Here is my latest article on placing a stop. Hope it helps.

I think as long as the stop makes sense, ie you are giving the trade enough room and the risk reward is good, that’s what you go with. But you need to feel OK if you get stopped out with the loss. I know a lot of traders don’t! So they kind of pretend that they’re not going get stopped out. So being really clear what the parameters are and having a willingness to take the trade no matter which way it goes I think is what’s important. I’m just saying the more carefully You plan the trade a head of time, and the more you stick to it, the less anxiety you feel in general.
 
VEGASDESERT said:
lol, i'm multifaceted.

but seriously though, we're both basically saying the same thing just using a different approach.

wide stop small size, more wins, smaller wins.

tight stop normal size, less wins, bigger wins.

equals about the same profit over time. (if you understand ta / pa)

its just who wants to feel less stress by losing less (psychology)
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"Size" has to do with only "money management" and the psychology of the player.... stress, et al... all BS. Nothing to do with whether the play is good/correct or not. IOW... if the play "freaks you out", or you're hesitant... has nothing to do with the play... only your brain.
 
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TRS said:
Entries are the easiest part of the trade. Market structure etc will tell you where and when price violates and negates a trade setup.
Exits once profitable are the trickier part of the game. When to take the money off the table. That can do the real damage to your psychology.
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I have 1 rule regarding my targets in my strategy, never move targets down.

Only move stops up to protect profit and move targets up if the price action is strong in the direction of the target.
 
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VEGASDESERT said:
Beginners should use wide stops but reduce size to compensate for risk and just get over
your stop getting hit.
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Couldn't agree more!!
Generally if you have a viable strategy as you make you stops wider your win rate goes up.
Key here is viable
strategy.
 
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Scataphagos said:
TOTAL HOGWASH... and you don't even understand why.
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Here's the deal....

TAKE SENSIBLE STABS AT THE MARKET... Technically based one best.

If you get it wrong, lose a little... not much harm. Get ready for the next play where you again try to "risk a little for the prospect of gaining a lot".
 
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Stop placement at the beginning of the trade works best. It does reduce your stress levels and makes you enter into an all important agreement with yourself about the trade. I don't believe you have completely entered a trade until all the parameters have been covered and that includes stop placement. You can make adjustments after a trade has been executed but only adjustments that are in your favor.
 
monee said:
Generally if you have a viable strategy as you make you stops wider your win rate goes up.
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High winning percentage has nothing to do with making money.

In fact, and this may sound bizarre, the most profitable and robust trading systems have a low winning rate.
 
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Most traders will not have the discipline to stick with it so, for the most part, if you are trading stocks, you have to have a hard stop on a GTC basis. That gets you out even if you wake up late, are distracted and forget to check on your stocks. Now, with options, with the wide bid and asked prices, a hard stop loss is impractical and only a mental stop loss should be used. You do have to have the discipline to exit the trade if the stop loss gets hit.
 
Stops protect capital by getting you out of a trade when what you expected to happen, did not happen. For that reason, I agree with the OP that stops should be placed when initiating the trade because at that point, it should be clear what price action would indicate that the trade is wrong. OP is correct that it really lowers the anxiety vs. manually deciding to get out once pain tolerance has been hit. I learned that lesson the hard way more times than I would like to admit. I would also add that if you don't know where to set your stop, that's the same as saying you're not sure when you would admit your trade would be wrong which suggests that the trade is simply a random entry based on nothing but hope.
 
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