When laying down some basic trades is there a rule of thumb to place S/L’s and T/Ps? Also Trailling Stops. I know it varies for everyone but i have read that for someone that typically uses 30min 1hr and 6hr charts that S/L should be around 30 pips and T/P around 100? that seems rather high, but i’m new and just want some input on the advice i have read. I know a lot of the answers are probably situational so let’s say i’m staying in trades less than 24 hours, but for more than say 2 hours.
Hi Kreading16,
With regards to a stop loss If you are in a trade for around 24 hours your S/L’s should take into account the ‘Daily true range’ of the pair you hold a position in, its briefly covered in the pips school,Market Hours: Best Times to Trade in the Forex Currency Market
With T/P levels i’d follow the blogs of happy pip and pipcrawler for greater info!! or even ask them!
hope this helps 
I am fairly new, but I try to place my stops above/below a significant support or resistance level, preferably 1 or 2 resistance lines beyond my market entry. For T/P, I look for swing lows or highers (in the direction I’m trading), and I place my T/P just before that point. This is all done in the planning stage prior to entering a trade, so I can make a risk assessment.
good answer
there is no rule of thumb when setting stops or tp’s but generally you will want to keep your risk to reward a minimum of 1, preferably 2 or higher
incase your not familiar with R:R, it is how much you intend to risk vs how much you intend to gain,
an R1 would mean you are risking as much as you intend to gain
an R2 would mean you are targeting twice what you are risking
these are controlled by stops and take profits.
an R1 would mean your stop and tp are equal
an R2 would mean your tp is twice your stop loss
a lot of new traders will formulate a plan as they’ve been instructed whereby they will be adament at using a particular R:R such as 2:1, they will spot a setup and decide they want to trade intra-day so there stop will be 30 thus giving them an automatic take profit of 60.
these kind of trades are unlikely to be very profitable as there is no real premise behind the placement of stops or take profits.
you should as barb mentioned take support and resistance into consideration when placing stops and take profits, and by support and resistance im referring to drawn up horizontal lines across recent highs, lows, double/ triple tops or bottoms, trendlines and fibo retracements. the strongest support and resistance will be where several of these coincide, you can also try to spot candle patterns forming around the S + R areas or lines for extra confirmation.
using the methods mentioned above, begin to work out the distance between your entry, nearest support/s and resistance/s to begin planning your trade and working out your risk: reward ratio.
for example you plan on entering at the market on the usd/jpy pair at a price of 89.65, you have establish a very strong resistance at 90.00 and a very strong support at 88.60. your entry is 35 points from resistance and 105 points from support, if you take a short position you would have a trade with a risk : reward ratio of 3:1 which is by any standards a very nice trade. you will most likely then want to tweak this slightly by putting your stop say 10 points above resistance and your take profit 10 points above support, you have now greatly increased your chance of protecting your stop and price reaching your target whilst still maintaining a R2+
hope this has helped, sorry if some of it seems as though im pointing out the obvious to some but alot of new traders find this harder to grasp than you may think, i have in the recent months starting teaching trading to some wealthy clients and as intelligent as they are, they sometimes really struggle with certain concepts
lee
As far as trailing stops, IMO/IME, anything below 200 will just cut down on profit.
Trailing stops are best usd for longer term trading to lock in larger profits and give a chance to ride a larger trend.
For instance if you put on a 50 pip TS, it’s very likely you are going to end up with +25 or less for a profit.
The issue of the TS is of particular interest to me as it is proving to be a vital factor in the success of the Ichimoku trend trading systems I am testing.
I was hoping to get some feedback from some more experienced traders as to if its a good TS set up and if not how best to improve it.
Trading on a 1 day chart, using the Ichimoku to trade trends, I set my SL based on the Kinjun-Sen, typically around 200-250 pips. I set a TS when a trade becomes profitable such that the size of the profit= the size of the SL. I then set the TS to be 10 pips smaller.
As an example, I short the EUR/NZD and set the SL at 228 pips above. When the pair moves in my favor by 228 pips I set a TS at 218 pips behind it,( thus guaranteeing that this trade cannot reverse and become a loser).
My logic behind this is that your SL has to, by definition be large enough to accomodate daily volatility. Since your TS should do the same, making it 10 pips smaller than your SL means you are leaving a profitable pair enough room to run, (to maximize long trend profits) but not allowing winning trades to become losers, (once a TS is placed that pair is guaranteed to be a winner, if a small winner).
Any thoughts on this method of placing trailing stops for position trades that last several weeks?
Anyone else using similar trading systems who places their trailing stops differently?
Any advice is greatly appreciated.
Arm Doc, why would you not manually sell out for a 200 pip gain? Why would you take a chance on the retracement only leaving you with ten pips?
To paraphrase a famous quote, .5 in the hand is not worth leaving 200 in the bush.
If the Ichimoku identifies a definite up trend, and the daily action moves are 200 + pips, I would be resetting buys daily at wherever that moving low might be until Ichi says otherwise.
