Positioning A Stop Loss

Greetings, I apologise in advance for the beginner type of question but I cannot find the answer in any books or online material of which if you have any suggestions please let me know.

When placing stop losses a good bit underneath the previous swing low or a good bit above the previous swing high, I can follow this mostly, except I struggle to follow this when there’s an unusually long leg up and I either have to: (a) set a ridiculously large stop loss with a reciculously low position size for the demo account’s size; (b) guess where to put the stop loss either intuitively or using a fix amount of pips which in both cases I do not feel is a good idea.

How do you guys place your stop losses when there’s huge momentum without a single pullback for over 100 pips?

Many thanks for your help, much appreciation for your patience with this beginner’s question.

having your stop loss above or below the swing is a good place to be..........if your position is too low for your liking due to a large stop loss, just ignore this trade and move to the next one..........

Dear PianistMat,

In my view, there is no answer that will fit every trader or their trading style. Best thing would be to test different stop placement techniques according to your trading strategy (if you intend to use the in market or hidden stops). Also for extra info, have a look in the top right search box as FF has plenty of threads about stops, SL's and placement.

Something that I have heard and can be of use to you is the use of the ATR (average true range) as a stop placement tool. Some traders use stop ATR pip value multipliers of 1.5 to 3 of ATR period 14 (test others as well, maybe they will work better for you). What that will do is provide a value of the "average" size of a bar in your current chart period. Maybe then use the ATR and multiply it by 1.5 or 3 or your own value and place a your stoploss that many pips below/ above the next bar's low/ high, after that huge tail bar. I do not use this method myself, and I don't claim that it works or doesn't work, please do your own tests/ research before trading it live. I am sure there are other examples on this forum, just try different search terms

If your current way is working well for you and the occurrence of these huge tail bars is low in your trading setups, Like yonnie mentioned, simply ignore them as there will always be another trade with a better setup.

Kind Regards,
Tzamo