How wide is your average Stop Loss? | Forex Factory

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How wide is your average Stop Loss?

  • Poll

  • How wide is your average Stop Loss?
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  • #1
  • First Post: Jun 22, 2019 12:47pm Jun 22, 2019 12:47pm
This pool has the simple task of finding... How wide is your Stop Loss on average?

Thank you!
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  • #2
  • Jun 23, 2019 5:16am Jun 23, 2019 5:16am
It really depends the system you are trading with
  • #3
  • Jun 23, 2019 7:34am Jun 23, 2019 7:34am
That is absolutely true, however completely irrelevant in this case.
No matter the system, your answer should fit in one of those options...unless you trade various systems - pick your best one and see the avg SL.
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  • #4
  • Jun 23, 2019 1:12pm Jun 23, 2019 1:12pm
Finally, we have a scalper to join the pool
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  • #5
  • Jun 23, 2019 1:43pm Jun 23, 2019 1:43pm
Quoting Maxjoy
This pool has the simple task of finding... How wide is your Stop Loss on average? Thank you!
Obviously, there is a myriad of answers to this question and a poll can't encompass them all. However, I think you left off some crucial ones:

(1) It depends on the volatility in the market at the time the trade is entered.

(2) It depends on the entry signal used.

(3) It depends on the width of the zone from which the trade is taken.

(4) It depends on the distance to the most recent reaction high/low.

None of these give you a default pip amount. Yet they are, arguably, better options.
Without VSA, you're playing checkers while the Smart Money plays chess.
  • #6
  • Jun 23, 2019 1:56pm Jun 23, 2019 1:56pm
We'll said hidden gap. I had to do a very long and involved study and collect data on how I trade along with the average (or maximum) move against my entry to come up with a reasonable stop distance.

In the same vein I continued the study to find the exit (take profit) level as well. The magic number came out to 15 pt stop with a 2.6 x R limit.
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  • #7
  • Jun 23, 2019 2:38pm Jun 23, 2019 2:38pm
Quoting DonPato
We'll said hidden gap. I had to do a very long and involved study and collect data on how I trade along with the average (or maximum) move against my entry to come up with a reasonable stop distance. In the same vein I continued the study to find the exit (take profit) level as well. The magic number came out to 15 pt stop with a 2.6 x R limit.
**Edit** I should also mention that the above is for my day to day futures trading. I do NOT day trade any other market.
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  • #8
  • Jun 23, 2019 10:57pm Jun 23, 2019 10:57pm
Quoting HiddenGap
{quote} Obviously, there is a myriad of answers to this question and a poll can't encompass them all. However, I think you left off some crucial ones: (1) It depends on the volatility in the market at the time the trade is entered. (2) It depends on the entry signal used. (3) It depends on the width of the zone from which the trade is taken. (4) It depends on the distance to the most recent reaction high/low. None of these give you a default pip amount. Yet they are, arguably, better options.
Well, you cant make everyone happy, however, as I said - If you have a system you should be able to establish an AVERAGE SL you fit in.
If you are all over the spectrum or using multiple systems, then I guess this pool is not suited for you and just pass.
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  • #9
  • Edited 1:31am Jun 24, 2019 1:12am | Edited 1:31am
So far the anti-SL movement is ahead
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  • #10
  • Jun 24, 2019 2:51am Jun 24, 2019 2:51am
I find it amazing that 30% of people don't use stops.

One of the very few benefits of being a retail trader is that (thanks, ESMA!) you get guaranteed stops, which allow for proper risk management.

The valid concern with stop losses is that disreputable brokers look for a concentration of stops and then, when the market is close, whipsaw the price through the stop levels so that the clients ‘stop out’ and sell to the broker at a low rate before the market naturally comes back higher. This would be extremely immoral behaviour and the way to guard against it is to use a highly reputable top-tier broker in a well regulated region such as the UK. Such entities are highly regulated and would not employ such practices unlike the bucket shops in lightly regulated jurisdictions.

Why are stop losses so important? Well, there is no other way to manage risk with certainty. You should always have a pre-determined stop loss before you put on a trade and no professional trading firm operates without these basic risk management tools.

Of course the with of your stop loss varies with your trading activity. It should generally be proportional to your target take profit: most will use a ratio of 1:3, meaning that if you leave SL ~10 pips away your TP should be ~30 pips away. All of this will of course depend on how you are trading ... if you are trading longer term momentum (1w MA etc.) then of course you need a SL that is far enough away that you do not get taking out in intraday noise - a classic retail trading mistake - whereas if you are scalping then your SL will be much tighter.

The important thing is to adjust your position size, based on your SL so you are not risking more than 2% of your balance on a given trade. For example, if you leave a wide SL 2% away from market then you should not use any leverage ... with a SL that is 1% from market you can leverage 2x and so on. That way you risk the same amount per trade, regardless of stop width.
  • #11
  • Jun 25, 2019 5:29am Jun 25, 2019 5:29am
Cant believe the percentage of ppl ignore basics of trading...
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  • #12
  • Jun 25, 2019 7:01am Jun 25, 2019 7:01am
Quoting Maxjoy
Cant believe the percentage of ppl ignore basics of trading...
And we wonder why 95% of traders are losers?

In actuality (while I don't know this for certain) many who trade retail run programs that function "like" a stop so the broker doesn't know where they place the stop, theoretically preventing stop hunting, at least for that trader...I tried this as well.

The problem was that I still placed my stop where most traders do...at swings, or with a set distance regardless of where the entry occurred. The brokers can find these even if you don't place your stop on their platform. It is be behavior the brokers are looking for not necessarily that they can "see" the orders. (Although this is also true).

