How can I be sure that my SL is in the right place? | Forex Factory

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How can I be sure that my SL is in the right place?

  • #1
  • First Post: Edited 7:22pm Dec 15, 2012 6:59pm | Edited 7:22pm
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
  • #2
  • Dec 15, 2012 7:53pm Dec 15, 2012 7:53pm
Quoting Furdean2
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
i have one simple rule, i place my stop 1-5 pips under the last bar low of the set up as long as this distance is in my % loss range other wise i will widen it and reduce my position size.
  • #3
  • Dec 15, 2012 8:00pm Dec 15, 2012 8:00pm
Im not sure now but i think to set up my SL somewhere between 5 and 10 pips
  • #4
  • Dec 15, 2012 8:09pm Dec 15, 2012 8:09pm
What do i have to keep in mind when i try to set up my SL?
  • #5
  • Dec 15, 2012 8:17pm Dec 15, 2012 8:17pm
Too close you'll get sweeped, too far larger risk.
  • #6
  • Dec 15, 2012 8:23pm Dec 15, 2012 8:23pm
Quoting Furdean2
What do i have to keep in mind when i try to set up my SL?
things i can think of
1. upcoming major news - this will suck up stop loss orders fast
2. volatility don't put a 10 pip stop loss if your tf range is 50
3. common indicators (fibs, moving averages, trendlines). Everyone uses them even the big guys. THey provide some indication where everybody is positioned
4. time of day - know that if you're leaving trades overnight- short terms traders will eat up the stop losses to initiate liqudity flow to start off their sessions
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  • #7
  • Dec 15, 2012 9:07pm Dec 15, 2012 9:07pm
The easiest way to do this with a price action setup is to place the stop right where the price action has by definition been invalidated. A common example for a pinbar is right above or below the nose. If you're trading with moving averages and god knows what other indicators....no clue.
  • #8
  • Dec 16, 2012 2:19am Dec 16, 2012 2:19am
.

The right place is were "you" want it to be, according to "your" appetite for risk, and according to "your"
money management plan, account size, etc..

If you have not in place or tough about the mentioned above, it will be very difficult to calculate
your SL... once you do it is easy.

Regardless of any size SL you use, always will be hit. So, in reality
there is no holly grail SL.... It is "decision".

J.
  • #9
  • Dec 16, 2012 2:44am Dec 16, 2012 2:44am
a stop loss is guaranted to be hit, so just be sure how much you want to lose.
repeat until your account is wiped out.
Not trying to be facetious, any move from A to B is caused by traders losing money. Just remember that.
  • #10
  • Dec 16, 2012 3:33am Dec 16, 2012 3:33am
Quoting Mingary
a stop loss is guaranted to be hit, so just be sure how much you want to lose.
repeat until your account is wiped out.
Not trying to be facetious, any move from A to B is caused by traders losing money. Just remember that.
We're all glad that you've chosen to give up after getting frustrated with your moving average crossover strategy, but it would be nice if you didn't go to every thread just to dump a load of butthurt. It's nothing more than whiny - if trading is impossible, then why are you still here? Misery loves company and trying to recruit?
  • #11
  • Dec 16, 2012 3:39am Dec 16, 2012 3:39am
Quoting Kanzler
We're all glad that you've chosen to give up after getting frustrated with your moving average crossover strategy, but it would be nice if you didn't go to every thread just to dump a load of butthurt. It's nothing more than whiny - if trading is impossible, then why are you still here? Misery loves company and trying to recruit?
moving average crossover strategy -Is that how one becomes a forex millionaire?
  • #12
  • Dec 16, 2012 3:44am Dec 16, 2012 3:44am
Quoting Mingary
moving average crossover strategy -Is that how one becomes a forex millionaire?
The statement was tongue in cheek - but I see you here on this forum and all you ever have is something negative to say, and honestly I can't comprehend why you would want to even stick around if you're so disillusioned with trading. You assume that because you couldn't do it that nobody else can either and that the market is out to get you personally - how else could you justify saying something stupid like "your stops are guaranteed to get hit"? That's absolutely assanine and you know it as well as I do. Are you angry because you tried everything you could think of but still couldn't get it? Are you mad because you couldn't turn $100 into a cool million in a year? What is it that left you so bitter? Lose your life savings over forex?
  • #13
  • Dec 16, 2012 3:59am Dec 16, 2012 3:59am
Quoting Kanzler
The statement was tongue in cheek - but I see you here on this forum and all you ever have is something negative to say, and honestly I can't comprehend why you would want to even stick around if you're so disillusioned with trading. You assume that because you couldn't do it that nobody else can either and that the market is out to get you personally - how else could you justify saying something stupid like "your stops are guaranteed to get hit"? That's absolutely assanine and you know it as well as I do. Are you angry because you tried everything...
1) Stop losses guaranteed to be hit. Ok, fine not all the time, only most of the time.
2) any move from A to B is caused by traders losing money ==> that is a fact. (see 1)
The price will move so as to cause the maximum damage to the greatest number of positions. Granted of course that a few (very few) positions will be winners..
  • #14
  • Dec 16, 2012 4:08am Dec 16, 2012 4:08am
Quoting Mingary
1) Stop losses guaranteed to be hit. Ok, fine not all the time, only most of the time.
2) any move from A to B is caused by traders losing money ==> that is a fact. (see 1)
The price will move so as to cause the maximum damage to the greatest number of positions. Granted of course that a few (very few) positions will be winners..
Any move from A to B is caused by 50% of weighted positions gaining funds and 50% of weighted positions losing funds; whether the nature of those purchases are speculative are up for debate as well. But it's already well known that trading is a zero sum game, negative sum when including spread fees. No surprises there! So it's very easy to point out that with any move half of orders will be winners if it takes a sell to fill a buy and vice versa. Money isn't just disappearing into a black hole.
  • #15
  • Dec 16, 2012 4:26am Dec 16, 2012 4:26am
Quoting Kanzler
Any move from A to B is caused by 50% of weighted positions gaining funds and 50% of weighted positions losing funds; whether the nature of those purchases are speculative are up for debate as well. But it's already well know that trading is a zero sum game, negative sum when including spread fees. No surprises there! So it's very easy to point out that with any move half of orders will be winners if it takes a sell to fill a buy and vice versa. Money isn't just disappearing into a black hole.
The big picture:
Money is disappearing from the greatest number of accounts that the price can reach caused by standing orders in the market. Like I said, some operations will be possitive at the time -- but over time, never the same accounts. Therefore, at any given moment you will have some accounts that are super winners due to chance.
Not a zero sum game as the money relentlessly trickles from traders's accounts into the brokerage firms and other costs.
The broker's firm sky scrappers don't build themselves. Millions upon millions moves from the market to build and maintain the infrastructure that perpetuates the game.
  • #16
  • Dec 16, 2012 11:11am Dec 16, 2012 11:11am
Quoting Mingary
The big picture:
Money is disappearing from the greatest number of accounts that the price can reach caused by standing orders in the market. Like I said, some operations will be possitive at the time -- but over time, never the same accounts. Therefore, at any given moment you will have some accounts that are super winners due to chance.
Not a zero sum game as the money relentlessly trickles from traders's accounts into the brokerage firms and other costs.
The broker's firm sky scrappers don't build themselves. Millions upon millions moves from...
So are you saying that I have the same chance of my stop being hit if I were to place it below, say, the 1.20 EUR/CHF price as if I were to place it at any other arbitrary location? As context, the 1.20 price is being supported by the swiss national bank, and is just a clearer example of strong support. There are thousands of examples of zones where there are big players waiting, because these zones are relatively easy to spot and everybody has their eyes on them.

