Decreasing the gap between entry and stop loss

[SanMiguel]

I'm trying to reduce my risk a bit and I figure I can do some of this by reducing the gap between the entry price and my initial stop loss.
I usually place my stop loss the other side of the trendline or support/resistance line.

Some have suggested to put it 0.5% beyond the line but I feel this is quite a long way. Yet, too close and the line is tested by the market with a spike far too often for my liking. Where's best?

Anyway, by the time I enter the trade, the price + margin have often moved from the trendline/support so the gap is much larger.
Now, I could
- use an order to execute exactly at the line which would make it closer but there's no guarantee at that point that the market might not break out;
- wait for the definitive trend to be formed, eg a bounce back or reversal, etc. and then enter the trade. In this case I can't put the stop loss at the trendline as it would be too far.

Any suggestions?

 

[TheBramble]

Improve your timing.

You are asking if you should trade risk for reward, not if you could.

The more confirmation you wait for, the larger the gap between entry and stoploss and the higher the probability of the trade. Smaller profit per pip/point. Fewer trades. Higher percentage of trades are winners. Less profit per winning trade.

The less confirmation you wait for, the smaller will be the gap between entry and stoploss and the lower the probability of the trade. Larger profit per pip/point. Greater number of trades. Lower percentage of trades are winners. More profit per winning trade.

It’s all about your personal appetite for risk and how much skew you can take on your W:L.

I’m taking it as a given that your position size will always inversely mirror your risk. In that you’re only risking the same amount per trade, regardless of the size of the stop. $X per pip/point for a 10 pip/point stop. $X/10 per pip/point for a 100 pip/point stop.

 

[SanMiguel]

I try to use this to calculate my bet size:
(risk capital x (percent risk on @ bet /100)) / (entry price - stop loss )
risk is 1.5% on @ bet
In practice I guestimate what these come out to depending on pip range.
The larger the range, the smaller the bet.
The closer the range, the larger, and potentially more profit.
10 pips and I can get a bet 4 times larger than a range of 40pips...for example. Bigger reward, same amount risked. On the daily charts it has to be much larger than this...say 100 pips if I can get in at the right time...

 

[new_trader]

I try to use this to calculate my bet size:
(risk capital x (percent risk on @ bet /100)) / (entry price - stop loss )
risk is 1.5% on @ bet
In practice I guestimate what these come out to depending on pip range.
The larger the range, the smaller the bet.
The closer the range, the larger, and potentially more profit.
10 pips and I can get a bet 4 times larger than a range of 40pips...for example. Bigger reward, same amount risked. On the daily charts it has to be much larger than this...say 100 pips if I can get in at the right time...

You cannot solve the problem with a magic formula. Sorry to disappoint you.

 

[SanMiguel]

You cannot solve the problem with a magic formula. Sorry to disappoint you.

I'm not I was asked how I'm calculating my bet size!
Just looking for some guidelines. As in the response above, I could add smaller stop losses and have more trades stopped out or add larger and have more risk.

 

[TheBramble]

You cannot solve the problem with a magic formula. Sorry to disappoint you.

NT - read his post again. He's simply expressing how he uses a 1.5% of capital allocation per trade and works that into his stoploss calculation.

When and if you come to trade yourself, you'll find you'll need to do something similar.

In the interim, if you're going to try and sound like Bertie, use PURPLE. It will really help. LOL.

SanMiguel - apologies. Hadn't read your response above before responding to NT's pointless post.

 

[new_trader]

NT - read his post again. He's simply expressing how he uses a 1.5% of capital allocation per trade and works that into his stoploss calculation.
When and if you come to trade yourself, you'll find you'll need to do something similar.

In the interim, if you're going to try and sound like Bertie, use PURPLE. It will really help. LOL.

SanMiguel - apologies. Hadn't read your response above before responding to NT's pointless post.

Read your post carefully.

Your material is old and stale TheBramble. Why did you come back anyway? You are still as boring and tiresome as you ever were.

UNSUBSCRIBED. Fill your boots.

 

[TheBramble]

Gutted.

 

[SanMiguel]

This advisable:

When the trade enters, as soon as you can, move the SL To your entry.

Now this will end up giving you a lot of break even trades of +- 0 pips, but it will take the risk out of the trade. (you will get some slippage though maybe - or +3 pips)

 

[TheBramble]

If you want to take even more risk out of the trade - don't trade at all.

Really, wat's the point of waiting for the perfect setup, perfect entry - just to grab ZERO in case you lose?

Either you've got a sustainable trading system or you don't.

Puilling small profits (or series of B/Es) is the mark of a numpty.