Where do you set you're stop loss? | Forex Factory

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Where do you set you're stop loss?

  • #1
  • First Post: Nov 23, 2008 4:40pm Nov 23, 2008 4:40pm
Whats the most pips you are willing to losse one one trade?
  • #2
  • Nov 23, 2008 4:48pm Nov 23, 2008 4:48pm
Depends on the trade, just a random number is a bad way to go about it. What happens if you say 20 pips but strong support is 35 pips away?

Also depends on how long you are willing to stay in a trade. If it is going to be a few days to a few weeks the stop will likely be larger than if you were only looking for 20-30 pips in a day trade.
  • #3
  • Nov 23, 2008 5:00pm Nov 23, 2008 5:00pm
A stop should be placed at a point that you would consider the setup void idealy.

Leon
Living the adventure in my head.
  • #4
  • Nov 23, 2008 8:20pm Nov 23, 2008 8:20pm
Stops? Who uses stops anymore in this environment? They'll keep ya in the 95% of losing traders.

A 3:1 ratio is a good rule for setups. If your right 60% of the time with a 3:1 rule then you will be in the 5%.

Cheers
  • #5
  • Nov 23, 2008 8:41pm Nov 23, 2008 8:41pm
It depend on the time frame you are trading. For 4hour time frame 20 or 30 will be too small but for 5min it might be OK.
  • #6
  • Nov 23, 2008 9:02pm Nov 23, 2008 9:02pm
stop losses i think are the number 2 reason people's account goes to 0.

The higher the time frame the bigger the stop loss should be. If you use a daily chart the stop could be several hundred pips easy.

also the bigger the stop the higher percentage of wins you could have. I went through it. I would have my stop hit sometimes only to be proven right about the direction later. I could have had a profit.

be careful
  • #7
  • Nov 23, 2008 9:34pm Nov 23, 2008 9:34pm
Quoting sleep1Iopen
Stops? Who uses stops anymore in this environment? They'll keep ya in the 95% of losing traders.

A 3:1 ratio is a good rule for setups. If your right 60% of the time with a 3:1 rule then you will be in the 5%.

Cheers
If your right 40% of the time with 3:1 RewardRrisk you will also be in the 5%.
The 3:1 can only ever be an average though as the market doesnt care what we want.

Leon
Living the adventure in my head.
  • #8
  • Nov 23, 2008 10:40pm Nov 23, 2008 10:40pm
Quoting sleep1Iopen
Stops? Who uses stops anymore in this environment? They'll keep ya in the 95% of losing traders.

A 3:1 ratio is a good rule for setups. If your right 60% of the time with a 3:1 rule then you will be in the 5%.

Cheers
You got that backwards. Stops are not used by the 90% who lose and that is a big reason why they do lose. Then when they do use them they bitch about brokers taking out their stops. And BTW those are the same people who mostly use some arbitrary 2:1, 3:1, 4:1 r/r ratio.

Price action determines where stops should be placed and how much a trade gains, in part by how probable a move might be. The markets do not care where anyone's price target is at. It will move where it will move. A traders job is to figure stop placement out of "normal" volatility movement. And when a stop is hit it means I was wrong and it is time to move on to the next trade.

Have no stops and it is time to move on to another career.
  • #9
  • Nov 23, 2008 11:14pm Nov 23, 2008 11:14pm
Quoting mitjar
Whats the most pips you are willing to losse one one trade?
Using a stop loss in forex is like wearing high heels while walking across a manure field. It stinks but you gotta wear em to get to the other side.

remember it's not just using the right stop loss that matters. find the right entry points and you won't be as concerned about setting a tight stop loss.
  • #10
  • Nov 24, 2008 2:30am Nov 24, 2008 2:30am
Quoting SunTrader
You got that backwards. Stops are not used by the 90% who lose and that is a big reason why they do lose. Then when they do use them they bitch about brokers taking out their stops. And BTW those are the same people who mostly use some arbitrary 2:1, 3:1, 4:1 r/r ratio.

Price action determines where stops should be placed and how much a trade...

Clients are happy and so is my family........ so the career is, and has been great thus far. There is a method to everyone's mayhem and it's different as risk tolerance is different for all. Some of us just have a feel for the market and use a strategy of adaptation as nothing is ever consistent in our career field.

The suggestion was merely a piece of advice for the originator of this thread to find his own direction. No need for criticism.

FYI All strategies are arbitrary as is the advice from self absorbed agenda pushers who think they are always right.
  • #11
  • Nov 24, 2008 9:20am Nov 24, 2008 9:20am
Quoting sleep1Iopen
The suggestion was merely a piece of advice for the originator of this thread to find his own direction.
Suggestion .. to find his own direction?? Maybe you should re-read your post.

You gave your opinion and I gave mine.

Good trading (without stops).
  • #12
  • Nov 24, 2008 4:58pm Nov 24, 2008 4:58pm
Quoting sleep1Iopen
Stops? Who uses stops anymore in this environment? They'll keep ya in the 95% of losing traders.

