Hey guys, I am working on a strategy. It’s a day trading strategy, maybe even call it a scalping strategy. I will be applying it on mostly major pairs. Point is I am noticing my average size of stop loss is 3-6 pips on EURUSD, GBPUSD and a couple of other majors. Now I am wondering is it TOO tight considering spreads as well? Although I plan to use FXCM or ICmarkets and their spreads seem quite decent. But I’m wondering if I’ll be taken out by spread only to see the pair go in my favor then.
The stop is calculated from ATR14 on a 5min chart and 3-6 pips is mostly the ATR14 value I’m seeing lately.
Is 3-6 pips stop loss TOO tight?
No it’s not too tight. Your SL is what it is, be it 6 pips or 60 pips. It all depends on your broker. Analyse your trades and see if you are getting whipped out by the broker widening he spread. If so, increase the SL size.
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Many pairs move 80+ pips a day, if that helps in answering your question.
Exactly. Many pairs have more movement. If I want to trade in those pairs, I should give stop loss high.
Of course, if you can pick the EXACT top/bottom, 3-5 pip SL would be fine.
3-6 pips is very tight i think. What is your RR ratio?
the only comment i can add to the post, where to put stops and take profits is arguably the trickiest part of trading, especially when to take profits.
3-6 pips is definitely too tight and won’t allow ur trade to breathe freely.
Unless of course you are scalping in minutes.