I've found that by thinking like a broker I can keep stops tighter and still reap the same benefit. I watch and (try to) wait for the first round of stops to be hit. I call it the "FU stop", or "crazy Ivan". Once this occurs you can usually enter and place a tighter stop because the field has been cleared out and the large supply of orders in that area are now gone. This also results in a return to the original price movement with renewed vigor and I can limit out very quickly. Sometimes even before I can roll my stop to BE.

Sometimes you will get a second "spike" into that same area and I will get stopped but that is less than 20% of the time, and often indicates the new formation of a range.
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  • #13
  • Jun 27, 2019 12:52am Jun 27, 2019 12:52am
Quoting DonPato
{quote} And we wonder why 95% of traders are losers? In actuality (while I don't know this for certain) many who trade retail run programs that function "like" a stop so the broker doesn't know where they place the stop, theoretically preventing stop hunting, at least for that trader...I tried this as well. The problem was that I still placed my stop where most traders do...at swings, or with a set distance regardless of where the entry occurred. The brokers can find these even if you don't place your stop on their platform. It is be behavior the...
very wise words my friend, very wise!
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  • #14
  • Jun 29, 2019 1:05pm Jun 29, 2019 1:05pm
Quoting TradeMinim
It really depends the system you are trading with
And the pairs...Pairs with higher ADR should have wider SL...
PM me if you want my EA.
  • #15
  • Jun 30, 2019 2:31am Jun 30, 2019 2:31am
Stop-losses can't be logically considered separate from other factors, as several posters have suggested above.

I'm trend-following on daily charts. I set my initial stop-loss position at (for longs) entry minus 2 x ATR20. Entries are always by pre-set orders: for a long it would be at the high of the daily bar just completed. I use this distance to size my position to 1% of my account capital. However, I then look for the low of the daily bar just completed and bring the SL up to the low. This means on average my SL distance is 1 x ATR20, and my risk 0.5% per trade. If the low of the set-up bar is further away from entry than 2 x ATR20, I cancel the order and wait for another pull-back.

Using such an approach allows me to vary SL distance according to volatility while also taking some account of recent s/r. It also means a very limited exposure per trade which means I can be in multiple trades simultaneously without hitting margin limits (even under ESMA).
  • #16
  • Jun 30, 2019 3:26am Jun 30, 2019 3:26am
Quoting tomorton
Stop-losses can't be logically considered separate from other factors, as several posters have suggested above. I'm trend-following on daily charts. I set my initial stop-loss position at (for longs) entry minus 2 x ATR20. Entries are always by pre-set orders: for a long it would be at the high of the daily bar just completed. I use this distance to size my position to 1% of my account capital. However, I then look for the low of the daily bar just completed and bring the SL up to the low. This means on average my SL distance is 1 x ATR20, and my...
What you say is true, but trading on daily chart - your answer will probably fit as on average - over 50 pips...thats it.
After all your stop wont vary 10-1000 pips
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  • #17
  • Jun 30, 2019 9:39am Jun 30, 2019 9:39am
Quoting Maxjoy
{quote} What you say is true, but trading on daily chart - your answer will probably fit as on average - over 50 pips...thats it. After all your stop wont vary 10-1000 pips

Yes, this would be a good guesstimate but I hesitate to click the poll results as the set-up implies deciding a pip distance in advance for all targets and setting the SL that far out every time. I actually don't know the pips from entry to SL and don't log it on my trades log.
  • #18
  • Jun 30, 2019 8:57pm Jun 30, 2019 8:57pm
Well! more than the dips, the money plays an important role in stop loss.
As some are more sensitive to losing money so they can't afford to lose even 10%.
While some are safer as they don't have to depend on the trading earning for the financial requirements so they prune to lose more than 25% too.
  • #19
  • Jul 2, 2019 1:59am Jul 2, 2019 1:59am
To my mind, it isn`t the best solution to use pre-defined stop since it should depend on particular technical situation. Of course, there could be fixed money management rulescontainting three main elements, something like: X pips and Y usd while the position size is Z. In any case risk per trade should not exceed Y, while other elements may change. Still, the proportion should remain: if according to the techncal situation you have to increase your stop making it wider, to 2X, for example, you will have to reduce your position to 1/2 Z to keep the balance. Or in case if there is a possibility to get a position with the smaller stop (like 1/2X), you may increase position size to 2Z.
To speed up the whole process you can create a Sheet with all this calculations for main intsruments you are trading, enter formulas and then just type in the "Risk in pips" value, while the system would generate an appropriate position size. In fact, if you are trading only a few instruments, you will soon remember all main values for the position size depending on stop width, so you would no longer need to calculate it each time. It happens because particular strategy more likely to have common risk per trade (if applied on one timeframe, or a group of risk dimensions for each timeframe), so in most of the cases it would be either X or 2X. If it seems necessary to increase the stop width to 3X or other unusual value, it might be better to avoid such trade.
Another important point to mention - it is necessary to adjust profit expectations together with the risk to keep the risk-reward ratio.
  • #20
  • Jul 2, 2019 4:45am Jul 2, 2019 4:45am
Quoting JCAnderson
...so in most of the cases it would be either X or 2X.
There you said it! The question is about average width of stops, not what is your fixed stop.
so if x=10 pips and 2x=20 you will fit in second answer - 10-20 pips and so on.
Rarely someone will constantly switch from 10 to 100 pips or more to be unable to establish an average SL that makes sense.
SL should be adequate to trade conditions - ABSOLUTELY. but lets say for example my trading style - I have SL from 5 to 20 pips, any other and wider SL setups will be usually disregarded - so I'll stil fit 10-20 pips as my average is about 10-12 pips...
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