A 3:1 ratio is a good rule for setups. If your right 60% of the time with a 3:1 rule then you will be in the 5%.

Cheers
first, i love how 100% percent of traders on FF think they are in that super special 5% that probably isnt even a real statistic.

secondly, you can win 33.333333% of the time with a 3:1 risk reward and be profitable. lose twice, win once and you are still profitable. just simple math.


basically, stops help. that's the whole point of stops. sometimes, you just need to cut your losses. also, sometimes your stop will hit and right afterwards your trade would have been profitable. this is just what happens. it doesn't mean that stops suck, it just means that wasn't the right place to put it. or it could just mean that the market did something unexpected.

to prove that stops work:

i was testing a strategy in excel. at first i had no stop loss. the total of pips after nine years was -39,860. i then added a fifty pip stop loss. the total was then raised to +171,749 pips. i think the stop loss helped a little bit. but, thats just my opinion.

see, the stop loss cut my losses, but left my profit alone. i then had trades that would be making like 150 to 200 pips, but still losing no more than 50 pips. without the stop loss, i had trades making 150 pips but losing 175 pips. and thats how the strategy lost. cutting losses is a good idea. and that is exactly what a stop loss does: it stops losses from being bigger than they're supposed to be. so if cutting losses is good, and stops cut losses, then stop losses are good. see the logic?
  • #13
  • Nov 24, 2008 7:46pm Nov 24, 2008 7:46pm
Quoting mitjar
Whats the most pips you are willing to losse one one trade?
Perfect World; 23% of my Profit.
Preferred; 10% of my Projected Gain.
Acceptable; 50% of my Projected Gain.
Rarely; More than Above but individual circumstances may prevail.
  • #14
  • Nov 24, 2008 11:17pm Nov 24, 2008 11:17pm
It depends

Most of my trades are on the daily chart which is what I try to stick to. My stop loss is routinely in the 500 pips range at the start of a trade...but there's a catch.

Some people are stupid enough to trade without a stop loss. I'm stupid enough to trade without a take profit. How that works is that I move my stop loss (up on a long, down on a short) every day. It takes a few days but I manage to lock in profits most of the time.

So I always get stopped out of a trade, but usually at a profit
Not all sins are created equal
  • #15
  • Nov 25, 2008 10:11am Nov 25, 2008 10:11am
Quoting Leonlorenzo
A stop should be placed at a point that you would consider the setup void idealy.

Leon
and where is that in relation to the trade?
FF = Forex Faggots
  • #16
  • Nov 25, 2008 10:14am Nov 25, 2008 10:14am
Quoting Jay Walker
It depends

Most of my trades are on the daily chart which is what I try to stick to. My stop loss is routinely in the 500 pips range at the start of a trade...but there's a catch.

Some people are stupid enough to trade without a stop loss. I'm stupid enough to trade without a take profit. How that works is that I move my stop loss (up on a long, down on a short) every day. It takes a few days but I manage to lock in profits most of the time.

So I always get stopped out of a trade, but usually at a profit
So you basically do a very large trailing stop (500 pips) or do you change it along the way?
  • #17
  • Nov 25, 2008 10:20am Nov 25, 2008 10:20am
Going back to the original question, if you read "Trading for a Living" the old rule-of-thumb has basically been to lock in 50% of your profits. Now, that book was mostly written for stock trading, so some people would say that the range of forex needs it to be different, but generally speaking, it's a good number.

Personally, I *hate* seeing retracements. So I pick a profit level that makes me happy (right now it's at about 100 pips) and I put a tight trailing stop on it (anywhere from 25 - 40 pips) after my trade reaches that level. I'd much rather live with the nice profit and lament it if it runs more, rather than take a large retracement and see a guaranteed 100 pips turn into 20 pips (or worse!).

BOTTOM LINE: you should choose the profit level that makes you happiest and build your stops around that.
  • #18
  • Nov 25, 2008 1:26pm Nov 25, 2008 1:26pm
In my opinion, the stop loss should be set at a point where if price reaches it, then the direction you were trading in was wrong, and therefore you better stop the loss before it gets any worse. At least that's what I use.

Depending on what pair you are trading, the stop loss can vary. If you set a tight stop loss on a very volatile pair, then you might get stopped out too soon before the movement took off in the direction you were trading for. In less volatile pairs the stop loss can be tighter.
On a journey to consistency.
  • #19
  • Nov 25, 2008 7:45pm Nov 25, 2008 7:45pm
Quoting LongToBeFree
So you basically do a very large trailing stop (500 pips) or do you change it along the way?
I change it along the way.
Not all sins are created equal
  • #20
  • Nov 25, 2008 8:20pm Nov 25, 2008 8:20pm
I you Ever Enter a Trade with No Stop {max risk} in mind; then congratulations are in order. You have [obviously] learned to ride the bike. You just haven't learned how to steer yet.
Good luck & remember "Do Not Look @ Your Front Wheel. Look at the point you are {hopefully} Heading to."
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