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Stop loss in trend trading

  • #1
  • First Post: Jun 29, 2009 7:57am Jun 29, 2009 7:57am
Hello,

I started to read jacko thread about trend trading, as many of you recommended.

He mentioned at some point he is using at least 4h chart, everything below is just noise. Maybe it's true, maybe it's not. What I didn't understand was how can he enter a trade with a 50 pips SL ? I personally think a SL of 50 pips might work on a 1h chart, but not on 4h and above. The market (at least EUR/USD) can easily fluctuate with more then 50 pips.

How do you trade with trades? What time charts are you using and what SL?
  • #2
  • Jun 29, 2009 8:00am Jun 29, 2009 8:00am
I use mainly weekly charts (if I use charts at all) and don't use stops.
  • #3
  • Jun 29, 2009 8:08am Jun 29, 2009 8:08am
Quoting Xaron
I use mainly weekly charts (if I use charts at all) and don't use stops.
So please tell me, how long a transaction of yours usually lasts? Or how many transactions are you doing per week? I usually do 1-2 transactions per day.
  • #4
  • Jun 29, 2009 8:20am Jun 29, 2009 8:20am
So do I. It depends. By using no stops I use of course low leverage. I just try to identify the current trend and just buy dips.
  • #5
  • Jun 29, 2009 8:20am Jun 29, 2009 8:20am
Quoting Xaron
I use mainly weekly charts (if I use charts at all) and don't use stops.
Really? How do you manage your drawdowns?
  • #6
  • Jun 29, 2009 8:34am Jun 29, 2009 8:34am
Quoting fxacs
Hello,

I started to read jacko thread about trend trading, as many of you recommended.

He mentioned at some point he is using at least 4h chart, everything below is just noise. Maybe it's true, maybe it's not. What I didn't understand was how can he enter a trade with a 50 pips SL ? I personally think a SL of 50 pips might work on a 1h chart, but not on 4h and above. The market (at least EUR/USD) can easily fluctuate with more then 50 pips.

How do you trade with trades? What time charts are you using and what SL?
First of all, Jacko is extremely picky in his trades. A very strong level with good fibonacci number, i don't think it will require more than 50 pip SL. And that is backup up by his antihedging technique. So, what's the problem with it? Also, he uses trailing stops. Maybe, you have not gone through it thoroughly.
  • #7
  • Jun 29, 2009 8:39am Jun 29, 2009 8:39am
Quoting epilogue
Really? How do you manage your drawdowns?
My drawdowns are about 20-25% floating max. I just handle it by closing out positions out of the money or by hedging them.
  • #8
  • Jun 29, 2009 8:42am Jun 29, 2009 8:42am
Quote
First of all, Jacko is extremely picky in his trades. A very strong level with good fibonacci number, i don't think it will require more than 50 pip SL. And that is backup up by his antihedging technique. So, what's the problem with it? Also, he uses trailing stops. Maybe, you have not gone through it thoroughly.

I am sure I missed some things ... I will get back to it many times probably.

It's a little hard to imagine how to use a weekly chart and make 1-2 trades a day?
Do you have a good reference on how to use fibonacci numbers? I don't think I really understand how to use them properly.
  • #9
  • Jun 29, 2009 8:52am Jun 29, 2009 8:52am
I use support resistance for STOP LOSS

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Gartley patterns guide

.
  • #10
  • Jun 29, 2009 8:55am Jun 29, 2009 8:55am
Quoting fxacs
I am sure I missed some things ... I will get back to it many times probably.

It's a little hard to imagine how to use a weekly chart and make 1-2 trades a day?
Do you have a good reference on how to use fibonacci numbers? I don't think I really understand how to use them properly.
There is a thread "Fibonacci Trading" in the interactive trading section. May be it will be of some help.

http://www.forexfactory.com/showthread.php?t=50767
  • #11
  • Jun 30, 2009 8:19am Jun 30, 2009 8:19am
Hi,

Jacko is using a 100 pip trailing stop at the moment. I follow his method and I use the same size stop loss - so I can confirm from my own experience that it does work.

Being picky on your trade is of course very important. I would say that using this method results in one or two trades per week on E/U.

Regards,

Dan
  • #12
  • Jul 1, 2009 2:51am Jul 1, 2009 2:51am
Quoting DanUK
Hi,
Jacko is using a 100 pip trailing stop at the moment. I follow his method and I use the same size stop loss - so I can confirm from my own experience that it does work.

