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Stop loss for the intraday trading

  • #1
  • First Post: Oct 3, 2005 8:01am Oct 3, 2005 8:01am
Hello everyone!

I have been wrestling with my demo accounts for a few months trying to shape myself up into a profitable trader. I trade the intraday, aiming for short, quick moves between 10 to 20 pips per shot, nothing more. Basically, I wait for a bounce to happen (according to a criteria, of course) and ride the move for a handful of pips while the bounce still has momentum. I trade off the 30 and 5 mins charts.

I have noticed a particular phenomenoum over and over: those trades that end up being successful, are so within 15 to 20 minutes top, meaning I enter the market and within 15 to 20 mins I have banged my 15'ish pips and Im out. I rarely ever go deeper into red numbers than 10 pips at most before price heads back my direction - the price bounces off my marked areas, I pull the trigger, and shortly after I score my target.

Conversly, those trades that end up failing and thus hitting my stop loss, tend to idle around for far longer; the price doesnt quite behave as I had forseen, price enters a range-bound area and little by little it heads south towards the stop loss.

To wrap it up, according my experience over my particular trading style, if price dips into negative numbers at all or takes more than 20 mins to score my profit target, I usually account in a loss.

So, this is my question: given the above mentioned circunstances, how should I modify my stop loss policy? I mean, like I said, I usually know within 15 mins if the trade is a winner or a losser because by then I usually should have hit my target profit already without hardly going into negative. Should I then perhaps go for very tight stops? perhaps automaticaly close the trade after 20 minutes no matter the outcome?

Any feedback apreciated!
  • #2
  • Oct 3, 2005 8:23am Oct 3, 2005 8:23am
Quoting WTB
Hello everyone!

I have been wrestling with my demo accounts for a few months trying to shape myself up into a profitable trader. I trade the intraday, aiming for short, quick moves between 10 to 20 pips per shot, nothing more. ......
I have noticed a particular phenomenoum over and over: those trades that end up being successful, are so within 15 to 20 minutes top, .......
Conversly, those trades that end up failing and thus hitting my stop loss, tend to idle around for far longer; the price doesnt quite behave as I had forseen, price enters a range-bound area and little by little it heads south towards the stop loss.........
So, this is my question: given the above mentioned circunstances, how should I modify my stop loss policy? I mean, like I said, I usually know within 15 mins if the trade is a winner or a losser because by then I usually should have hit my target profit already without hardly going into negative. Should I then perhaps go for very tight stops? perhaps automaticaly close the trade after 20 minutes no matter the outcome?

Any feedback apreciated!
My opinion only......
When you enter a trade you have done so on the expection of it moving to a certain level with momentum. So, the shorter your trading TF, the shorter is your "Time Stop" If I enter on a 1 minute bar I expect the trade to move one way or another within a max of 3-5 bars. If it hasn't done so by then that tells me my timing was out/ volatility is dropping etc. The longer you stay in a trade that's not moving the more the odds are *increasing* against you that this will be a successful trade. So I make it a habit to set a realistic time stop.
Another stop that you can use ( if you use indicators) is if that indicator moves against your position 3 bars your out...or something similar
  • #3
  • Oct 3, 2005 9:14am Oct 3, 2005 9:14am
Quoting WTB
Hello everyone!

I have been wrestling with my demo accounts for a few months trying to shape myself up into a profitable trader. I trade the intraday, aiming for short, quick moves between 10 to 20 pips per shot, nothing more. Basically, I wait for a bounce to happen (according to a criteria, of course) and ride the move for a handful of pips while the bounce still has momentum. I trade off the 30 and 5 mins charts.

I have noticed a particular phenomenoum over and over: those trades that end up being successful, are so within 15 to 20 minutes top, meaning I enter the market and within 15 to 20 mins I have banged my 15'ish pips and Im out. I rarely ever go deeper into red numbers than 10 pips at most before price heads back my direction - the price bounces off my marked areas, I pull the trigger, and shortly after I score my target.

Conversly, those trades that end up failing and thus hitting my stop loss, tend to idle around for far longer; the price doesnt quite behave as I had forseen, price enters a range-bound area and little by little it heads south towards the stop loss.

To wrap it up, according my experience over my particular trading style, if price dips into negative numbers at all or takes more than 20 mins to score my profit target, I usually account in a loss.

So, this is my question: given the above mentioned circunstances, how should I modify my stop loss policy? I mean, like I said, I usually know within 15 mins if the trade is a winner or a losser because by then I usually should have hit my target profit already without hardly going into negative. Should I then perhaps go for very tight stops? perhaps automaticaly close the trade after 20 minutes no matter the outcome?

