How can we use stop loss effectively for more profitable trade?

[Jack Francisco]

I want to ask to every traders here in this forum on how we can use stop loss strategy more effectively to make our trade more beneficial. I know stop loss prevents us from huge loss by automatically closing our trade before our whole account balance goes to nil.

So i want to know if is there any other ways of using stop loss so that we can maximum benefits as possible as we can.:smart:

 

[resistance]

We can use stop loss effectively after having good analysis. If it is used haphazardly then it will certainly hit stop loss , we can face loss most of the time. Stop loss is to protect if some sudden moves come in market.

 

[SuperSnake]

Use a trailing stop?

Or did I not get the question...?

 

[robertofx]

Close 1/2 positions at certain levels and move your stop with a trailing stop

 

[bigboyfx]

The stop Loss Option is very effective for all trades unless you are a scalper. If you are doing the long trade, you need to have enough money in your account and set your stop loss to an an amount you can risk. Stop loss can help save your account if your initial plan meets a setback.

 

[Eurex]

I want to ask to every traders here in this forum on how we can use stop loss strategy more effectively to make our trade more beneficial. I know stop loss prevents us from huge loss by automatically closing our trade before our whole account balance goes to nil.


Get your entry right so that your stop is not in the obvious Support Resistance Zone
And don’t move your stop It can save you sometime but will get you into wrong trade habits and anxiety which will reduce your clear thinking and overall development of a confident trader. Be patient take your trade and wait for it to unravel.

One Type of stop which is excellent in saving money is Volume Stop -

If you trade futures then you can use Volume Stops. Many times it happen
that price just touched the level and retrace back and we think its unfair for us to be stopped out. To get little advantage in this you can use Volume Stops. Check TT, Ninja for volume stops. It can give slippage since its residing in client or on TT servers and actioned when he volume drops to a particular level.
So suppose in Eurostoxx 50 FESX you think if volume at a price drops to 300 at a particular bid/ask then my stop should get triggered at that price. Its a good strategy where volume is thick like ES, FESX, Bobl.

Dont keep the volume stop to too low or you will get slippage in fast moving markets.

 

[Rambo35]

I think it starts with a good analysis and entry point. A stop loss by itself will not safe your account if you do not have a proper strategy, it will just allow you to get more trades wrong before you zoom down to zero.

 

[malaguti]

I have been in this market for long time

but if you can't find out your mistake and make the same mistake over again and again then using stop loss would be a just maintaining formality

If you can't find out your mistake as you say, then surely the stop loss is immeasurable and not a formality at all?

 

[Traderallen]

Reading the comments above it is no wonder so many want a be traders loose money! You need to be able to measure volatility (standard deviation or optimal f) and set your protective stop out side of that. Trade with the trend ( which most traders probably get wrong). and trade the proper position size for good money management.

 

[Rockfeller]

I want to ask to every traders here in this forum on how we can use stop loss strategy more effectively to make our trade more beneficial. I know stop loss prevents us from huge loss by automatically closing our trade before our whole account balance goes to nil.

So i want to know if is there any other ways of using stop loss so that we can maximum benefits as possible as we can.:smart:

Setting a stop loss level depends what strategy are you using.

I am always using a stop loss. Since I am a scalper I am looking to take 10-30 pips per trade. If price moves to my direction then I am moving my sl closer to BE.

 

[robertofx]

I would rather suggest to use trailing stop to close trades going in the intended direction. If trade going in the opposite trade we don't want to wait SL to hit. We can close the trade manually rather than increasing further losses.