Master Tang, the daily action is not 200+ pips, I am position trading so my trades can last for weeks, during my backtesting the longest lasted 8 months and netted 3200 pips!
The Ichimoku based system is designed to identify a trend and ride it a long time, getting as much profit as possible. I like the idea of a TS because it takes the emotions out of trading and makes my system a “set it and forget it” affair.
The main reason for the TS is to not let winning trades become losing trades.
For example, if you Shorted EUR/USD 3 weeks ago you’d be up a lot, but in the past week the pair has started ranging. Should the EUR suddenly explode upwards on news(while you’re away from your computer) you might be looking at a 300-400 pip profit becoming a -100 pip loss.
I am trying to figure out a TS that is big enough to let my winners run, but also that guards against unnecessary losses.
So far this is what I have come up with:
Trading on 1 day charts: 2% capital risk, SL set at Kinjun-sen, TS when profit= size of SL, TS size = SL size -10 pips.
Enter when:
- Kumo breakout
- Kumo trend is in same direction, (bullish for longs, bearish for shorts)
- T/K cross confirms
- Chikou Span confirms.
- 3 Hr chart confirms same trend direction
- 1 Hr chart confirms same trend direction
Exit when SL is hit, (if trade never went in your direction) or when TS takes you out.
So far I have been demo trading this system for 18 days. 17 trades so far: 9 closed 8 open.
So far 12/17 have been profitable/are profitable and the system is up 12.8% in the 18 days I have been trading it.
I know its not a lot of trades or a long period of time, but it is promising enough for me to start trading a $10 account with Oanda next week.
Each month I am profitable I will add double the account value to the account.
In my opinion, trailing stops just take you out of the market prematurely. I never use them.
In addition, I would never use a 200pip+ SL either, but thats just my trading style. I rarely use anything larger than 40-50 pip SL, but I have clearly defined entry rules, and then once into the trade, the method of trade management gives the ability to catch the long trends.
Trade with the trend! take profit regularly… your account will love you for it.
Cheers
It was a 200 pip trailing stop, not initial stop loss.
Trailing Stop = wreck a trade
That has been my experience.
If you are trading a large time frame I think you would be better off moving your stop your self. You can look at a spike and decide it was a spike but your TS can’t and may get pulled in way to close to “normal” PA and stop you out to soon.
Leaving a trade open on a live account may cause problems.
Check your broker for a few things. The longest I’ve left a trade open on a live account was 4 days with a loser early on. The thing is, my broker closed me out over the weekend, balanced my my trade out, and opened a new position at the new amount minus my loss. So I lost the money, and had a different number as my buy in.
May be a consideration, and usually when that happens, it messes with a trailing stop.
And the next issue would be the quarterly closes. Does your broker allow for keeping a trade open past the quarterly change? OR would you need to be buying and trading based on next October’s close? That may cause a problem as well. If I have positions open when the quarter ends, I get a check payable in Euros, Yen, gold, or whatever else I have had open until the closeout.
Practice account? No prob, leave it open, it doesn’t change anything.
Real life is a tad different.
Sorry about the misunderstanding on the TS issue. I guess I misread your post.
And BTW, about the Euro’s recent change in direction, I killed it on the way down, doing day trades. Longest 8 hours, and now that it’s ranging, it’s a no brainer.
I’m not in long enough to have a 400 pip retrace hurt me. In fact I would probably ride it.
I don’t use trailing stops, I manually drag up a stop behind the number based on where I think it’s going. So I do have a backstop, it’s just up to me to make sure it’s active, and in place.
I’ll babysit. It pays well;)
Happy new year!
I agree with that on smaller trades and smaller TS.
The thing is if you are trying to stay in for a large part of the move, much of the time you can’t be in front of the computer to manually do it.
I didn’t mean you mate, I figured you have good entrys and tight SLs…
As an example, I short the EUR/NZD and set the SL at 228 pips above. When the pair moves in my favor by 228 pips I set a TS at 218 pips behind it,( thus guaranteeing that this trade cannot reverse and become a loser).
Above was what i was refering to
Cheers…
good luck this year!!
I don’t like trailing stops either so I usually use fix TP and SP.
In one of my systems using Renko charts on USDJPY I use TP=20 pips and TP=20 pips after testing all kind of trailing stops this works OK for me. Usually I have 3:1 winners to losers ratio 
Hi,
You said that you usually have a 3:1 ratio, but with fixed 20tp and 20sl (1:1 ratio).
So does that mean that your able to exit out false signals before your 20sl gets hit?
Just curious
Tim
Look at your charts & your bars will tell you.
Regardless of reversals or continuation patterns it’s the lowest or highest bar nearest your entry depending on Buy/Sell that matters.
You can place S/L’s one pip below for longs or one pip plus spread above for shorts the previous bar nearest to your entry.
There isn’t a set rule. As long as you place a technicasl protective stop in an area that has a low risk trigger.
T/P’s ?? They don’t exist except in your mind.
Below/above swing hi’s/lo’s managed on sub hourly tf’s would be a good start.