Iam new to forex but have read lots of books and have done simulated trading on another site. A book I read said do not put stops to close to the market price as it can be activated by market noise. So what is a safe distance (in pips ).
Another question in relation to this is this–ie if a stop can be activated by market noise then can a limit order say to buy at a certain price also be activated by market noise. So for instance if you had a limit order to buy at 6 to 10 pips below market price could this be activated by market noise and how likely is that. In other words the market price would seeming stay where it is (ie above your limit order but your limit order is still activated).This could be very desirable.
i think a good place to be above noise is to find the “redzone”. if u read investopedia, theres a good article on stop hunting. redzone is where most ppl will take profit
basically, when the trend is approaching a price, people have tendency to choose targets with round numbers. so instead or 1.477. mostl likely the will choose 1.480 or 90. so these are the ones i try to set it at. of course preferabbly, you dont want to set the stops too close to the trading level.
Anyways,when prices do reach 1.490, lets say long positions will open, and ppl place stop-loss 10 pips below or 15. u see im still confused about this. does thsi mean that when price retraces back to the stop-loss, it will trigger a cascading wave of selling positions, thus producing a downward pressure on the prices? so my real target should be 1.485 ? or placing OCO @ 1.490 ?
another suggestion is looking at resistances and support, placing OCO order in anticipation of breakout or retracement. no punishment for being wrong here.
of course, im a noob too, so those with more experience can correct me.
also look at 1hr charts or even longer ones, while confirming a trend is well in place, or resistance/support/channel can be found. the longer charts will prevent you from more fakeouts compared to short term ones.
and like u say, prices staying well above your stop/limit order, thus your positions being deep in money. if you are looking for breakouts it shouldn’t be too worrysome, however i’d recommend manually/or locking in your profits just in case.
also does it matter if you use stop or limit to trigger your positions?
Cheers.
To JohnD :
Market noise is prevalent in 1/5 Minute charts. These charts are good for looking at to get a good entry but they are not for us beginners to trade.
If you trade 30 minute charts or longer you will be away from most of the market noise.
If you do trade these 1/5 minute charts you can expect the market noise to trigger your settings quite easily.
In setting a stop loss, one trick is to divide your entry into 2 or 3 parts while watching the 1 minute chart with a MACD. Each effort you try to get a better price. The charting software then averages your entries and you end up with quite a good entry. In using this approach you prevent stop loss hunting from taking your trade.
The stop loss setting really depends on what time frame you are trading. Several people on this forum do not even use a stop loss, but rather manually exit if they feel the trade has gone too far the wrong way. This method prevents stop loss hunting.
Kind regards, Tymen Wortel, Perth, Western Australia. 
What really makes up market noise? is it the news events, or the different analyst opinions found all over the web? Or is it a case of both? I never really trade during major events, usually allow 30 mins before and 30 mins after. Then get going with my technical analysis-based strategies etc.
Perhaps there are many definitions for market noise.
The one I use: “The frequency with which the bounds of a price range of a given length are broken toward a new direction.”
The more often the bounds of a price range of a given length are broken toward a new direction, the more noisy it is.
There is a negative correlation between price range length and the frequency with which its bounds will be broken toward a new direction. A ten minute price range is broken toward a new direction many times a day on average. A ten week price range may be broken as little as a few times in ten years. Thus, the ten minute price range is much more noisy than the ten week price range. Longer ranges tend to be less noisy than shorter ones.
Why is that? Well that is for discussions over pints and/or under the stars. It is like asking: “Why are we here?”
-Adrian
PS This thread has a very low amount of noise as its age is many years and its posts are very few.
wow talk about grave digging an 8 year old dead thread…
One man’s noise is another man’s profit.
Trade smaller lots with higher stop loss for longer time periods, in the direction of month long trends to earn profit.
" One man’s noise is another man’s profit. "
True though, if you can scalp and make profit, you are a badass!
Markets are volatile.They change minute,hour,day,week.There is no fixed stop-loss that can be applied just like there is no,“Holy-Grail” trading system.You must learn as much as you can and adapt everyday.The moment you think you have it beat,you lose.
Of course it can. That’s why many brokers set some fixed min. distance between market price and assumed limit/stop order or SL, though I don’t have it at one of my broker Tickmill (there is 0 pips distance)
Note that this could be considered as a safe measure from brokers, however for some techniques like grid trading or hedging with opposite positions 0 pip distance may become a powerful earning tool, as if one position goes on trend second should be closed ASAP, and the less is distance the better.
don’t see clear view related to grid trading with 0 pips distance as powerful earning tool. with these trading condition better suit with quick entry type, scalp during news time perhaps.
it may appear only savor for quick entry method. and tickmill condition are reputable and savor mostly scalpers. but at overall the lessen the noise are the better for any kind of trading method. for example at grid trading system, most of them use exposure as exit method. said there’s 10 grid entries, all equipped with own spread, with those 0 pips distance the accurate fill in entries may differ compare with higher pips distance. and these where the exposure as exit would totally different when put in cumulative 10 times entries.