How do you put a stop loss against spikes? | Forex Factory

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How do you put a stop loss against spikes?

  • #1
  • First Post: Jun 3, 2014 8:46am Jun 3, 2014 8:46am
Yo guys!

Look at the chart. Say I take two long positions. I put 25 pips for an SL and got killed. I missed 70 pips for the first one and 100 pips for the second.

I got killed by news hours -- the spikes.

Is there anyway I can survive those spikes??

Mahalo
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  • #2
  • Jun 3, 2014 10:11am Jun 3, 2014 10:11am
If you are trading small ranges in the face of big news, the safest bet is to exit the position and re-enter when the dust settles.
  • #3
  • Jun 3, 2014 10:17am Jun 3, 2014 10:17am
Quoting Forexgogo
Yo guys! Look at the chart. Say I take two long positions. I put 25 pips for an SL and got killed. I missed 70 pips for the first one and 100 pips for the second. I got killed by news hours -- the spikes. Is there anyway I can survive those spikes?? Mahalo {image}
Your entry was not correct and given that, your stop not wide enough to cope. That's all. Improve your entries or widen the stop to reflect the fact that you can't get an accurate enough entry. As Trance said, if news is causing the problem, don't trade through news or adjust as I've suggested.
  • #4
  • Jun 3, 2014 10:35am Jun 3, 2014 10:35am
Quoting TranceTrader
If you are trading small ranges in the face of big news, the safest bet is to exit the position and re-enter when the dust settles.
Thanks. That makes sense. So, I understand you trade with a small SL for a big TP.
  • #5
  • Jun 3, 2014 10:39am Jun 3, 2014 10:39am
Quoting SupraSense
{quote} Your entry was not correct and given that, your stop not wide enough to cope. That's all. Improve your entries or widen the stop to reflect the fact that you can't get an accurate enough entry. As Trance said, if news is causing the problem, don't trade through news or adjust as I've suggested.
Thanks but I don't understand why my entry was not "correct." Also I don't understand that my stop is not wide enough to cope. Cope with what? A spike? And I don't quite understand "you can't get an accurate enough entry."

But I do understand "don't trade through news." It's safe to say
  • #6
  • Jun 3, 2014 10:45am Jun 3, 2014 10:45am
Quoting Forexgogo
{quote} Thanks but I don't understand why my entry was not "correct." Also I don't understand that my stop is not wide enough to cope. Cope with what? A spike? And I don't quite understand "you can't get an accurate enough entry." But I do understand "don't trade through news." It's safe to say
A couple of trades is not necessarily enough to conclude there is a problem. However, if you have decided this is a problem you want to do something about then you can make changes.

You use words like spike, but it doesn't really matter. There's just price movement. Sometimes it happens quickly, sometimes slowly. There are lots of reversals in the day. But the aim of the trade is that you enter at a point in which price will move so that your trade goes into profit and price doesn't look back. If price comes back it means you didn't get the entry right. The stop is there to allow you some room for manoeuvre and get you out of bad trades, since it's very hard to get the exact turning point for entry. But blaming losses on spikes is missing the point. Your entry has more than a 25 pip drawdown in news times, therefore either the entry is wrong, or the stop is too tight. It's up to you to decide which, but your trade lost, therefore was wrong. Is that clearer?
  • #7
  • Jun 3, 2014 12:00pm Jun 3, 2014 12:00pm
Quoting SupraSense
{quote}Is that clearer?
Thanks for the explanation, but no, it's not clearer. "blaming losses on spikes is missing the point." -- I don't understand. Blaming losses on spikes is the whole point of trading in my humble opinion.

Spikes (or fast move in your word) are predictable (we know when news hours comes). We have only three choices: (1) avoid trading, (2) trade as you do as usual (fixed SL), or (3) move the SL.

So, I think you are either (1) or (2).

I was hoping some insight from traders who do (3).
  • #8
  • Edited 7:24pm Jun 3, 2014 6:26pm | Edited 7:24pm
nope ... back the days spike can be upto 100 more pips , get off the duck pond . h4 ? 100 pips is a small sl
  • #9
  • Edited 11:47pm Jun 3, 2014 9:35pm | Edited 11:47pm
"Spike"

Go down to a lower timeframe and see when the sellers came into the market. I can't see your lower Chart but I am assuming on one of the lower ones you would see something like an upthrust, or shooting star in PA, or a top reversal, all signs of weakness, your entry was too early, otherwise you would have caught the move. Well you live you learn
Being a trader is lonely, but being a great trader is lonelier still
  • #10
  • Jun 3, 2014 10:26pm Jun 3, 2014 10:26pm
I've been averaging the impact of news events based on the SMQ of the past 15 releases of that data. If the average SMQ is relatively high compared to other High impact data you'll know that you should probably widen your stop, or as others have said just sit tight and wait for things to settle a bit before pulling the trigger. The average SMQ method is obviously not very precise but it has helped me identify which pieces of data have a tendency to move the market the most.
  • #11
  • Jun 4, 2014 12:35am Jun 4, 2014 12:35am
Quoting Forexgogo
Yo guys! Look at the chart. Say I take two long positions. I put 25 pips for an SL and got killed. I missed 70 pips for the first one and 100 pips for the second. I got killed by news hours -- the spikes. Is there anyway I can survive those spikes?? Mahalo {image}
Just some food for thought, if you're an open minded trader. I noticed that you're trading from an H4 chart, like I do. Here's how I would have done it, with a properly scaled chart. But since we have different brokers, different candle times, etc...... results may vary. But the point is, whenever price makes a low, I'll put a 1x1 angle, which is a 135 degree angle going into the past. And then I'll put a vertical line on the previous high. And where the two intersect at is my point of interest to go long at, once price CLOSES ABOVE that line. With my SL below the swing low. R:R is too good to pass up.

