Stop Loss used for 1H / 4H time frame

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?

Thanks

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.

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I like your approach to this. Maybe even a modest r:r of 1:1.5 is too ambitious on this time-frame.

But what in more detail is going wrong?

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.

I think looking at charts in 3 or more time-frames can be confusing if you’re not absolutely clear why you’re looking at them.

But I agree, if you’re trading a specific time-frame, the ATR you set your SL by should be the ATR from that time-frame.

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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?


Trade above details:

Demo account size is $5,000 and risked 1%
purchased 8,000 units of CAD/USD.

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.

Keep up the good work!

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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).

Hello,

I’d use the daily ATR to trade the 4 hour. If the $ amount of the SL is too much risk lower your position size and scale up as the trade progresses.

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.

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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.

That was very interesting to read. Thank you for sharing.

For me, more time frames mean more confusion. Anyway, check on your support and resistance levels, where you are using them.