How do you adjust the Stop Loss? | Forex Factory

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How do you adjust the Stop Loss?

  • #1
  • First Post: Jul 3, 2011 1:31pm Jul 3, 2011 1:31pm
This is a simple question how do you adjust your stop loss?

But I think many traders even don't know why he set those number to stop his losses.

Some of them just set a default number of SL and don't care whatever about the current market condition, that number is a level risk he can tolerate.

Some others even totally don't know why he should use stop loss,

Some others else become so freaky to see his SL be hit. When the prices will nearly hit his SL, he will quickly widen his SL. But when he get a little potential gain he will immediately to take those profit. He is so tolerative with loss but has no tolerance with gain. This type of traders shouldn't be discuss in this thread.

Please feel free to share your thoughts. Thx.
  • #2
  • Jul 3, 2011 3:44pm Jul 3, 2011 3:44pm
That question is based solely on you and what your looking for in a system. Some traders place a stop by a default Number some sort of magic number Like 20 pips or 50. Some like me place it behind Support or resistants and should the support or resistants be far away i would adjust my trades like risk less. and as far as adjusting it i would try to look for Long runs in the market. so i would move it up by 50 pips daily. But like i said it up to you and what your looking for in your system. stop loss is something that i took the time to master to reflect my money management system.
Best Regards Moneymike
  • #3
  • Jul 3, 2011 8:10pm Jul 3, 2011 8:10pm
Quoting 100m
This is a simple question how do you adjust your stop loss?

But I think many traders even don't know why he set those number to stop his losses.

Some of them just set a default number of SL and don't care whatever about the current market condition, that number is a level risk he can tolerate.

Some others even totally don't know why he should use stop loss,

Some others else become so freaky to see his SL be hit. When the prices will nearly hit his SL, he will quickly widen his SL. But when he get a little potential gain he will...
it varies from case to case.. but the one constant I can thing of is I never adjust it larger than its initial position

there are technical stop loses, volatility stop loses, pip stop loses, time stop loses, conscience stop loses, value stop loses, mental stop loses, etc...

its a pretty intense subject if you really expand your mind...
  • #4
  • Jul 3, 2011 8:53pm Jul 3, 2011 8:53pm
It depends what your instrument of measure is you use to gauge the market conditions. Using Trendline is a very simple example; In a bull run when PA is above trendline then you set SL just below it and adjust as market moves higher thereby decreasing your SL gap.

The same goes for Moving Averages, Bollinger band, etc.

- Is
  • #5
  • Jul 3, 2011 9:41pm Jul 3, 2011 9:41pm
Thanks to you all for your inputs.

Moneymike,

Lets take a sample of 50 pips daily.

Capture the 40 pips of profit because about the 10 pips is the number of chance may be impossible to be capture. Instead of losing 50 pips.



Quoting moneymike
That question is based solely on you and what your looking for in a system. Some traders place a stop by a default Number some sort of magic number Like 20 pips or 50. Some like me place it behind Support or resistants and should the support or resistants be far away i would adjust my trades like risk less. and as far as adjusting it i would try to look for Long runs in the market. so i would move it up by 50 pips daily. But like i said it up to you and what your looking for in your system. stop loss is something that i took the time to master to...
  • #6
  • Jul 5, 2011 2:37am Jul 5, 2011 2:37am
Quote
But I think many traders even don't know why he set those number to stop his losses.
I think it depend on the strategy you are using. For example psychologically it is wise to use 1/3 ratio for stop lost. Lets say you have 10 SL and 30 TP. In this way you wont be much depressed if SL will be hit.
And of course there are support/resistance stop losts, where you place them visually, not care much about numbers.
  • #7
  • Jul 5, 2011 3:16am Jul 5, 2011 3:16am
Stop loss order is a very important tool! Losses are part of the trading. You can, and you will lose money. That's why this called trading, not making money risk free.

Adjust stop losses is the second step. In my opinion, you should adjust the stop loss to profit or breakeven level.

When you open the trade the very first question you should ask yourself: " How much I can lose?"

My 2 cents,
Josef
  • #8
  • Jul 5, 2011 3:21am Jul 5, 2011 3:21am
Quoting Zheskar
I think it depend on the strategy you are using. For example psychologically it is wise to use 1/3 ratio for stop lost. Lets say you have 10 SL and 30 TP. In this way you wont be much depressed if SL will be hit.
I may be wrong but it is not the best thing to set your SL because of your ratio, like 1/3 = 10 SL for 30 profit. You should corelate maket conditions like volatility, limits, top of reversal candles and so on, and only then you should look if the market conditions will give you your payoff ratio; If you set your SL solely on your payoff ratio you will be stepped out many times by SL.
  • #9
  • Jul 5, 2011 7:28am Jul 5, 2011 7:28am
My Buddies,

Whatever your RR strategy, lets look at the chart below as an example:

https://lh3.googleusercontent.com/-w...s144/Snap7.jpg

Suppose that your entry setup is in the red rectangle area. After that, a green candle appears ( B Rectangle). This is an 8 hours TF, so 100 pips of your SL can be easily to be hit.

Even though you know the current trend is upward, I think you will suffer some losses before the real movement established. See the chart below:

https://lh6.googleusercontent.com/-o...s144/Snap6.jpg


I'm worried although you can capture the trend, your gain cannot cover your losses.
  • #10
  • Jul 5, 2011 7:37am Jul 5, 2011 7:37am
Your example long or short?

MY stops are 100% discretionary based on market conditions.. but I like to have them on the far side of a round number, big candle, a major Ema (200), something like that. If it goes my way then stop is @ BE.
  • #11
  • Jul 5, 2011 7:41am Jul 5, 2011 7:41am
You can assume only short or long. But you can create any scenario for the both directions.

Quoting EmeraldEyes
Your example long or short?

MY stops are 100% discretionary based on market conditions.. but I like to have them on the far side of a round number, big candle, a major Ema (200), something like that. If it goes my way then stop is @ BE.
  • #12
  • Last Post: Jul 6, 2011 3:16am Jul 6, 2011 3:16am
Quote
I may be wrong but it is not the best thing to set your SL because of your ratio, like 1/3 = 10 SL for 30 profit. You should corelate maket conditions like volatility, limits, top of reversal candles and so on, and only then you should look if the market conditions will give you your payoff ratio; If you set your SL solely on your payoff ratio you will be stepped out many times by SL.
Let's say it is the idea of how to set them. Because when you are setting your stops equal to profits or even greater you will to spend much more time to be sure that your strategy is really working. A lot of robots using such approach when they have large stop lost and small profit, and we all know how does it ends usualy.
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