 

[NVP]

Reading the comments above it is no wonder so many want a be traders loose money! You need to be able to measure volatility (standard deviation or optimal f) and set your protective stop out side of that. Trade with the trend ( which most traders probably get wrong). and trade the proper position size for good money management.

good advice ...........but all the readers will suddenly realise that adjusting the MM on such a strategy means they will make nothing like the profits they were promised in the "Sellinars" they attended before buying that expensive shiny system

N

also if any use ..........heres a link to Exit strategy's that incorporates stop loss management as well :-

http://www.trade2win.com/boards/forex/117416-best-exit-strategies-forex-market.html

 

[NVP]

I think the most effective way to use the stop loss feature in the forex market is to make sure that you you place your stop loss as half of your take profit limit. For instance, if you are targeting 40 pips profit, then you should be risking only twenty pips and your stop loss should be twenty pips from the current market price. This technique has worked like a charm for me right from the beginning. You might wanna try it on the demo account and see if it works for you too.

hey W

best wishes in your good fortune but you are putting the Cart before the horse ..............i'll let others tell you why ......but the key to making money in Forex is first and foremost learning not to lose money ....and stop loss placement is a very very key feature of this ..........and fixing it to an (arbritrary?) profit target is possibly not a good idea in my opinion .......but thats just me

N :smart:

 

[NVP]

Adding to what the folks have said on here, we should follow the trend of the market closely, then we would know when to act!

Can you define Trend Trance ?

thnsks
n

 

[Purple Brain]

And don’t move your stop It can save you sometime but will get you into wrong trade habits and anxiety which will reduce your clear thinking and overall development of a confident trader. Be patient take your trade and wait for it to unravel.

This is such a useful piece of advice. Anxiety and nervous fiddling with a trade once on in order to ‘avoid loss’ has cost me more in missed profits than all my outright losers put together.

I suspect the main problem is lack of confidence. If you for instance knew that the price was going to reach a certain level and you have your stop set at a sensible level, you wouldn’t care what route it took to your target. You’d simply put the trade on and leave it. While we can’t know for sure what any price is going to do next, if your analyses are reasonably better than average and your risk management sensible, there would appear to be no benefit in – and distinct disadvantages to - moving your stop too quickly if at all.

On this same topic, there is also fairly obviously more chance of a price moving a few tens of pips than a few hundreds of pips without heart-stopping drawdown. Does this suggest for us more nervous traders, that aiming for more reasonable risk:reward (1:1 or even less) and for smaller absolute moves in the few tens of pips range will provide a more sensible approach?

 

[Splitlink]

With me, mistake is in direction and not in stop loss distance. If the triggered stops become a run of losing trades, then the trader should consider whether his direction is correct. The first three days of this week were so successful ,for me, that it took me too long, on Thursday, to admit to myself that direction had changed. In fact, Friday made me losses, too.

So a certain stubborness and an unwillingness to admit an error can be a dangerous factor, as well.

 

[Traderallen]

The best way to make use of the stop loss in the forex market according to me is to make sure that you apply the stop loss as half of the take profit limit. For instance, if you open a position in the forex market and you are targeting 50 pips on that position, then you should risk only 25 pips over it.

using a method like this is a great way to blow out your account in no time. The first time the market changes its character you end up with a string of losses and wipe out all your profits and then some. This method you're talking about the trading at 2 to 1 when loss ratio is one of the fastest ways to go broke. It's taught by so many gurus that should be the first sign that it's not the correct way to do it.

Follow the professional not the amateurs or gurus. Professionals set their stops outside of market volatility. Most of the time they will close the trade at the first sign their trade plan is no longer valid. Having a stop outside of volatility is only there the safety in case something goes wrong prior to them being able to hit the sell button. Having a stop placed inside of market volatility is a great way to watch your stop get taken out and then the market turns and take off without you as we've all seen before. Then you want to play the blame game "the market maker was gunning for my stop" no you are just dumb money that had your stop placed inside normal market volatility.

 

[Purple Brain]

Professionals set their stops outside of market volatility.

How are you defining market volatility? Support & resistance levels, pivot points, yesterday's High or and low, most recent higher high, higher low or lower high lower low or something else entirely?

 

[Traderallen]

For all my trading except scalping I use a standard deviation of the daily chart. Basically I use the average of X number of days maximum range.

 

[Dameon]

Two day range for the SL and TP levels