How do YOU decide where to place YOUR Stop?

GrowleyMonster

GrowleyMonster

So many ways to decide where to put an initial stop order, that all make sense. A percentage of the last charted up or down movement? A percentage of the difference between the buy in and a resistance or support or VWAP or an average? Maybe a closer stop if the entry is at a suspected rather than proven reversal? The initial stop looks to me to be nearly as important or maybe just as important as the entry point. If I am gonna be wrong half the time or even more than half the time, I want it to not hurt too bad to be wrong. But it would suck to see a lot of my trades get stopped out right before the price does what I expected it to do, and miss out on a fat win.

I think I know myself too well to enter a trade without first deciding on a definite stop level. But do any (successful) traders just wing it on bailing out of a trade, getting off the train when it seems like the thing to do?
 
sfwind said:
Depend on your risk tolerance, position size and level of diversification. But it is not a science, otherwise, it would be too easy. Use the chart as a reference, but understand that everyone is looking at the obvious level. First loss is always your best loss, most of the time.
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Wow a light bulb just came on there. Thanks for that. So, I want to do what everyone else is probably going to do, but before they do it instead of when they do it or after they do it. Definitely sounds like a strong factor in making ANY order of ANY type. And stop out earlier rather than later, more losses but much smaller ones. I am liking the sound of that more and more as I think about it.
 
i put it only for unexpected news which may be declared at any time that may change the technical picture totally what is called a catastrophic stop.

i usually am correct about market movements but if the market does not behave, as i expect it to, i just bail out.
they say markets are random but that is the biggest bull shit i have heard.

however the market's behavior theoretically may change at any time ....i have seen it happen sometimes,not often.

even at major news releases market does follow technicals though it may appear volatile
 
If you access that price from point B to point C is likely to be made THEN the stop (A) can be at the point where you would no longer consider that to be likely. That is, your premise has been proven to be wrong by the unfolding PA.
 
GrowleyMonster said:
I think I know myself too well to enter a trade without first deciding on a definite stop level. But do any (successful) traders just wing it on bailing out of a trade, getting off the train when it seems like the thing to do?
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"Winging it" on the stop can be hazardous.

You've got the idea right about placing the stop when you place the trade. That way, you've already decided how much you're willing to risk that your play is correct.

The most logical play/stop is to "buy near support and place the stop just the other side of support". Vice versa for shorts at resistance. Of course that's where "everybody" has their stops and they can be gunned, but that's not what usually happens.

Stops are a must, but where to place them is an art. No specific right answer.
 
I always use a TA-based level to set the SL, what some might call support or resistance though I never go through plot those as horizontal lines on my charts. Instead, if I'm buying on a breach of the high of a swing low bar, the SL will probably go in at the low.

The exception I make is when price is trending. If in a trend-following trade I would use a multiple of ATR20 as per the Turtle.
 
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