Any veteran traders who have been consistently get profit for each week or month share about the stoploss?
Do you use wide stop or tight stop generally?
The most basic answer you’re searching for is: No two trades are the same (for the most part).
It’s all contextual and subjective. What’s wide to you, may be tight to me (given my risk preference, trading style, etc).
Sometimes I don’t even use a stop, and I know many people that don’t either. It’s like trying to say- what golf clubs are you going to use on the course today, before you even tee off on the first hole. How can I predict what tools I need to pull out if the game didn’t even start yet?
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@FOREXunlimited is correct in what he says. For myself the price action determines where my stop goes, eg when I’m long I always place a stop at the low of the last bar. This means if the bar is small it’s a tight stop if the bar is wide it’s a wide stop.
As for initial protective stop I lean towards tight but again price action dictates more than anything. It
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Add Stop… Wide Stop… Tight Stop… No Stop… Improve your percentages… Try something other than gradually giving your account to the market stop loss by stop loss…
PRACTICE the strategy demonstrated below on a Demo… adding a hedge position where you would normally place your Stop… or should I say… guaranteed loss position! (See Below)
(Above) We have Friday’s closed… AUDUSD 1 Hour Chart… You opened a 0.5 lot Buy Position on Friday when you saw price was about to breakout and head to the North… So did the LP’s… who instantly traded against the breakout crowd taking them to the cleaners in the next sequence of candles…
If you had a SL situated below the entry 1 hour candle (~27 pips) you would have lost money within the hour, a $20 loss… just like that… without even a fight. It’s no wonder Brokers love Forex educators…
(Above) Instead of panicking and sitting there watching your stop being taken out… You put up a fight… and place an opposing 0.5 lot Sell position… the opposite direction of the original trade, a hedge.
Now if price continues on down, your loss is locked at $20.00. it will not increase no matter how far price goes against us… How is this possible?.. Your losing Buy position is being matched pip for pip, dollar for dollar (less spreads) by the Profiting Sell position…
The only rule applicable now is the requirement to close the Sell position if price moves above it.
Percentages…If you had have closed out at the stop… 100% loss… By hedging you have improved your position to 50/50…
50% that price will have another crack at breaking out above your initial Buy position…
(Even a chance that price will move above your Sell position… an opportunity to close at a smaller loss)
50% chance that price moves away from your position and you can close at a later date and take the loss.
Trade Management… If price moves away from our Sell position and continues down… we manage the positions… We know our loss cannot increase… So, now we set a SL… just inside our Sell (1-5 Pips BE) Position at breakeven. If price moves above the Sell position we need to close it either manually or with the BE Stop Loss .
So, if price reverses sharply back up into our Sell position we will profit and close our hedge at the same time…
Because this is being demonstrated on a LIVE (not historical) Chart… lets see Monday where price action will take your potentially losing trade and see if it can be turned into a profit or at the least, lower your loss.
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Hi @vayne77, I normally use a multiple of ATR as my stop loss. One strategy I have has 2 x ATR and other has 3 x ATR. I always have a stoploss on my trades. It really depends on how the strategy perform over the years. So you have to do your own back test, demo trade the strategy, to see how wide or tight the stop should be when you live trade. If you think that it would be best to use no stoploss, then it’s also good. Just make sure that you really know what you are doing because it might lead you to a blown-up account.
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I can tell you what clubs to use - a driver, 6/7-iron and a putter. No matter what’s up ahead you’ll do pretty good with those clubs.
I guess the same is with stop-losses. Since most trading strategies tests show better results with wider stops those should be preferred. But not too wide. The limitation here comes from the other part of the equation - the reward.
I doubt you’ll find such a person who is on profit every week or month for a long time
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So you tee off on the 1st hole, with only those three clubs in your bag? Or, do you take all of them because there is 0% chance of you being able to predict your lie, the wind, elevation, etc…
Source for “trading strategy tests shows better results with wider stops”?
What is “not too wide”?
