I’m looking at the position size calculator, trying to trade short time frames such as 5m, but I think I need to do larger stop losses. What are your preferred timeframes lot sizes?
I only trade on the daily charts but the principles are similar.
First, I want the maximum loss on a trade to be 2% of my account capital. Second, I don;t want the initial stop-loss to be hit so I select a price far off from the entry so that only very suddenly high volatility will hit the stop-loss. But I also decide on chart developments that would make me get out manually if price goes against me but before the stop-loss is reached.
My initial stop is usually 3ATR20 from entry. This normally leaves time for me to monitor the position and close it for a loss much smaller than 2% if the TA starts to look unhealthy.
ATR is a useful device for setting stops as it takes into account the recent volatility of that market: volatility varies continuously and across different markets.
What is ART?
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Atr
Average true range,
I trade long term using the monthly and weekly charts. My positions are based on 5% of my account balance, and SL is usually 1 to 2%. That does vary though depending on where I see the price going, could be more or could be less.
The wider the stop, the more room you give your trades. But you also risk more of your account.