How do you guys decide your stops/limits?

[sharesr4us]

Hi everyone,

I'm just wondering, how do you guys know how much your stops and limits to take profit should be?

For me it's 50:50.

So for example if I place a bet of £2 on GBP/USD @ 5000 that it's going to go up, I place a stop at 4950 and limit at 5050. Some occasions my stop/limits can be even more.

I know everyone has different strategies, but my reason for large stop/limits is that the market can fluctuate too quickly which means if I placed a stop too close to my opening price, it kicks in too early.

I'd appreciate it if you can give me your stop/limit amounts so that I can gauge what most traders use.

 

[counter_violent]

Hi everyone,

I'm just wondering, how do you guys know how much your stops and limits to take profit should be?

For me it's 50:50.

So for example if I place a bet of £2 on GBP/USD @ 5000 that it's going to go up, I place a stop at 4950 and limit at 5050. Some occasions my stop/limits can be even more.

I know everyone has different strategies, but my reason for large stop/limits is that the market can fluctuate too quickly which means if I placed a stop too close to my opening price, it kicks in too early.

I'd appreciate it if you can give me your stop/limit amounts so that I can gauge what most traders use.

With a Risk Reward ratio of 50:50 you cannot expect to make any money whatsoever due to spread cost on each transaction. This assumes an equal win loss distribution.
So, I'm not sure what the purpose of this post is. Can you clarify?

 

[NVP]

Hi everyone,

I'm just wondering, how do you guys know how much your stops and limits to take profit should be?

For me it's 50:50.

So for example if I place a bet of £2 on GBP/USD @ 5000 that it's going to go up, I place a stop at 4950 and limit at 5050. Some occasions my stop/limits can be even more.

I know everyone has different strategies, but my reason for large stop/limits is that the market can fluctuate too quickly which means if I placed a stop too close to my opening price, it kicks in too early.

I'd appreciate it if you can give me your stop/limit amounts so that I can gauge what most traders use.

assuming you are using sensible stakes and % of capital .......the larger your stop the less your returns ..........so its up to you to strike the balance

 

[sharesr4us]

Many thanks for your replies guys.

I am still a beginner, so my apologies if I don't make total sense. This is the reason why I'm asking how others setup their stop/limits as I'm not sure if I am doing this correctly.

The way I see it is that I'm willing to lose/win the same amount either way. So in the example above I'm willing to lose approx £100 for the sake of winning £100.

Can you help me? Assuming the stakes were no more than £5 per point, How would you do it?

 

[NVP]

hey dude

you are kind of on the wrong foot with your questioning........I would suggest you read the beginners area stuff here at T2win and try to appreciate the basics of trading .....will take a few hours ..focus on stop losses as well as Risk reward calcs and spreads ........

you may then get a sense of the question you are asking and why we cant give you a solid answer

N

 

[counter_violent]

Many thanks for your replies guys.

I am still a beginner, so my apologies if I don't make total sense. This is the reason why I'm asking how others setup their stop/limits as I'm not sure if I am doing this correctly.

The way I see it is that I'm willing to lose/win the same amount either way. So in the example above I'm willing to lose approx £100 for the sake of winning £100.

Can you help me? Assuming the stakes were no more than £5 per point, How would you do it?

I've already given the answer,
You cannot make any money using 50:50 ratio Target and Stop assuming an equal distribution of wins and losses. Because each time you make a trade, there is a cost of doing business. Sorry, can't make it any simpler.

 

[sharesr4us]

@ NVP - thanks...is that the "I’m New To TRADING – Where Do I Start?" link your referring to?

@ counter_violent...sorry, I know you've told me that 50:50 ratio is not ideal, but I'm asking how you guys define your ratios? For example are you going 2:1 or something else?

 

[Forexmospherian]

With a Risk Reward ratio of 50:50 you cannot expect to make any money whatsoever due to spread cost on each transaction. This assumes an equal win loss distribution.
So, I'm not sure what the purpose of this post is. Can you clarify?

Hi CV

Are you having a bad day ?

So if he has a 70% win ratio and a RR of only 1 when he wins - he cannot make any money then ???

Agree with you on a win ratio / probability of say under 52% or lower - then you are correct

But if after many years he develops into a serious day trader with win ratios of between 65% and 80% per 100 trades and still only had an average RR of 1 - he would still make money after deducting spreads and any commissions.

Ideally he wants RR's of one and a half or two plus - and then he can be happy with 40 - 50% win ratios and still make a bit of money.

With regarding to Shares4us question about stop sizes - its all down to the level of experience / trading knowledge / timing experience / focus / frame size etc etc - because every move is readable to a certain degree - even "noise" - but not for newbies or less experienced traders - but whether the stop is just 3 pips or 30 pips or 150 pips - make sure your targets are ideally twice or three times more - but because the market is dynamic and fast moving - never have targets fixed in stone - adjust according to the market conditions - and accept any win - rather than your stop being hit

Just my opinion

Regards

F

 

[darktone]

Dont use stops. They are a shįte poor way of managing risk

 

[counter_violent]

Hi CV

Are you having a bad day ?

So if he has a 70% win ratio and a RR of only 1 when he wins - he cannot make any money then ???

