If im looking to make 20 pips on a trade where should my stop-loss be in terms of pips? Thank-you
If youâre entering a trade, there must be a reason why you think price is going to go in the direction of your trade ie. a signal. This is an indication that will catch your attention a say, âhey, thereâs a good possibility that price is likely to do Xâ.
However on analysing you market, you should think to yourself that if price does Y, then my trade is invalid. This is where your stop loss goes. A standard rule of using 20-pips as a stop loss wonât work, it needs to go in a logical predefined location.
Thereâs an endless amount of answers which would be dependent on your system & not all options will fit all systems. Itâs subjective. As a general vague answer, these are the options that youâll probably hear most often: put your SL above or below support/resistance or above/below the swing high/low.
So to sum it up, with the information provided, your question canât be answered. Even if you told us the currency pair, time-frame, reason for the trade etc. youâd probably still get numerous different answers. Risk tolerance varies, market interpretations vary, systems vary.
Depends on how much risks you are willing to take.
IE:
TP:SL ratios
2:1 = 10 pips
1:1 = 20 pips
1:2 = 40 pips
etcâŚ
Everyone is different. How much are you willing to lose when the trade go opposite of what you think?
Also agreed with the earlier post.
Also depends on his trading style, 20 pips to a scalper is different to 20 pips for a position trader
In demo, set your stoploss at -64 pips, but exit if price goes 12 pips against you. It builds character.
Yeah i know it was kind of an open-ended question really, iv heard the placing below supp/res swing high etc. it is subjective i guess there is no answer. just like forex it is kind of random. it is organized chaos.
I agree. Itâs happened to me to many times where a spike has taken me out only to have the trade continue profitable. The only time I might consider something different is when you set the stop loss when your in profit and turn your comp off and walk away with a limit in the stratosphereâŚ
Actually this doesnât have anything to do with it. Best you do a little more research bro. Setting a stop loss to match a risk to reward ratio equals
FYI! It was meant only as example, and I did say that I agreed with baz1982. Meaning for OP to read and understand his post. If I gave you the wrong impression. Then pardon me. 
Stop Loss is only a precautionary option. You can set it based on your trading anaylsis of the market. How far or close do you think a certain price level will go; this is what determines your stop loss.
Stop loss is a very important tool in forex trading specially for new traders, it will reduce your loss margin and prevent your investment from eroding away, but its a skill to place stoploss which you will learn as you gain experience.
I have read some of the replies to your question and I am surprised this was not said. You have very little say when the stop should be. A stop is often place above/below resistance/support levels, you canât just place a fixed 20 or 30 pips stop because this is your risk management. Also, bear in mind that larger stops will be required for EURJPY for example than EURUSD. You have no say whatsoever where to place the stop, taking profit and whether to buy or sell. The only thing you decide is how big the trade should be and even for that there are strict rules. Read stop loss trading strategies
I differ in my thought process for SLâs (e.g., often not using them), so I might be wrong, thus I can only interpret my understanding of how most people implement it (or how many people suggest to use it).
SLâs are placed in regards to how much you want to risk, based on the trade size. It is NOT done based on nearby S/R levels, or any other factor.
How/when you decide to get into a trade is based on where S/R levels are compared to your possible entry AND your SL. You may want to either wait and buy a bit higher to ensure the market isnât just going to get pushed down the to the support level and hit your SL on the way. This is similar planning for not buying right below a resistance level.
[QUOTE=âNefser;669086â] SLâs are placed in regards to how much you want to risk, based on the trade size.[/QUOTE]
Maybe itâs just the wording but from my interpretation of the above, I disagree. That implies that if youâre trading $1 a pip & you only want to risk $20 then your stop-loss is therefore 20-pips. Regardless if where a thought out stop would go.
You need to decide where a logical stop-loss should go BEFORE you place your trade & then calculate your position size so that your risk is the same. So if your logical stop loss is 45-pips away, then you buy a position size that makes those 45-pips = $20.
BabyPips has a calculator to help.
http://www.babypips.com/tools/forex-calculators/positionsize.php
The logic being that you could trade a 100-pip stop or even a 10-pip stop & at no point risk more than $20; all by adjusting the position size.
baz1982 - You are correct.
As I said, I donât generally trade by using SLâs like this (just for BE and taking profits), as I will tend to manually close trades or let them run.
Thanks for the clarification.
Stops are safty nets for when your trade jumps off the bridge, power outage, internet outage.
They tell you, " YOUR WRONG "
depending on your system, and your strike rate, Stops can be differant across the board.
Good trades SHOULD be around the S/Rs levels, which usually inturn would be tight stops, or last candle High, if trade placement is correct. SImple because if your assumption is the wrong turning point, you lose far less. Remember, stops tell you your wrong, how wrong do you want to be?
to many senerios to deal with,
SLâs are for exactly whatever reason you use them for. Deep SLâs are for extreme circumstances, such as the examples youâve given.
Nearby SLâs are often used to keep a trade from costing too much if the market moves away from profitable levels. âWrongâ is rather harsh and biased wording for a trade where the price action merely moved far enough from your entry and thus triggers the stop and limits the trade loss. It could easily reverse, and proved you were âRightâ about the trade, but Iâd guess you would then say the trader was âWrongâ about the entry. Or, in fact they were âwrongâ about the trade, but ârightâ to put in an SL and stop it going further against them?
(Imo, itâs just part of the volatility and uncertainty in the market, but I guess youâd prefer labelling all this activity judgementally by being ârightâ or âwrongâ. I just say some trades work and some donât. )
As for support and resistanceâŚarenât these the levels that you check to see whether the price will rebound off of them, or push through? Therefore, wouldnât you place a sell SL above or below (and far enough away) from a resistance level?
Also, arenât these levels bound to be tested by the market, shifting nearby, to, just past and around? Using these as your areas for SLâs sounds crazy. Arenât these areas generally like magnets, where the price will seem to be âpulled towardâ the level, once it gets close enough? Even the names themselves suggest a place that will affect the market movement.
Canât say I agree with you on this.
Well, where the stats correlate to losing traders, ( 93% ) that most THINK the rebound will commence, and it doesnt.
In a business that its either buy or sell, your either right or WRONG.
I prefer to see S/R as Zones, like you said, for test reasons and such.
I have my ways to know if they are even true zones, which was my biggest fault in my past.
Your Right or Wrong, bottom line.
For the amount of pips that can go against you, and come back down, could easily be doubled if you except your wrong. At the end of the day, you cant be almost right, or almost wrong.
ANd again, this is why you practice to be perfect. You must practice perfection, high strike rates, and NILE Drawdown.
Im a firm believer in you MUST be right. But im also a max lot trader, and try to make the most of my balance leverage to reap the maximum benefit of being RIGHT.
So, can we agree that its definitely systems rules and Money Management with trade control?
Everyone trades different, or loses differently i guess I can sayâŚ
Great Pips to Ya,
I agree that Stop loss is the best way to limit our risk in ensuring the safety of our capital but the major thing we Should know about STOP LOSS HUNTING . This is been the mystry for me. Can anybody Clearly explains when this stop hunt takes place and how to avoid it ?