Thanks for the video, you have a very easy, natural style that makes it easy to listen to.
I like the logic in determining the stop level, although it might be bit of a stretch for a beginner or small account trader. I guess with such a deep stop it would probably always make sense to either have a trailing stop or to manually adjust it as the pips accumulate? You mentioned the dynamic type trailing stop, which moves smoothly, pip for pip, in accordance with the new market highs/lows but what do you think about using a fixed stop that only jumps once the market reaches an additional, say, 50 pips? Is there really any difference? Would this help to ensure the stop level [I]only [/I]moves once the market has made a significant move in the right direction?
Initially, you set the target level on the basis of your desired risk/reward level (2:1), and this seems at first glance to be a rather arbitrary, purely mathematical, calculation based simply on what happens to be the stop width and not related to any kind of analysis of where the market might actually extend to. - but it was excellent to see that you actually subsequently adjusted both your stop [I]and [/I]your target to levels that made sense with respect to earlier swings - that is surely a very important point that you made there
Do you recommend always closing your entire position at your RR level or do you sometimes close a portion at that point and leave the balance to eventually close out on a trailing stop in case there is additional follow-through?
Thank you, Manxx. I am over the moon! It is not often that I get feedback for my videos, and certainly this is the best yet!
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Well, you are right, and I did wonder if I should have chosen smaller-sized profit and stop targets; I should probably have mentioned that POSITION SIZE will determine how far you can go with stops and profits - the larger the amount of money on the table, the smaller the stop distance (risking a bigger size, but less pips).
I made the mental note of mentioning the other type of moving stop, namely the Trailing Fixed, which does exactly what you say (for example, you can set it to move up ten pips for every ten pips of your position moving in your favour…or twenty pips, or, as you say, fifty, and so on); sadly, I had to limit myself to two examples, as that is all I had time for.
Thank you; I am glad that I made that clear…
Good point, Manxx, but difficult to answer, as it depends, for example, on the size of the position; for example, if trading a 2k position, you can close half of it (1k) on reaching your target and let the other half of it (the other 1k) running further into profit and using a trailing stop; however, if you were trading the minimum size of 1k, you could not close half of it (as your broker would not give you that option), so either you opened two separate trades of that value, one after the other, or you would just have to accept the initial profit target, for example, and play it conservatively.
Thanks for the responses - that all makes sense to me
Actually I was thinking about this example late last night, and one aspect occurred to me that is not really to do directly with stoplosses but to trading this daily level in general:
This particular example worked out fine but, if I remember rightly, took about one month to complete. This time factor is an important aspect. If one is trading for capital gain then it is pretty much ok and a good return on investment. But if one is trading for a living and needing to regularly draw down funds this is a long time to wait and pretty disastrous if it actually failed to make a profit after such a long period. It would also mean risking a large position in order to gain a month’s “salary” from it.
I think this raises the issue of spreading one’s trades over a number of different pairs or scenarios/timeframes which improves the probability of overall gain but reduces the gain from any one particular trade - but I guess the stop-loss logic remains pretty much the same on most/any trade set-up. However, on smaller timeframes like 30M/15M or less is there actually such a thing as an absolute minimum size for a stoploss. I.e. I would never put a stop for less than 9-10 pips and would usually hope to see at least 10-15 pips on the plus side.
Maybe these issues are splitting hairs but I think there [I]are[/I] a lot of people trading short time frames.
thank you, and what an excellent point you raise, which, I feel, would be better answered by my esteemed fellow trader Lexy, whose targets are indeed much smaller than the ones I exemplified in my video.
