hi there guys,
quick question. i am trading on the 24 hour chart. and looking to find out where i should be placing my stops. i am thinking mine are too wide. i understand risk reward ratio of 2:1 is a good starting point and good stops can help you get out of the loser trades. right now my risk reward ration is 1.4:1 so looking to see which trades i should get out earlier. this is an idea i am sure someone else has worked on before.
on the 24 hour we have the open, high, low and close. i was wondering if i take the high and subtract the low and then divide it by 2 would give me the average volitlity. maybe take the last 10 days and see what the average is. i guess this would give me a good place to put my stops? or shud it be inside of this number?
Hi buddyanton,
I won’t tell you an exact SL position. Everybuddy has it’s own strat and it depends on that.
But my experience shows me this:
If you set an SL too tight, it get too often hit and you can not trade profitable.
Facts (assuming long trade):
The lower the SL, the LOWER the risk to beamed out.
The lower the SL, the HIGHER the loss, IF that hits.
So, in my opinion: Set the SL as low as possible to let the trade breath and and as high as possible to reduce risk. My pets here (some EAs) won’t make profit with a maxrisk of less than 150 pips on eurusd. That means: There are a few trades with an SL set 150 pips below entry. Not one hit in 2 years backtest at this fix, but it could. Average loss is around 35 usd per trade, 17 usd profit and 95% profit trades. Maximum loss around 75 usd. That’s just 50% of maxrisk setting. Just for information.