And nobody said that this game was in favor of retail traders; this is a competition similar to poker in many aspects and the fact that the vast majority of traders trying their hand at this as amateurs are fail isn't surprising nor should it be when you look at all the factors against retail traders, from the sheer number of by the book scams, commercial coaches, attention-whores who just want to boost their egos, and the just flat out greedy culture in trading of those obsessed with finding the holy grail in the newest EA or guru. And that's all before we throw in the smart money traders making it more difficult. Broker spreads are really a small part of this in the end, and really kill the people playing time frames where they have no business being. I know a lot of small traders want to be 'scalpers', where the spread has the potential of doubling your risk per trade. Awesome way to handicap yourself I say.

That said, I am certain there is a way to become consistently profitable and my own limited experiences the year and a half I've been researching trading have shown me things that cannot in any way be attributed to random chance; the odds are simply too low for it to happen if we had a random walk hyper-efficient market. The markets are run by human behavior and always will be, and as long as we don't change the opportunities to profit from that behavior will always exist.
  • #17
  • Dec 16, 2012 12:31pm Dec 16, 2012 12:31pm
Quoting Furdean2
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
Place stops in the place where you would LEAST expect price to go.
  • #18
  • Dec 16, 2012 12:55pm Dec 16, 2012 12:55pm
Quoting Furdean2
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
this advice won't be well received but dont use a stop at all imo. if you are trading S/R and price moves against you, it should be pretty clear what needs to be done. if you absolutely have to use a stop, some statistical mean of PA should be adequate but may make a loss wider than necessary. take more care about where you enter and dont allow some OTC broker to stop you out when (not if) they manipulate the spread in their favor.

Quoting Kanzler
The markets are run by human behavior and always will be, and as long as we don't change the opportunities to profit from that behavior will always exist.
except, of course, when they are being run by algos designed to exploit human behavior.
Any prices quoted are futures
  • #19
  • Dec 16, 2012 1:16pm Dec 16, 2012 1:16pm
Quoting redteamgo
this advice won't be well received but dont use a stop at all imo. if you are trading S/R and price moves against you, it should be pretty clear what needs to be done. if you absolutely have to use a stop, some statistical mean of PA should be adequate but may make a loss wider than necessary. take more care about where you enter and dont allow some OTC broker to stop you out when (not if) they manipulate the spread in their favor.


except, of course, when they are being run by algos designed to exploit human behavior.
Which was written by a human and still follows human rules. We've had computers for a couple of decades playing a big part of the markets, yet the structure of the market has remained similar to what we saw in the 1920 and 1940s.
  • #20
  • Dec 16, 2012 1:56pm Dec 16, 2012 1:56pm
Quoting Kanzler
Which was written by a human and still follows human rules. We've had computers for a couple of decades playing a big part of the markets, yet the structure of the market has remained similar to what we saw in the 1920 and 1940s.
ah, so one of your intraday entry methods is to exploit the algo exploitation of retail traders? i want to hear this one.
Any prices quoted are futures
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