[B]Given that we are never to risk more than 3%, at most 5%…
… the fibo38 level as a SL would violate the risk rule (3%-5%)![/B]
In setting your SL at 38.2%, it means you are doing a 1:1 Risk/Reward ratio management. So perhaps if your TP is say 35 pips, then your SL would be 35 pips. I don’t understand how can ANY amount of pips in a SL can ever violate your maximum 5% risk rule.
Assuming that you have $1000. If you have 5% risk rule, meaning you are willing to lose $50 per trade. Now… you are in a Macfibo trade and you set your SL at 38.2% (R/R 1:1) and it was in the amount of 35 pips. Now you need to determine your volume/pip value. So since you are risking no more than $50 per trade, you calculate Volume = $50/35 pips. So for this case your volume would be $1.4.
See where I am going with this? So if you ought to lose 35 pips in this trade, 35 pips X $1.4 = $49. I don’t see how even setting your SL at 38.2% would violate 3-5% risk rule. If your risk 3%, then you don’t want to lose beyond $30 of your trade. Then do the same thing. Let me know if I misunderstood your earlier statement (on how setting SL at 38.2 violates the 3-5% risk rule) but I hope i shed some light on how you can calculate your risk and money management.
[B]If i set the stop loss within the risk parameters, that would be somehow close to the open price, sometimes around 61fib level.[/B]
I don’t quite understand what you mean on this statement…??
p/s : Risk/Reward ratio is equally important.