Agree with you on a win ratio / probability of say under 52% or lower - then you are correct

But if after many years he develops into a serious day trader with win ratios of between 65% and 80% per 100 trades and still only had an average RR of 1 - he would still make money after deducting spreads and any commissions.

Ideally he wants RR's of one and a half or two plus - and then he can be happy with 40 - 50% win ratios and still make a bit of money.

With regarding to Shares4us question about stop sizes - its all down to the level of experience / trading knowledge / timing experience / focus / frame size etc etc - because every move is readable to a certain degree - even "noise" - but not for newbies or less experienced traders - but whether the stop is just 3 pips or 30 pips or 150 pips - make sure your targets are ideally twice or three times more - but because the market is dynamic and fast moving - never have targets fixed in stone - adjust according to the market conditions - and accept any win - rather than your stop being hit

Just my opinion

Regards

F

I wasn't, but engaging with you, there's every chance it could turn into one

 

[new_trader]

Dont use stops. They are a shįte poor way of managing risk

A stupid suggestion like "Don't use stops" can only be rebutted with a post from SOCRATES

[Highlights are mine]

Let us take this topic of stoploss one notch higher shall we ?

When you become very familiar with an instrument, it talks to you.

It indicates to you its propensity to go higher or not, to fall further or not, and how far.

It also tells you that it is zig zagging and going nowhere.

All these inferences are there for everybody to observe, but you need a lot of screen time to be able to tune in and pick them up.

When you first start with all this, you have to use a stoploss every time you take a postition because your judement is not so accurate and your timing is not so good.


With the passing of time and the clocking of screen hours, if you are able to recognise mistakes and not repeat them, your accuracy improves. If you do it for very long, and you are very strict with yourself and you proceed to benefit from your errors by cataloguing them, you will get to a point of development in which you are right most of the time.

When you start, the stops you are likely to use are a bit wider than those you will eventually end up with at the end of your road, but the idea of using stops must never be derelicted or abandonded.


The reason for this is that you may be perfectly right to enter a trade by taking a position. However, it may be that at the very moment you have done this, unbeknown to you conditions may have suddenly changed.

When you decided and entered you were right, now suddenly you are wrong.

At a mechanical level a stoploss mechanically curtails unnecessary losses.


At a higher level of proficiency, even when the stop is a very tight one, in the same way that the instrument you have specialised in will talk to you, the stop will do the same, it will tell you that the posture you are currently adopting is the wrong one, and that you must not persist.

This means that if the ensuing move developing is particularly strong and steady, you ought to consider taking the opposite view, or, if the move developing is unclear, you ought to abstain.

Using stops is part of trading, it is very foolish not to use them at whatever level of proficiency you are at.

 

[barjon]

A stupid suggestion like "Don't use stops" can only be rebutted with a post from SOCRATES

[Highlights are mine]

Absolutely

 

[darktone]

A stupid suggestion like "Don't use stops" can only be rebutted with a post from SOCRATES

[Highlights are mine]

Heyyy ʄućk face, hows the ego? Large as ever I take it. :cheesy:

 

[sharesr4us]

hi and thank you everyone for your help and contribution.

My strategy of 50:50 so far seems to be working and I'm trying to be sensible by only playing on demo accounts before I jump in. I admit I'm not perfect, but that is why my question was to ask what ratio stop/limits you guys use to help me decide if I need to change anything.

Below is my spreadsheet downloaded from ig index and as you can see so far I am making a decent profit:-

 

[barjon]

hi and thank you everyone for your help and contribution.

My strategy of 50:50 so far seems to be working and I'm trying to be sensible by only playing on demo accounts before I jump in. I admit I'm not perfect, but that is why my question was to ask what ratio stop/limits you guys use to help me decide if I need to change anything.

Below is my spreadsheet downloaded from ig index and as you can see so far I am making a decent profit:-

nice results, but can't see much evidence of using 50 pips either way?

 

[counter_violent]

nice results, but can't see much evidence of using 50 pips either way?

I think I get it now.

OP sets a Target of 50 and a Stop of 50 and observes the ongoing price action. If at some point the trade goes into profit, he closes out for what he can get, thus negating the original proposition of a fixed ratio.

Does that about sum it up?

 

[sharesr4us]

where does it normally show? I always use stops/limits...in fact it's guaranteed stops. However if I see I'm making a reasonable amount of profit, I don't wait until it hits the limit and tend to sell beforehand. The same goes for stops...if I see I'm possibly about to make a large loss, I will use my instinct to pull out. The real reason for putting stops a long way off is because that is the absolute max I'm willing to lose per trade.

 

[sharesr4us]

I think I get it now.

OP sets a Target of 50 and a Stop of 50 and observes the ongoing price action. If at some point the trade goes into profit, he closes out for what he can get, thus negating the original proposition of a fixed ratio.

Does that about sum it up?

You beat me to it mate...SPOT ON! :clap:

 

[sharesr4us]

I want to add that I have spreadbet in the past and used to set the stops too close to the opening price. This almost always caused me to lose and get burnt. My other problem was psychology...I used to panic at the slightest loss. Now I keep calm and even if I'm making a large loss, I keep my cool and wait for the right moment for it to either hit the limit or I pull out if I think I'm making a decent amount of money. I try not to be greedy and walk away when I can.

 

[barjon]

You beat me to it mate...SPOT ON! :clap:

Well in that case your opening post is not a strategy at all,