This thread is intended for the exchange of ideas on how to use stop losses effectively and profitably.
For me they are both my friends that save my bacon and my enemies that rob me of my well-deserved profits. I’m trading e-mini s&p and sometimes e-mini nas if I think it will produce a bigger move. My trading strategy is a basic old-fashioned one based on S/R levels, major trend lines and a bunch of indicators. I try to take a position at points where I’m expecting a reversal or continuation. I always use an automatic stop immediately and set it fairly tight (between 2 and 5 ticks depending on how good my entry is). I’m prepared to be stopped out and reposition 2, 3 or even 4 times in order to be on board for a decent move. If I’ve not made a successful entry by then I accept my analysis is wrong and I’m licking my wounds.
This strategy inevitably involves a lot of top and bottom calling which is a dangerous game of course, but I’m getting quite good at it and I’m often in right at the very beginning of a move.
Back to stop losses. Having made the perfect entry I’m anxious not to make a loss and tend to move my stop as soon as possible to lock in enough profit to cover the commission on this trade at least. I may be sitting on a couple of points + commission loss from previous failed entries and want to recover this too, which a good move would make and more. Quite often I can be stopped out at this point because I’ve been too quick to lock in the break-even trade. I’m on the sidelines and need to reposition again.
Once moving, I keep my stop a couple of ticks outside the most recent short term S/R level. Greed usually forces me to be more aggressive and often I will progressively move the stop as the trend develops keeping it a couple of ticks outside of my trend line. Quite often a mid trend pullback can just fire my stop as a few trades fake out the trend. Out again and missing out on the rest of the move. Very frustrating considering I was there at the very beginning.
What do I know?
1) Stops are good and bad
2) Taking a position too early and gets you stopped out using a tight stop
3) Perfect timing is crucial when using a tight stop loss strategy
4) Quickly locking in a break-even trade can get you out at the worst possible moment
5) Getting stopped out mid trend is really bad news – you may not be able to get back in for the same or better price
6) If you get your repositioning wrong, rather than jumping back on you may take a few ticks of loss
7) A stop guarantees you will not get the whole of a move in your pocket.
My main problem is in using stops, which allow a position to develop its maximum potential. All a question of experience I suppose. Please feel free to add any wisdom/criticism either positive or negative.
For me they are both my friends that save my bacon and my enemies that rob me of my well-deserved profits. I’m trading e-mini s&p and sometimes e-mini nas if I think it will produce a bigger move. My trading strategy is a basic old-fashioned one based on S/R levels, major trend lines and a bunch of indicators. I try to take a position at points where I’m expecting a reversal or continuation. I always use an automatic stop immediately and set it fairly tight (between 2 and 5 ticks depending on how good my entry is). I’m prepared to be stopped out and reposition 2, 3 or even 4 times in order to be on board for a decent move. If I’ve not made a successful entry by then I accept my analysis is wrong and I’m licking my wounds.
This strategy inevitably involves a lot of top and bottom calling which is a dangerous game of course, but I’m getting quite good at it and I’m often in right at the very beginning of a move.
Back to stop losses. Having made the perfect entry I’m anxious not to make a loss and tend to move my stop as soon as possible to lock in enough profit to cover the commission on this trade at least. I may be sitting on a couple of points + commission loss from previous failed entries and want to recover this too, which a good move would make and more. Quite often I can be stopped out at this point because I’ve been too quick to lock in the break-even trade. I’m on the sidelines and need to reposition again.
Once moving, I keep my stop a couple of ticks outside the most recent short term S/R level. Greed usually forces me to be more aggressive and often I will progressively move the stop as the trend develops keeping it a couple of ticks outside of my trend line. Quite often a mid trend pullback can just fire my stop as a few trades fake out the trend. Out again and missing out on the rest of the move. Very frustrating considering I was there at the very beginning.
What do I know?
1) Stops are good and bad
2) Taking a position too early and gets you stopped out using a tight stop
3) Perfect timing is crucial when using a tight stop loss strategy
4) Quickly locking in a break-even trade can get you out at the worst possible moment
5) Getting stopped out mid trend is really bad news – you may not be able to get back in for the same or better price
6) If you get your repositioning wrong, rather than jumping back on you may take a few ticks of loss
7) A stop guarantees you will not get the whole of a move in your pocket.
My main problem is in using stops, which allow a position to develop its maximum potential. All a question of experience I suppose. Please feel free to add any wisdom/criticism either positive or negative.