Again- another major problem with how people think about risk:reward; focusing on a raw QTY of pips or dollars or whatever unit. Sure- I can have a stop that is 600 pips wide on a pair that moves 30 pips a day and never get stopped out.
The focus needs to be on position sizing- not width of the stop loss. The stop is secondary to position sizing.
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Again, no matter what’s up ahead those clubs would be enough to perform well. Of course, if it is too windy it would be better to use 3-iron instead of driver. Your approach will be better with 9-iron for example. But in both cases, 7-iron will do the job.
This is according to my personal experience. Changing stop-loss, based on pure technical analysis with a dollar stop.
“Never” has the strange ability to “happen” in the markets (again personal experience). Anyway, that is why I wrote that the limitation is the reward and I don’t see how you can expect to reach 600+ pips profit (to maintain R/R at least 1) in a pair where you have 30 pips per day and no chance to get stopped out with a 600 pips stop?
But if it moves 100 pips a day?
24 Hours later, Price action has enabled us to adjust our Sell (Hedge) Position up 13 pips… taken a $2.50 profit at the BE and just about halved our loss from $20 to $11.20… on 0.05 lots…
Our loss continues to be locked at $11.20 for the time being… The battle for a profitable trade isn’t over yet…We’re making an argument to retain our funds…not making it easy for the market to just take it.
Waste of time for $20?.. Maybe… What if your position was 0.5 lots, a strategy and a little patience has just saved you $90… Your position was 1 lot… $180… Serious savings for your trading account.
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Can’t hedge with regulated brokers in the USA unfortunately. One could try hedging with a correlated currency though.
For me my stop loss placement depends on price action, level of confidence based on confluences and overall risk/reward
Pretty confident that’s why the US Regulators don’t allow hedging… You can play them at their own game… it’s too hard to take your money…
28 Hours later, Price action has taken us back into profit… It’s that simple… Our maximum exposure to the market throughout this whole demonstration was only $20… the same amount a clumsily placed SL would have gifted your appreciative Broker.
Traders (Outside the US) If you resort to using a SL each and every time and continue to be oblivious to alternate forms of risk management… your Broker thanks you… each and every trade…
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This make total sense to me. I’ve already implemented it on 2 active trades. Thanks for the tip, hopefully it doesn’t catch on though or they’ll slap anti-hedging laws on the rest of us.
Is there not another way around this n theUS, such as opening sub accounts with your broker? I know with OANDA you can open a dozen or so sub accounts and trade them all independently. At least here in Canada, might be different in the US.
Very interesting Trends! Here in the U.S. it looks like they are more interested in providing brokers with profit rather than protecting traders. That’s why they have FIFO rules and no hedging. Even if they were to remove FIFO restrictions it would help us a lot.
Yuh, I use pretty much same system of levels for entry or exit (loss or gain,) but sometimes when there are different prices that are kinda close to one another, the question is, “Which one will prove this is not the trade it looked like?”
BTW, Johnscott31, I enjoyed looking through your website, neat stuff.
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Lol this is pure luck. If you traded long enough…it can hit your sell sl at entry and slap down again. 1 trade isn’t enough to show how great you are LOL
@vayne77… Ahh, yes… we have a live one here… new to the forum, with 6 topics and only 4 posts… questions about martingale, scalping and asking anyone and everyone for advice so they don’t have to think too hard in their “Vayne” attempt at getting rich quickly…
No doubt a knowledgeless newbie with profitable intentions, a 10 pip stop, closed mind and no idea what happens next…
I post concepts, ideas and strategies… completely void of obligation to help, maybe even inspire traders starting out in these markets to think outside the box of bland Forex Education… that don’t have the time or maybe the knowhow to trial, research and apply what they read.
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You’re funny! Tsk, tsk.
It might have been a good idea to check out Trend’s posts in the forum before mouthing off. He has probably forgotten more than you’re ever likely to learn about trading.
Edit: The problem with some people is that they are quick to criticize and slow to learn. They don’t recognize knowledge if it slaps them in the face.
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