that is the closest to the current market price.

I don’t set TPs in any way, shape or form in most of my trading - the exception being inside days where half my position is closed at 20pips.

I’m a swing trader and I place my initial stop a few pips behind the previous swing low (uptrend) or high (downtrend). As for taking profits, I have 2 targets. The first target is 20/30 pips before the previous swing high (uptrend) or low (downtrend). If hit, I close half my position and move my stop to break even.

For my second target, I use the size of the previous swing as a guide. I take 80% of that previous swing and project it onto the current swing. That gives me a potential target. I then draw in the channel top (uptrend) or bottom (downtrend) and see where that falls in relation to my potential target level. If it falls short, I will move my target level accordingly.

Hey can you maybe post a picture of what this look likes? Sounds interesting but can’t quite visualize it.

Thanks for all the responses :slight_smile: I back tested multiple stop types and multiple settings rigorously for the past week and have determined that these are optimal settings for my system:

ATR (14) = stop loss and half take profit

ATR (14) x 2 = full take profit

Thanks for all the ideas :smiley: I was able to increase my profits 30% this way

There is no perfect rule to determine stop loss or profit target - all is just speculation.