Yes, I agree with this. For my hourly and daily trades, I created an excel spreadsheet “hedge calculator” to calculate my sl, tp1, tp2 and the hedge entry, sl, tp1, tp2 based off of entry price. (Its not easy to enter this much info for scalping). Its fun to experiment…20 point tp, 25 point tp, 10 point sl, etc.
1 Like
I am in favor of tight stop loss as I believe it helps in improving the risk: reward ratio. I also think with the tight stop loss we can easily trade large contracts with minimizing the possible loss in the trading. Also, I have experienced that with tight stop loss, whenever I am right, I can make profits very quickly.
1 Like
Risk management reality from a 40 year trading Veteran…
Limit position sizes, limit exposure, limit failure…
1 Like
The opinions on stop loss voiced here by Michael Norman would be contradicted by luminaries such as Al Brooks, Linda Raschke and no doubt many others.
I’ve just remembered, I owe you an apology.
I can’t find his quote but I remember Al Brooks saying that he uses a very wide stop loss,not to be stopped out but incase he faints or the Internet goes down. ! 
This depends on your trade and you cannot use them both. Most people prefer using stop loss according to their strategy and requirement while trading. Wide stop loss is generally preferred.
He might have a point in the context which he himself identifies - i.e. trading forex based on a long-term view of macro-economics, using an in-depth understanding of the monetary system.
But how many private retail traders trade like this?
I prefer to use something like 100 PIP stop loss since I watch my trades very closely and can exit early if the trade starts to move against me and other aspects like price, structure or momentum indicators tell me to. I use the 100 PIP stop loss only as a parachute against a huge MM move or whipsaw action. I found that I would often lose a trade because I positioned a SL at market structure…where the MM’s know and look for liquidity. So far I have not gotten caught:)
As far as I know, a wide stop loss is more popular among traders. But it also depends on the strategies of different traders. No one uses both wide and tight stop loss.
Using a tight or wide stops loss is relative to the time frame traded.
100 pips is wide for a day trader, might be tight for a long term position trader, or just right for some one in between.
Your stop loss strategy should make sense more than being tight or wide.
It should take into account all the markets gyrations for the time frame you are trading
It should never be ‘oh I use a 20 pip stop loss’, or ‘i use a 500 pip stop loss’
Markets are dynamic, your stop management should be equally the same.
3 Likes
I agree. For each chart, I draw my SL based on previous candles. If there are really long candle shadows, I’ll have to draw a wide SL.
But, I don’t go by pips, I go based on price activity.
1 Like
the best way to accept a loss is to have a SL only in your mind, not placed in your order. It helps a LOT and i m talking about the psychological aspect. Start with your well done Money Management, it s fundamental to know how much you can put on a position, then calculate the aproximal loss you can accept and splash yourself in the waves of the market. Furthermore, if you follow big timeframe and then find a nice and the more possible safe entry price, you ll have great possibility to close your trade in profit. Personally i m around 90% from 2 years and a half. In all what i m saying it is absolutely a MUST that you got the time to follow entirrly the development of your trade. The “start tought” in your mind should be to gain points with the consciousness that if you are wrong you have to click on your red once your mind had reached your tolerance. in this way even your maturity as a trader grews up with your balance.
1 Like
The rule of thumb is to place wide stop loss for positions with small lots and short stop loss for large positions. After all what you expect to control is risk per trade and width of stop loss in pip is a parameter of this function.
1 Like
I’ve made many many mistakes. And based on my style of trading, I find it best to FIRST place the SL according to what I feel is necessary to stay in the trade.
After that, I will increase lot size based on that SL. Placing my SL based on what capital I’m willing to risk will lead to tight SLs, and getting stopped out.
I choose 0.01 lots, then set my SL according what my trade signals are telling me or what recent price activity tells me. And I have to leave room for price to breath.
Also, I try not to set my TP first either. I try to focus on the risk, first; and profit, second.
I think this guy really try to tell the secret behind the scene of trader and many other hedge fund capital deal trading. 