Any feedback apreciated!
I think you are exactly right in your view that a trade that doesn't behave the way it should must be closed within a set interval (for example 20 mins). However, I guess that it should be applied only to the down-side. If you see that the trade is still moving up after 20 mins, you ought not close it, for the gains should be higher - if you wish, move your stop to break even +1.
Another view is that after 20 mins you should consider whether there exists a set up that causes you to take again the same side of the deal you are holding. If so continue holding. If not, close the position.

Just my view of things.
  • #4
  • Oct 3, 2005 2:00pm Oct 3, 2005 2:00pm
Hi,

I trade relitivly the same way.
The bounce is caused buy bids/offers that are triggered at those points.

ex: short trade...If the bounce doesn't happen like you wanted it's because the downward momentom is greater than the bids that were hit causing a stall rather than a bounce. Eventually momentom pushes it past support where stops and mabe sell orders are just past the support wich increase the downward momentom.

A good example is right now on the eur/usd. there is support at 1.1900 but no large bids causing a bounce.

Incase of a stall I usually try to get out at break even or least possible loss I can.

hope this helps

Dave
  • #5
  • Edited 3:54am Oct 4, 2005 3:42am | Edited 3:54am
I struggle with this issue of closing trades because of time. Clearly it depends on your strategy and time frame, so it is a little hard to discuss globally.

If you take a long at very strong support of 00 and price stays at 8/13 area for 30 mins, surely there is still more edge to stay in the trade, if your stop is protected by the strong support - There is more chance of an strong upside ?

Perhaps if price starts ranging for a certain amount of time you could close 1/3 or 1/2 of your position.

Unless price is sitting on support (or res), does time make any difference to the probability of that level being broken ? My vote says no.

Many times I have clsoed a trade, with stop well protected by a support level, at +10, because of time, only to see the thing move 50 pips in my direction !

Quoting WTB
Conversly, those trades that end up failing and thus hitting my stop loss, tend to idle around for far longer; the price doesnt quite behave as I had forseen, price enters a range-bound area and little by little it heads south towards the stop loss.

To wrap it up, according my experience over my particular trading style, if price dips into negative numbers at all or takes more than 20 mins to score my profit target, I usually account in a loss.

So, this is my question: given the above mentioned circunstances, how should I modify my stop loss policy? I mean, like I said, I usually know within 15 mins if the trade is a winner or a losser because by then I usually should have hit my target profit already without hardly going into negative. Should I then perhaps go for very tight stops? perhaps automaticaly close the trade after 20 minutes no matter the outcome?

Any feedback apreciated!
  • #6
  • Oct 4, 2005 5:58am Oct 4, 2005 5:58am
Alright, I will start testing out different "time stops" and see how it affects my trading. I reckon 20 minutes seems about right.

Thank you!
  • #7
  • Oct 4, 2005 5:59am Oct 4, 2005 5:59am
Hi,
Quoting hagadol
Many times I have clsoed a trade, with stop well protected by a support level, at +10, because of time, only to see the thing move 50 pips in my direction !
Have you managed to compare that with the number of times it didn't go in your direction and the +10 was better and work out over the long term which choice would have been better in terms of pips or $?

Best regards
Alan
  • #8
  • Edited 6:20am Oct 4, 2005 6:13am | Edited 6:20am
Yes.

Staying in won hands down. I did a check on this via a sample of 50 real trades.

Example was in the last hour on cable. I shorted at 75. Price stayed between 73 and 80 for about 40 mins. Then sold off. I took a 1/3rd profit @ 58 and moved the stop to B/E. I just got stopped on the 2/3 a moment ago. I realise this is just a single trade, so no meaning compared to a sample size, though when it was ranging between 73 and 80 there was much more chance of it selling as there was no barrier there, like the Asian close (84) and current high (80). Of course in time, yoiu could say that the positive side of the range (70 ish in this case) becomes a barrier, though I think for me, on my 1/5 min time frame 30 mins is too short. You could also consider what type of res / sup level it is: Is it just a recent high, is it a session high or days high.

If you are trading of sup and res levels best to leave the stop protected, until you can lock in some pips. If you move you stop inside the protection by a few pips it is a lot less value.

Stop to B/E on Cable (high volitility pair) @ +10 results in getting stopped out alot.

I think with soemthing like this, you cannot have a general rule, accross systems. It is best for each of us to test (in real time) these issues over a sample and see what happens.

