Stop loss on scalping | Forex Factory

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Stop loss on scalping

  • #1
  • First Post: Nov 1, 2010 12:14pm Nov 1, 2010 12:14pm
I know that most probably it has been covered somehow in the past but I wanted to post it on my own words.

Should I decide to scalp - 20pips let's say - would it still be right placing a stop at 10 pips only..?

The way I am trying to understand this is that if you enter a trade after some studying & watching... and if it goes over 10 pips against you that means you got it totally wrong (?!) so why should one place it at 20 pips on a 1:1 ratio?

Thanks.
  • #2
  • Nov 3, 2010 6:11pm Nov 3, 2010 6:11pm
General advice for stop placement:

1. Define a stop loss. Why do you set a stop loss?
-it's the point where you know that you're wrong.

2. Where/when will you know that you're wrong?
-Let your system/the market tell you.


Now, let's say you set your stop 10 pips away. What does that mean? Why would you set it there?

In my opinion, the way to go about this is find a spot in the market where you know that if price trades there, you will exit your trade. Set your stop there, and then decide if the trade is too risky for you.

And I'd try and shy away from the word scalping. It is typically trading the bid-ask spread and acting as a market-maker. If you tell yourself "I'm a scalper" rather than a trader, you'll behave as a scalper. If your system is to be a scalper, than sure, scalp away. But if you have a good trade and you cut your winner short because you say "Hey, profit! I'm a scalper", then you may not be happy with the long run scheme of things.
  • #3
  • Dec 15, 2010 10:34am Dec 15, 2010 10:34am
Quoting Arona
I know that most probably it has been covered somehow in the past but I wanted to post it on my own words.

Should I decide to scalp - 20pips let's say - would it still be right placing a stop at 10 pips only..?

The way I am trying to understand this is that if you enter a trade after some studying & watching... and if it goes over 10 pips against you that means you got it totally wrong (?!) so why should one place it at 20 pips on a 1:1 ratio?

Thanks.
Atomic Time
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Did you place your stop loss order? Why not?!? Story of my life...
  • #4
  • Dec 24, 2010 5:56am Dec 24, 2010 5:56am
Time is also important. If you open a trade and price doesn't move for and hour you should close the trade with small lose all or small profit because you were wrong.

SL is based on your system, if your strategy performs 90% win trades SL can be 9:1 or less. Combination of stop value and win rate - this is important.
  • #5
  • Edited 6:55am Dec 24, 2010 6:26am | Edited 6:55am
Quoting Arona
I know that most probably it has been covered somehow in the past but I wanted to post it on my own words.
Hi Arona,

so your keen on the world of in out!

Quote
Should I decide to scalp - 20pips let's say - would it still be right placing a stop at 10 pips only..?
stops to me when i short term trade never have defined levels... some times they might be 6 pips or they might be 30 pips, it all depends on the current markets depth. You need to gauge this quickly so u don't get run out cheaply.

Quote
and if it goes over 10 pips against you that means you got it totally wrong (?!)
Not at all, many time, when i'm looking for a new direction I trade the turn and if I get run I sit wait and then hit the next signal... if you can learn to qualify set ups you can learn to build position sizes into trend turns that whip while working themselves out.

Quote
so why should one place it at 20 pips on a 1:1 ratio?
never do this, 1:1 is something never to do, say you hit 6 wins and 6 losses where are you?? no ware... this mental frustration for the 12 trades of work you did will lead you to self destruct. ( I know I have been there done it)

Once I hit a nice winner that's breaking highs I try to hold as long as I can, moving my stop up with the trade (or not, mental stop). you will see the very nice winners really move the account forward, not so much all the little tid bits!

big tip here in any trading, learn to hold, holding makes you the cash, never believe a market is cheap or over bought (look at incoming support and resistance)... you don't know... and try, (i know its very hard)to not get scared to lose paper profits, it's just a number it anit yours till you close the trade. so try not to get wound up about it. learn to accept and deal with loss, don't let it eat into you.


