How Much Stop Loss You Set?

[aliasentric]

I will also add this to my above comments…

My favorite trades are as follows:

I am able to find at least 2 or 3 support/resistance levels and put my SL at the 3rd level away from my trade. That way, it has to clear 3 levels of support/resistance before I am stopped out. It is not very likely that the price will break all 3 levels and hit my stop. It might break 1 or 2 levels, but usually it will continue in my favor and on into profit…

I can't always find 3 levels of SR cushion, but when I can find them, I definitely like my chances in that trade!

 

[higherSelfishness]

To begin semantically, I think your question is worded incorrectly. Don't ask "how much" - ie, 10 pips, 50 pips, 1% of your account, 4% of your account - ask "where?" You want to avoid the arbitrary parameters like "I only want to lose 10 pips..." Why 10 pips? Does that have anything to do with how price is behaving? Find, mark and use the thresholds the market is putting in place for you. When you enter the trade, enter it based on a hypothesis and you set your stop at a level where your hypothesis is invariably proven wrong. Said much simpler: your stop should tell you that you were wrong, which means you need to identify characteristic thresholds in the market. So when you enter, you are placing yourself in a logical position based on what the market has been doing - you either believe it will continue to do what is was doing (repeating a pattern), or it will now stop doing what it is doing (disrupting a pattern). If you enter with the former belief, you set your stop at a level it wouldn't have reached if the pattern continued. And if you enter with the latter belief, you set your stop at a level that demonstrates the pattern is in fact continuing. Hope that gives you some direction...

 

[newton trader]

I think you should think seriously about how much, in terms of percent, you can afford to risk. Ultimately it's your account versus the market. Risk of ruin.... If you get the balance wrong, you won't be around too long. Why not throw in a bit of common sense, in terms of stop location for good measure.

 

[gerryg]

My stop loss value depends on the trade size. With balance increasing I'am trying to move to the strategy of conservative trading. Moreover with growing capital I moved to another broker, because with your big deposit it is difficult to find reliable broker. Recently I participated to hotforex and see good results with him. Anyway stop loss is one of the most important things in forex you can be smart with

 

[pro_fx]

Completely based on trading style. Mine is +_ 8

 

[masonlee]

Thanks for the comments everybody.

My stop loss value depends on the trade size. With balance increasing I'am trying to move to the strategy of conservative trading. Moreover with growing capital I moved to another broker, because with your big deposit it is difficult to find reliable broker. Recently I participated to hotforex and see good results with him. Anyway stop loss is one of the most important things in forex you can be smart with

With big deposit, how unreliable a broker can be?
Will the brokers delay the execution of the take profit target or increase the spreads?

 

[Euroscalper]

Hi new_trader,

Thanks for your post I appreciate it. I use extremely tight stops because the object is to limit losses. I don't need a big movement to let me know whether the rest of the market agrees or disagrees. I have been in uncontrollable fits of laughter at your post. Notice I did't use edge too.

 

[Traderallen]

Of course euroscalper that's the conundrum isn't it. You set tight stops to keep losses small and end up with lots of small losses that bleed your account to death. Tight stops to limit your losses is a myth. The fact that most want to be traders don't understand this is one of the reasons why 90% lose. To set your stops correctly it takes more than just looking at chart.

 

[bigmistake]

Thanks for the comments everybody.


With big deposit, how unreliable a broker can be?
Will the brokers delay the execution of the take profit target or increase the spreads?

hotforex is a big one, I think big deposit is not a problem. But it's a big deal if you want to invest millions

 

[Euroscalper]

Of course euroscalper that's the conundrum isn't it. You set tight stops to keep losses small and end up with lots of small losses that bleed your account to death. Tight stops to limit your losses is a myth. The fact that most want to be traders don't understand this is one of the reasons why 90% lose. To set your stops correctly it takes more than just looking at chart.

I agree totally. I use the RSI's direction on multiple time frames and chart patterns. less charts and more RSI though.

Tim