hey i’m trading on daily chart
is it a good practice to set you stop loss to break even after 50 pips profit
and than on 100 pips profit to 50 pips?
or just leave it alone
i’m using bollinger bands 20,4,0,0 to determinate take profit/stop loss
or just something else?
and how do i calculate the pips on indices like the same amount of 50 pips but on indices it much higher number (i hope this question make some sense)
thx in advance
I really don’t see what relevance these questions have on stop loss placement. Back testing for what it is worth is for strategy development. Stop loss placement is more trade management and I really fail to see how back testing assists with trade management.
On a footnote. I think back testing is a waste of time. The most overrated advise given to new traders.
Cheers
Blackduck
It is always good to, at some stage, lock in profits. Profit is the name of the game and if you don’t take profits or lock in profits at some stage then what is the point of trading?
If you have got 50 pips and you want to move to break even that is fine. I have never used Bollinger Bands so I cannot comment on stop loss placement with this indicator. However we all know that price moves in waves and as price rises or falls, at some point price will pull back and the reason that price pulls back is usually because traders start to liquidate some of their positions to lock in profits.
Once a pull back has occurred and price resumes in the direction of the trend then it is usually safe to place your stop loss at the bottom or top of that pull back.
You could also look at other options such as trailing your stop a number of pips behind your your trade.
Depending on the size of your account you can always enter with 2 lots and when price reaches a certain point, say in your example 50 pips, you can liquidate one lot giving you a 50 pip profit, move the remaining stop to break even and then let the trade run moving your stop as you see fit.
Hope this helps
Cheers
Blackduck
The ideal method of determining where to place a stop-loss is based on the technical analysis, the chart. So in a long situation this could use a recent support level, which might simply be yesterday’s low. Or if you’re using a chart pattern like a bull flag or inverse head & shoulders it could be based on the low of the pattern (Google thepatternsite).
If there isn’t a chart feature that indicates where the stop should be placed, you should question why you wish to buy this one at this time. But if you are determined to buy this now, you should use ATR to give some statistical pointer and value towards your stop position - it is a help to know for example that you have placed your stop at twice the distance down from a long entry price that price has moved in an entire day’s trading out of the last 14.
Similarly for TP’s. Use the TA to identify where a TP might be placed. But if you’re trend-following, don’t set a TP at all, just follow what the chart tells you about the strength of this trend. For example, back-testing shows that it is rare to get more then 3 consecutive days with higher closes in an uptrend in forex, so an exit a the third higher close might be a good idea.
It is very important to use stop loss to manage the risk. Stop loss has to be used to maintain money management and risk ratio. I never trade without stop loss. This formula is able to increase the profitability ratio in trading.
Hi @Ancalagon
If you are trading on a daily chart, you could have an insurance policy in the form of a moving average. Once the price has closed meaningfully above it, the probability increases that it will not retrace to your entry and therefore move your stoploss.
You could play around with different periods to get the best odds and do some testing with this
Don’t do this, you will get stopped because all the banks and the algo’s know where amateurs tend to put their stop loss orders
Yes that is a good point we can agree to disagree. However I am a full time trader with the ability to trade in a number of ways on several time frames. I scalp, I swing and I position trade,the latter usually with options. I trade both the futures market as well as the spot FX market. When I first started to trade I tried backtesting and had no idea of what I was doing. So I gave the idea of backtesting away. Since that time I have never backtested. Instead I practised practised practised many different styles on a demo account. I also did several very good courses.
So my point is there is more than one way to skin a cat.
What works for you may not work for others.
Just my point of view.
Cheers
Blackduck
Yes I checked out your website. Auto trading can be very successful. Just ask all those high frequency hedge fund traders. Me I personally never trust machines to do my work. LOL
Happy Trading
Cheers
Blackduck
I usually place a stop loss below swing high and swing low. And when the profit is about 30 pips, then the stop loss is breakeven. If the volatility in the market increases, then the possibility of loss is less.
Could you please mention those courses which particularly helped you in the spot FX and indices trading? Have you earned any experience in commodity trading using those courses?
~AJ