Quote
Thanks.
Any time

Good trading

Apoca
  • #6
  • Dec 25, 2010 4:52am Dec 25, 2010 4:52am
Quoting >Apocalypto<
Hi Arona,

so your keen on the world of in out!

stops to me when i short term trade never have defined levels... some times they might be 6 pips or they might be 30 pips, it all depends on the current markets depth. You need to gauge this quickly so u don't get run out cheaply.

Not at all, many time, when i'm looking for a new direction I trade the turn and if I get run I sit wait and then hit the next signal... if you can learn to qualify set ups you can learn to build position sizes into trend turns that whip while working themselves out....
Thank you!

Have a great day!
  • #7
  • Dec 25, 2010 5:22am Dec 25, 2010 5:22am
never do this, 1:1 is something never to do


why not?

it depends on the %win of the system

regards
  • #8
  • Dec 25, 2010 11:24pm Dec 25, 2010 11:24pm
Quoting anama
never do this, 1:1 is something never to do


why not?

it depends on the %win of the system

regards
Give it a go champ and in 8 months tell us where your at. I don't know your system but based on the 8 months I tried it, I ended up with a fail. but you might have better results.

*there's no black and white in trading, my comments are based off my personal live experience and traders i have discussed it with.**

Good Trading........
  • #9
  • Dec 26, 2010 5:55am Dec 26, 2010 5:55am
this is not a champ for me. i work in this for a living, and scapl it isn´t my main system.
i´m a day trader and when i take a good trend, sometimes a try to scalp 5 or 10 pips in the direction of the main trend to increase my profits.

i put a sl of 30-40 pips to earn 5-10 but only when i´m earning this 30-40pips whit the first position in the trend.

best regards.
  • #10
  • Dec 26, 2010 8:07am Dec 26, 2010 8:07am
Quoting anama
this is not a champ for me. i work in this for a living, and scapl it isn´t my main system.
i´m a day trader and when i take a good trend, sometimes a try to scalp 5 or 10 pips in the direction of the main trend to increase my profits.

i put a sl of 30-40 pips to earn 5-10 but only when i´m earning this 30-40pips whit the first position in the trend.

best regards.
that's not 1:1 in the form i am talking about, i mean tp and sl the same on the same position size taken on the open of the trade and that is also closed with the trade.(single trades) with no previous trade to hedge the new short term trade taken. what you have posted is very different to post of 1:1 (maybe i didn't explain myself properly).

sounds like you have a good plan that is working for you, well done. hope it brings you many profitable quarters in 2011!

good trading to you,........
  • #11
  • Dec 26, 2010 9:07am Dec 26, 2010 9:07am
hi, apocalypto.
you explain yourselve properly

i only try to explain that the 1:1 or whatever ratio can be profitable whit a determined win ratio.

a 1:1 ratio with a 50%win is not reliable but a 1:2 whit a 80% is.

regards.
  • #12
  • Feb 7, 2021 1:26pm Feb 7, 2021 1:26pm
First trade and learn trading in demo account. Then invest small capital in micro or cent account. If you feel confident then go for big investment.
  • #13
  • Feb 7, 2021 1:39pm Feb 7, 2021 1:39pm
There are lot of factor impact on the market. Political event one of them like Brexit which impact greatly in GBP.
  • #14
  • Last Post: Feb 20, 2021 8:58pm Feb 20, 2021 8:58pm
When an SL is hit, it doesn't mean you are wrong. It's been a part of trading with SL that it will be hit from time to time because trade entries are based on probability. Meaning sometimes SL will be hit and sometimes TP is the one to be hit. The important part of the game is how to analyze the entry that will give you a higher probability to hit TP rather than SL. If 20 pips are put on TP, there must be a good reason for you to put it there. have you tested many trades already that gives you more TP hits on 20-pips and fewer SL hits? If yes, then 20pips TP is reasonable.
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