How to avoid whipsaws?

I know you can’t always win every trade, but is there anyway you can limit whipsaws? Often times I’ll be in a trade and get stopped out by one or two pips and then all of a sudden the trade will go my way and hit my targets.

Are you using a set stop for each trade or are you putting your stops in strategic places? Make sure you put your stops behind support or resistance levels because then your trade will be protected. If you get stopped out, then you know that it was because you were wrong in your trade idea and that it just wasn’t some freak accident.

I would also avoid entering a trade just before a major market news. :slight_smile:

I agree. I used to use set stops and I would find myself getting stopped out by 1 or 2 pips. Then I realized that there is no point in using a set stop because the market doesn’t care. I like to think that my stops are at levels where if they are hit then it actually means that I was wrong in my analysis.

Before you enter a trade, make sure you know the bigger trend. Look at a higher timeframe and see if you are trading with or against the trend. That might help you pick your trades more carefully and hopefully help you avoid careless trades.

Why not try using wider stops. Lower your position size so that you can have more room to let your trade mature.


Mature? Do trades go through puberty? Or should I call it pipberty. :smiley:

I agree. Especially in today’s low volatility and rangebound trading environment, wider stops are a necessity. In my own trading, i’ve cut my position sizes in half, but my stops are doubled. This has created the same maximum risk i’m willing to take on a trade as before, but with more room for my trade to work and weather whipsaws.

What is considered major market news ramrocket?

Tell me, what would you call an important news event?
P.S. realy realy good advice!

OOps…didn`t notice that You asked the same question!:slight_smile:

Please refer to this posting on Economic news