Being picky on your trade is of course very important. I would say that using this method results in one or two trades per week on E/U.
100 pip SL is a reasonable amount for EUR/USD. What is an average profit in pips for this kind of transactions you mentioned ?
  • #13
  • Jul 1, 2009 12:03pm Jul 1, 2009 12:03pm
Without looking into in great detail I would say that my "average" profit would be 200/300 pips in a trade.
  • #14
  • Jul 1, 2009 3:54pm Jul 1, 2009 3:54pm
I honestly have absolutely no idea how Jacko trades. Having said that, I trade mainly off of 4hr charts and my SL is usually about 200 pips on EUR/USD or EUR/JPY, 150 or so on pairs like AUD/JPY, 120 on NZD/USD, you get the idea. Sometimes more, ideally less, but given the markets motions the 200 area is the average. Anything less than that would not allow the fluctuation (as mentioned) that I feel will occur after entering. When trading on a 4hr or higher chart you generally are looking at a longer outlook, perhaps a week, perhaps a month, rarely a day or two.

50 pips can happen in 10 minutes if there is a spook in the market, who wants a "long outlook" to be stopped out in 10 minutes, or, more commonly, 1 day? Is that 50 pips of motion, up or down from your entry, actually significant movement in terms of the 4hr graph you are looking at? I am looking at the EUR/USD right now on the 4hr, top is 1.43 something, bottom 1.36. 50 pip stop doesn't seem like too much to me. Anything that can be gobbled up in a typical daily high to low is too little for me.
The market is my nation. Traders, my family. Hello, brothers and sisters!
  • #15
  • Jul 2, 2009 3:18am Jul 2, 2009 3:18am
Quoting DanUK
Without looking into in great detail I would say that my "average" profit would be 200/300 pips in a trade.
That is very good, but how long a trade like this lasts? I usually use H1 chart and my average profit for a trade is 50-100 pips within a day. I don't do more than 1-2 trade / day.
  • #16
  • Jul 2, 2009 6:43am Jul 2, 2009 6:43am
Quoting StockKJay
Having said that, I trade mainly off of 4hr charts and my SL is usually about 200 pips on EUR/USD or EUR/JPY, 150 or so on pairs like AUD/JPY, 120 on NZD/USD, you get the idea.
What exactly do you mean by off of 4h? I am not sure I understand.
  • #17
  • Jul 2, 2009 7:43am Jul 2, 2009 7:43am
Quoting fxacs
That is very good, but how long a trade like this lasts? I usually use H1 chart and my average profit for a trade is 50-100 pips within a day. I don't do more than 1-2 trade / day.
I would say that typically I hold a position for about two days. This varies though, sometimes it's just a few hours and then on other occasions it can be several days. I once held a position for six days... it netted me 800 pips (rare for this to happen of course!). On most weeks I only have about two trades on EUR/USD.

Regards,

Dan

  • #18
  • Jul 2, 2009 4:51pm Jul 2, 2009 4:51pm
Quoting DanUK
I would say that typically I hold a position for about two days. This varies though, sometimes it's just a few hours and then on other occasions it can be several days. I once held a position for six days... it netted me 800 pips (rare for this to happen of course!). On most weeks I only have about two trades on EUR/USD.

Regards,

Dan
Can we call trend trading a trading system based on H1 chart like I am currently doing? Maybe I don't even trade the trends.

Do you usually trade more than one pair or it's just EUR/USD?
  • #19
  • Jul 2, 2009 5:06pm Jul 2, 2009 5:06pm
Okay :-

1M or 4H it's the same market, so you can use any SL or TP you require.

You have a reason for going long at X and if X-20 invaliditates your trend / reason then 20SL it is, easy regardless of the TF you prefer.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #20
  • Jul 2, 2009 6:21pm Jul 2, 2009 6:21pm
Quoting fxacs
Can we call trend trading a trading system based on H1 chart like I am currently doing? Maybe I don't even trade the trends.
Quoting fxacs

Do you usually trade more than one pair or it's just EUR/USD?


To be honest yes I think you can say you are trading the trend based on an H1 chart.

The trend is defined by the timeframe you use to trade from so if you see an uptrend on your H1 chart then yes you are trading the trend. Are you trading the long term trend... maybe not? Am I... probably not either! I guess it depends on your own point of view on the market. I would say that using 4 hour and daily charts and holding my position for a few days, I am a medium term trend trader! Perhaps others might disagree with me!

Sorry I could be rambling... had a couple of JD's tonight to celebrate some good news!

I also trade GBP/USD... using the same method. More volatility, possible more risk... but also more reward!

Regards,

Dan
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