Setting stoploss

Please can someone giv me an advice on how to set SL, i analyze on 4hr and use 15mins for entry with the aid of stochastic and RSI. I await your replies, thanks. :pray:

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I always base my stop loss based on market structure. At a point where if price reaches and goes through the trade idea is invalid. Then based on however number of pips that is I use a lot size calculator to work out my lot size so that I ahem 1% risk on the table.

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Set it for a % loss. 1% or 2% I would recommend

Sorry I don’t understand, should or can i leave the trade when my indicators reverses to a certain level or something?

I don’t know about your indicator. If you want to base a stop loss of that I suggest reading instructions that came with it??

Or contact the person you got it off maybe.

I use stochastic and RSI for entries on 15 mins, i got this strategy from babypips thou but babypips says the lower the time frame the more false signals you will experience, i analyze on 4hr and use 15 mins for entries so i was thinking if i use 15 mins for exit i may get whipsawed to death because i follow indicators for exits mostly RSI I watch out for values above or below 50 for my entries and exits… i feel bcos of my time frame the indicators could get me out of trades too early…

Stop Loss should take you out of the trade when the reason why you entered it is no longer valid. It answers question “What need to happen for me to admit I was wrong and protect the capital?”
You have multiple options to set your Stop Loss (without getting into position sizing):

  1. Market Structure - set Stop Loss behind previous high/low or support/resistance level. The idea here is, that if price will break previous local extreme it most likely means, that move has been invalidated. This is great for setups based on price action
  2. ATR - ATR is a measure of volatility. In other words it can say how much noise you can expect in price movement. If ATR is around 20 pips and you will set Stop Loss within less than 20 pips you can get out just by market flow and not necessarily by your setup being invalidated. So usually you multiply ATR by some number and this is your Stop Loss 2-3 * ATR is common choice. ATR is good for strategies based on indicators and not on clear price action.
  3. Some strategies do not have Stop Loss, but just flip the position into other side.
  4. You can also use “Time Stop Loss” - after position is open you will close it after set number of candles. I don’t use it, but my AI performs best with such Stop Loss (it’s easier as it does not require any decision making)
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Thanks for the reply, i will try out the first option, setting it at previous high or low, setting it there means i shouldn’t be looking at my indicators for exit right?

I don’t even believe you should be basing entry on indicators, let alone exit. If your indicator indicates exit from a long position, does this not mean you should reverse direction and open a short position? Does that make sense?

I mean…I think indicators are stupid but didn’t think that was helpful of me to say lol

When you are doing short term trading then try to use small SL like 6-7 Pips! But you need to increase your position when you are doing long term trading like Swing trading, Day trading etc! By the way, don’t copy others method, try to build your own version!

Basing trade entries and stop losses of a public domain indicator is the fast track to ruin.

The big financial houses have teams of maths pHd’s producing highly complex statistical based ‘indicators’. That is what your Babypips RSI stochastic indicator is up against! And even these in-house Quant systems have a shelve life and will reach a point where they just start losing money (after which point they are turned off).

The one thing I would say regarding Stop Losses, is that the market is attracted towards places where clusters of Stop Losses are to be found. The other thing I would say is that you have to have one.

90% of the time in trading Forex a Stop Loss will just make you lose money, as your SL level is triggered, only for the market to soon reverse back towards your entry area or perhaps even towards your target level. The reason why you must have a SL, is the 10% of the time, when the market will blow through your SL, and not look back, and could potentially blow up your account.

A common method used for calculating a Stop Loss is an ATR method past the entry point. i.e. 2ATR, etc. I did not not learn this way. I learned to place my SL behind logical market structure. That is to say, if you are trend following and buying on the dip, there will be a pivot behind which you don’t think the market will fall if the trend is to continue. That is where your SL will be. The problem with that is that this is where every other trader and his dog will also have placed their SL, and we know that all too often, the market likes to raid those liquidity pools, and then shoot back off in the correct direction just the same…

…which leaves you with a dilemma. Do you keep your Stop tight in order to maximise RR and just take it with a grin on your face, each and every time the market rinses you out of an otherwise good position (which will happen a lot), or do you reduce your RR per trade, in order to have a little bit insurance for when the market comes back against you deeper than expected?

For trend following trades, I place my SL a -0.14% extension behind the logical pivot.
For reversal trades, where d1ckfukcery, head fakes, and SL pings are to be expected, I place it behind a -0.23% retrace level of what seems like the key low at the point I frame the trade.

This can often mean significantly reduced RR on winning trades, but it also saves me getting d1ckfked by the market and can also give the opportunity to get out at scratch or SP on many trades where I either make a mistake, or the market starts to shape up against my idea. Truth be told, having extended Stop Losses isn’t rational thing for me to do. But it is a psychologically beneficial thing for me to do. It gives me more confidence when placing a trade, when sitting in a trade that is running against me, and prevents the pain of being RINSED by the market, only for the market to then go whizzing off in desired direction…and that is a big deal to me.

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Here is an example of my SL method in a trade I have just entered.

And again in BTC:

Shall revisit these in a few trading days and see where things stand, and whether my ext SL saved me and/or gave me options that a SL behind logical SL wouldn’t, or simply lowered my RR, or indeed if they were completely irrelevant, as the market just kept pushing against my trade.

Usually at the high or low of the base of my Demand or Supply zone with 1% risk and Usually a 3R

Place the stop-loss below the market price, if you’re intending to go long, or it should be placed above the market price if going short. Make sure to not place it too close or too far from the market price. Using an ATR is helpful to know what’s the right level to set stop loss at.

Setting stop loss is an obligatory duty of all traders. Opening trades without using stop loss is like mocking at your own fund. Stop loss acts as a security against any sudden big market movement. I think it’s obligatory to use stop loss because a sudden massive movement can make a trader destitute. None of my trade is opened without stop loss.

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Truth. Not only teams of crazy math geniuses but also developers.

If you’re intending to go long, the stop-loss should be placed below the market price, or it should be placed above the market price if going short. It is very important to place the appropriate stop loss to avoid unnecessary losses.