And as you notice, price has yet to close above that line @ 1.3628 area. So I'm flat. Then the next chart is the same scenario back at the beginning of April. After putting the 135 degree angle into the past, and where it intersects with the previous high, that 1.3696 area is my line of interest to go long at, with my SL just below the low. Since you also trade off the H4, like me, thought I'd just share how I prevent from getting burned. GL.
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Time turns trend. - W.D. Gann
  • #12
  • Jun 4, 2014 1:03am Jun 4, 2014 1:03am
One more before I take me drunk azz to bed. On vacation for the next three weeks. Heading to Florida for a beach vacation next week. After you're long, now what? Where, oh where, do I take profit? I'll just take the previous high, in that mountain of wicks, to the left, and angle it up with a 45 degree angle, and where it intersects with the time of the low, is my tp line. Then notice price closed above it. The big boys up there doing their thing. Supply and demand, etc........ Then I'll put my sell stop just below that line and go for some retracing. Good night.
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Time turns trend. - W.D. Gann
  • #13
  • Jun 4, 2014 6:32am Jun 4, 2014 6:32am
Quoting ForExtraPips
One more before I take me drunk azz to bed. On vacation for the next three weeks. Heading to Florida for a beach vacation next week. After you're long, now what? Where, oh where, do I take profit? I'll just take the previous high, in that mountain of wicks, to the left, and angle it up with a 45 degree angle, and where it intersects with the time of the low, is my tp line. Then notice price closed above it. The big boys up there doing their thing. Supply and demand, etc........ Then I'll put my sell stop just below that line and go for some retracing....
Thank you very much for your insight! It is quite interesting. I've never seen your way of trading.

135 degree angle and the intersection, eh? It's a very original idea and I like it!
  • #14
  • Jun 4, 2014 6:34am Jun 4, 2014 6:34am
Quoting Rgr1855
I've been averaging the impact of news events based on the SMQ of the past 15 releases of that data. If the average SMQ is relatively high compared to other High impact data you'll know that you should probably widen your stop, or as others have said just sit tight and wait for things to settle a bit before pulling the trigger. The average SMQ method is obviously not very precise but it has helped me identify which pieces of data have a tendency to move the market the most.
Forecasting the size of movement (spike) in news hours! That is a great idea! Thank you very much for a new perspective.
  • #15
  • Jun 4, 2014 6:41am Jun 4, 2014 6:41am
Quoting saneblane
"Spike" Go down to a lower timeframe and see when the sellers came into the market. I can't see your lower Chart but I am assuming on one of the lower ones you would see something like an upthrust, or shooting star in PA, or a top reversal, all signs of weakness, your entry was too early, otherwise you would have caught the move. Well you live you learn
I now what you are talking about -- a distinctive price movement right before a big jump. You see it on 5m and 15m charts. But the thing is, it does tell which way it's going to jump... and how big it's going to be.
  • #16
  • Jun 4, 2014 5:29pm Jun 4, 2014 5:29pm
Quoting Forexgogo
{quote} I now what you are talking about -- a distinctive price movement right before a big jump. You see it on 5m and 15m charts. But the thing is, it does tell which way it's going to jump... and how big it's going to be.

You're right and many have opted to trade smaller sizes and don't use SL or use a stoploss that is the same as your target for a 1:1 ratio, just for these kinds of reasons. The other day I went to buy a cardigan for winter weather and found it on sale for $20, normally it would be about $90, but I bought it at the right time and got it at a better deal. The same is true for the market, they are looking at the same price action you are and are betting that price can move a little higher, and at the point it does, they sell into the buying and push it down, that the way they get their bargain price. Price normally spike for them to get there bargains and make a little extra.

I am not going to tell you what to do but you are going to have to adjust your style to make money, whether that be less accurate and going for high RR, or being accurate and going for a low RR of at least 1:1. Only you can decide how you progress from here. A trader seldom have a high RR and accuracy at the same time, it's the very few that possess such abilities, so only you would know how to proceed that's best for you.
Being a trader is lonely, but being a great trader is lonelier still
  • #17
  • Last Post: Jun 4, 2014 5:42pm Jun 4, 2014 5:42pm
Quoting saneblane
{quote} You're right and many have opted to trade smaller sizes and don't use SL or use a stoploss that is the same as your target for a 1:1 ratio, just for these kinds of reasons. The other day I went to buy a cardigan for winter weather and found it on sale for $20, normally it would be about $90, but I bought it at the right time and got it at a better deal. The same is true for the market, they are looking at the same price action you are and are betting that price can move a little higher, and at the point it does, they sell into the buying...
Well said, I agree.
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