Best Tips To Avoid Being Stopped Out In Futures?

[Scataphagos]

As Scataphagos said, stops are crucial, and placement is an art. Whether hard stop or mental stop may be a debatable topic, the crucial and art characteristics still apply.

The psycho of the stop....

"I'm risking ______ on a play. If the market goes against my play by (stop amount), I must conclude that my play "might be/or is" totally wrong. At the stop point, it's "wrong for a little". If the trader lets the loss get much below the stop point, he may end up being "wrong for a LOT". That's a risk a trader need not nor should not take.

 

[tiddlywinks]

If the market goes against my play by (stop amount), I must conclude that my play "might be/or is" totally wrong.

Since I use volume, structure, and price, I look at it a little differently.... if this and/or that occurs the trade is wrong.

We're on the same page, just a different author. Of course price determines P/L, but the determination to stay in the trade is not solely about price... for me.

 

[Bugsy]

Thank you for all of the replies everybody. I think the catastrophic stop would be my best option; then using mental stops for escapes thereafter based on the price action. Just trying to get all my ducks in a row this time before going at it again. I used the catastrophic stop before as well after hitting so many stop outs in the beginning. The problem was when I used mental stops I had the tendency to let it run on the "hope" it righted its course soon enough. It was stupid. I guess the better question would have been how others formulate their mental stop, though that has been touched on with the references to formulating them based on price action, volume, structure, etc.

 

[lovethetrade]

(1) Use of stops is fundamentally crucial to your success (and even survival) as a trader, and (2) where to place them is an art.

Is there a difference between a stop and an exit?

 

[Pekelo]

Is there a difference between a stop and an exit?

Yes, a limit order can be an exit and it is not an emergency one.

 

[soulfire]

Hello. Would anyone mind sharing how they avoid being stopped out in futures trading? It's hard finding a balance on safety for a stop loss that isn't close enough to be stopped out while also not setting your stop loss so far out that you're shooting yourself in the foot. I got eaten alive before in futures when I was trading and lost about $15,000 about a year and a half ago. Not giving up, and trying to plug the leaks that I know were pivotal in my losses before. This was one of my leaks that hurt me quite a bit. Thank you for any feedback in advance.

Ask yourself the following questions:

1) What is the reason for entering at your desired entry price?

The answer is you must think prices are primed to move in your general direction to your target price.

2) What path can prices take to reach the target exit price?

The hard lift here is being skilled enough to analyze and project/map out a price channel of support and resistance that prices will move in between as it proceeds towards your target price. Past the channel boundaries is where your stop should be located- the reason being if your channel is clearly violated, the premise you had for prices staying in that channel and moving towards your target has been proven wrong. Staying in past this point isn't based on your analysis, but on just "hope".

You want to enter near the edges of the channel- so if you have the channel wrong, or prices break through, you stop will also be close by as well and not be that expensive. Knowing your channel also allows you to take short term interim profit at the opposite edge as it moves towards your target price.

Figuring out how to draw proper price trend channels is NOT easy, but if you achieve this, you will also solve your questions of where to enter, exit, and place stops as well.

 

[Van_der_Voort_4]

First thing that comes to mind you are for sure overtrading
Regardless of your trading style whether discretionary or automated if you can come up with solution to be profitable with only 40 % of all trades you might be on the right path
You see what i mean,you must have records of past trades,if new method will be profitable based on only 40 % of trades compared to what it was previously then you can try to test this in simulation.

 

[ElectricSavant]

ohhh Bugsy, Good Luck to you I really mean it...

ES

Thank you for all of the replies everybody. I think the catastrophic stop would be my best option; then using mental stops for escapes thereafter based on the price action. Just trying to get all my ducks in a row this time before going at it again. I used the catastrophic stop before as well after hitting so many stop outs in the beginning. The problem was when I used mental stops I had the tendency to let it run on the "hope" it righted its course soon enough. It was stupid. I guess the better question would have been how others formulate their mental stop, though that has been touched on with the references to formulating them based on price action, volume, structure, etc.

 

[Bugsy]

ohhh Bugsy, Good Luck to you I really mean it...

ES

Thanks. Worst case scenario I just lose money which can always be remade. Succeeding at something I enjoy doing, that the vast majority barely understand, is worth more to me. Personally, I'd rather be broke at the end of my life with no regrets than vice versa.

I've read Technical Analysis of the Financial Markets & Japanese Candlestick Charting Techniques two times each. I study up around the web and try to fix my leaks. I study charts with various indicators for hours a day looking for edges. I've literally put thousands of hours into it. If I do fail, it won't be for lack of trying.

 

[ElectricSavant]

Bugsy I believe short term trading is the hardest thing you can conquer in your life...as for me anyways.

When you can MicroRemove™ money from the market and prove that you removed risk (exposed in the market less time) comparatively for holding the duration and do this consistently then you have your edge.

Then...

The environment changes and you must learn to do this the other direction...When you are a master you can adapt to the environment and the direction while you are competing against many players using various speeds of transmission. Anticipating and calculating on the fly can position you to react to the unknown with the best possible book.

MB

Thanks. Worst case scenario I just lose money which can always be remade. Succeeding at something I enjoy doing, that the vast majority barely understand, is worth more to me. Personally, I'd rather be broke at the end of my life with no regrets than vice versa.

I've read Technical Analysis of the Financial Markets & Japanese Candlestick Charting Techniques two times each. I study up around the web and try to fix my leaks. I study charts with various indicators for hours a day looking for edges. I've literally put thousands of hours into it. If I do fail, it won't be for lack of trying.