I just did another test of 50 trades of what is better moving stop B/E at +10/15 or leaving it 3 pips into the value zone (where price has not been, other side of a level) and the quicker move to B/E losses, for one reason because it is a level where price has recently been traded at and might retest again. So while it is more emotionally comfortable to know you cannot lose (stop at B/E) it does not been that you are increasing your edge or results. You just enjoy the coffee more at B/E !




Quoting firehorse
Hi,Have you managed to compare that with the number of times it didn't go in your direction and the +10 was better and work out over the long term which choice would have been better in terms of pips or $?

Best regards
Alan
  • #9
  • Oct 4, 2005 7:11am Oct 4, 2005 7:11am
If the market doesn't move in my favor after a short time the entry was signaled, I would say that I was wrong regarding my entry, and will close the trade immediately.
I think there is no sense on taking a bigger loss when you know your entry point is weak or just completely wrong.

Regards,
Pepo.
----------------------------------- chances favors the prepared mind
  • #10
  • Edited 7:59am Oct 4, 2005 7:40am | Edited 7:59am
What is "........a short time" ? That depends on your system / time frame.

If you are right or wrong about your entry might depend on the original reason for your entry / what system you are using (and or other reasons) not just time.

If you are using an entry system, like me, which relies on stop protection by s/r levels, it might not be incorrect to close the complete trade due to time.



Quoting Pepo
If the market doesn't move in my favor after a short time the entry was signaled, I would say that I was wrong regarding my entry, and will close the trade immediately.
I think there is no sense on taking a bigger loss when you know your entry point is weak or just completely wrong.

Regards,
Pepo.
  • #11
  • Oct 4, 2005 5:36pm Oct 4, 2005 5:36pm
Quoting hagadol
What is "........a short time" ? That depends on your system / time frame.

If you are right or wrong about your entry might depend on the original reason for your entry / what system you are using (and or other reasons) not just time.

If you are using an entry system, like me, which relies on stop protection by s/r levels, it might not be incorrect to close the complete trade due to time.
Sure. It depends on the original reason for the entry and timeframe.
It is inherent to the system design whether a time exit criteria will just make results better or worse.
----------------------------------- chances favors the prepared mind
  • #12
  • Oct 4, 2005 5:42pm Oct 4, 2005 5:42pm
Today my stop was triggered at BE (1.1941) only 2 pips and then market went in my direction I was furious and went short at 1.1937 again and still set Stop loss at BE, see what happens
kiss the trend
  • #13
  • Oct 4, 2005 7:23pm Oct 4, 2005 7:23pm
stops less than 50 pips will get hit often. Trade with the trend for 100 pips.
  • #14
  • Oct 4, 2005 8:35pm Oct 4, 2005 8:35pm
I don't think many intraday traders trade with such a large(50pips) stop loss.

Ken
Trade what you see, not what you believe.....
  • #15
  • Oct 4, 2005 9:41pm Oct 4, 2005 9:41pm
based on backtest, anything less than 50 pips will be hit by the random mkt. so for TRAIN I put 50-100 pips sl.
  • #16
  • Oct 4, 2005 10:03pm Oct 4, 2005 10:03pm
Quoting auto
based on backtest, anything less than 50 pips will be hit by the random mkt. so for TRAIN I put 50-100 pips sl.
I tend to use larger stops as well. the market is usually to jumpy for a 10-20 pip stop loss. But everytime I am stopped out I wish my stop had been 10-20 pips LOL. I also find it common for me to enter a trade and before I know it I am down 20-40 pips. But more offen then not it comes back.
Happy Trading.
Happy Trading everyone.
  • #17
  • Oct 4, 2005 10:52pm Oct 4, 2005 10:52pm
Quoting auto
stops less than 50 pips will get hit often. Trade with the trend for 100 pips.
Depends on the TF you trade. 100 pips on a 5 minute chart is unnecessary, whereas on a daily chart it's probably 50 pips too little.
  • #18
  • Oct 5, 2005 5:28am Oct 5, 2005 5:28am
Quoting Pepo
If the market doesn't move in my favor after a short time the entry was signaled, I would say that I was wrong regarding my entry, and will close the trade immediately.
I think there is no sense on taking a bigger loss when you know your entry point is weak or just completely wrong.
My thoughts exactly. Pepo, do you use any backtested formula as far as applying your time stops, or do you follow your guts when you feel the trade is not cooking out as planned?
  • #19
  • Last Post: Sep 20, 2019 1:46am Sep 20, 2019 1:46am
I don't take positions on small TF but from my experience the best SL is 20%-25% from medium Average Daily Range (last 15 days).
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