Hi All, I’m a newbie and going through the school of pipsology, and demo trading as I learn and read. I look at the 4H and 1H time frames but having a hard time to set a stop loss based on the 4H and 1H ATR or volatility in the market milk tool.
For example I’m going long at the lower channel (bullish trend) for CAD/USD. The following are the ATR: 1D - 47 pips, 4H - 21 pips, 1H - 10 pips. I fee like the 4H and 1H pips are to narrow and will definitely get stopped. By using 1D ATR, I’m limiting my risk to reward ratio to 1.5:1 or 1.8:1, maybe 2:1 and not the recommended 3:1. I set losses below key support level into consideration when setting my losses.
A FX pair at support or resistance can move 1D worth of pips even though looking at 1H or 4H. How do experienced traders set stop losses for 1H /4H time frames?
To set a stop loss you have to consider support and resistance level. You can not put stop loss by specific pips. Stop loss should be below support and above resistance level. You also need to consider spike.
Hi, from my expierience there is deppend on builded strategy, sometimes is better to using ATR as stop loss level sometimes constans value in pips or value one indicator or indicators, backtesting will show you which method is better. Regards Greg
Nothing has gone wrong with using Daily. Is the daily ATR to wide for 4h or 1h? from my understanding if you are trading daily time frame then your ATR should be based on daily and so forth.
Can you assist with reviewing my trade or providing feedback
My reasoning for entering the trade was due to the strong bullish candle at 8pm and confirmation at 9pm of closing above the previous candle. I was aware that on the 4th both US and CAD were reporting employment numbers and the decrease the day before was due to people buying USD b/c of the market sell off.
Would have entered the trade differently and where would have put your trailing stop loss? I decided to hold the trade over the weekend. would have done something different?
I don’t trade using ATR, I look at S/R levels, but Honestly, I don’t see anything wrong with this setup. You’re following the trend, price is in a good spot in relation to that channel, and your SL is in a place that will nullify your trade if it’s hit.
It’s all about keeping things simple and sticking to your strategy.
One interesting thing to me though is your chart is displaying CADUSD instead of USDCAD, which is what is typically displayed.
I look at the spread for USD/CAD was 1.7 vs CAD/USD was 1. However the value per pip was still lower for USD/CAD so i should have gone with it (rookie mistake).
I think its a good set-up - my sell order on USD/CAD triggered during the evening of 02/09 (UK time). I don’t use Stochastics but do use ATR - useful for taking account of volatility - it changes.
Maybe you might lose one of your time-frames and make sure you keep a very keen eye on what you’re using each for.
I trade the 1hr time frame, providing it’s in synch with the daily chart trend. On a $2-10,000 capital base I would risk 1-2% per trade which means adjusting my lot size to give my S/L and T/P a 1:1.5 breathing space. Ideally, I aim for 2* ATR spread.
At my lot size of 0.8 on a demo of $1,000 I’ve noticed - as a trend trader - that trades are losers when reaching minus c.$12, and I close it, whatever.
What needs experimenting, and providing my capital can withstand it, is whether, say at minus $10 (1%), I close the trade and reverse it by risking an increased lot size of 1 or 2.
IMO, that’s a strategic move to at least break-even, not chasing losses. Bear in mind that a 1:1.5 ratio of profit and loss, only 40% of trades need to be winners at the same risk level to break even.
However which way you look at it, on demo accounts, constant DISCIPLINED experimentation of strategy, risk reward, and money management for several months is the only way to learn what works and what doesn’t.
And, IMO, I suggest a $5,000 capital account, and using a 0.5 - 1% risk per trade should provide a beginner with enough space to ride the waves and to eventually become consistently profitable.
@tommor you mentioned that your USDCAD triggered, Do you always preset your order? How do you know that the price will bounce and not blow right thru the resistance? Would you exit a trade after it is triggered bc of news or some other factors or do you let it play out?
Trading long-term, so no need to wait and wait for price to reach a pre-identified level. Just set the order and go away.
Its rare that exit from a long-term trade is necessary because of some news but it does happen. Usually the first I know about some news is not seeing the news but seeing the charts for the same currency all change direction together. Might as well get out when that happens.
Often I will exit a profitable trade when price makes a sudden sprint. Or sometimes just because it has made so many consecutive closes in the same direction - if price has been rising for 6mths but only once made more than 3 consecutive higher closes and we just got to three tonight, might as well get out and bank the profits, wait for the lower close tomorrow and set a new entry order.
The general rule for stop loss setting - you set it below the level where you expect the price to bounce up (if you hold Buy order) and above the level where the price is expected to bounce down (for sell orders). Your goal is to determine these potential level or zones. For example it can be previous support or resistance or areas of previous price consolidation, “round” levels, Moving-Averages (50, 100, 200 work best for stocks)
