How do YOU decide where to place YOUR Stop?

tenny1886 said:
i use stops based on my ball size. If i woke up on a particular day with brass like balls i don't use stops at all. If i see shrunken balls that day i use tight stops. On a serious note its dependent on what you trying to get out of the trade and also how is the market sentiment ( you can get a gauge of the market in the first hour after opening). short plays tight stops, long plays generous stops. Now a days no matter where you hide your stops it will be hit unless you have a great entry price. My stops are based from 0.75-2.25. most times its 1.25 but then all my plays are for a point or 2 points with few getting me 5 points max.
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I assume you are trading a stock priced over $500, when risking $2.25?
 
Thanks for all the replies, everyone. I just woke up, it is not quite 0500 where I am right now, 14 hours ahead of NYSE time. Got a half hour to have my cappuccino and get ready for work.

I definitely will start out "cherry picking" with only one trade generally, on any trading day, since I will be playing with well under the PDT limit. If the setup doesn't look REALLY good, I cant use up one of my allotment of day trades, until later in the year when I am fully capitalized. No grazing for a while. So yeah I can try to shoot for a high win ratio. Maybe since I will be trading smaller lots, I can look for stocks with not so great liquidity, that the big players might find awkward to trade? But yeah it makes sense to not go with the herd on the stop, unless the apparent risk/reward ratio is low. I will be mostly looking for strong reversals, morning gappers, or momentum bull flag situations that look really good. First few days I will probably concentrate on reversals. I will also be watching for medical/pharm fundamental catalysts in the news, and be ready to pounce on strong openers. Just going through old data, I see a lot of crazy action in low priced pharmaceuticals at market opening. A lot of apparently irresistable gainers that have new FDA approvals or test results in the news. I can even afford to go several days between trades during this stage of my trading journey. I will be trading rather small positions, too. One thing I have learned in my 60 years of life is the perfect setup is sometimes actually perfect for the OTHER guy and a sucker play for me, so even cherry picking I will be concerned with my stop, whether it is a stop order, or I mentally set a point where I place the order myself to exit a surprise loser.

That was a big surprise for me, that stop orders go to the exchange as visible stop orders. I had assumed that the order stayed with the brokerage until the stop point was reached and the order triggered. This is the kind of stuff they don't put in the books.
 
bone said:
I’ve been at this a very long time, and it’s not realistic to even contemplate any sort of BS notion about placing a Stop “where people can’t find it”. Let’s be generous and say that you are going to have the great fortune to have an intraday trading strategy with a 65% W/L ratio. Obviously you can’t place a Stop eight points away from your trade entry “where people can’t find it” - you’d run out if capital VERY quickly.

If your average winner is say, eight tics - proper trade management strategy dictates that you can’t let your losers run for thirty tics or, once again - you’d run out of capital very quickly.

It’s a really shitty feeling to put together four really solid days (or even a solid month) - and then give it all back in one day.

Another strong consideration is your exposure to the market - are you cherry picking two or three really good risk/reward setups per day, or are you taking a hundred trades per day ?

Also, what markets are you trading ? There’s a large variance between ES and ZN and CL volatility and trading range and market micro structure - they are very different animals.

When I started trading, I learned scalping 30 Year Treasury Bond Futures. I was given my stop loss rule by my mentor and it was perfect for that particular market’s volatility and trading range - if a trade went two tics against me, I went to market (hit a bid or lifted an offer) to puke.

These days, there is so much automation in the markets that bids and offers trade away or disappear in a flash. I have traded from within both the CBOT and the CME buildings and possessed both collocated servers and TT X-Trader - and still missed trades. My point being - your day trading foes are heavily invested in ECN infrastructure and automation. Even puking can be a challenge.

I wish you good fortune !
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So nice of you to confuse the daylights out of everyone and flush Ed Sekota, Paul Tudor Jones, Bruce Kovner, Prof. Charles Bassetti, author of TA of stock trends (edwards/magee) down the tubes. Not to mention Dr Hank Pruden, head of Finance who with Charles did the definitive work of the century on STOPS. Title: STAIR STOPS

Its a work of ART bone. Study it bone. Report back to me when you are done. I will test you on it. :). :). :)

Learn bone learn, learn before its too late. God told me to forgive my enemies,, to hug and kiss them, but in your case may I recommend a gift?


http://www.edwards-magee.com/ggu/2stairstopsk.pdf
 
fibo_trader said:
So nice of you to confuse the daylights out of everyone and flush Ed Sekota, Paul Tudor Jones, Bruce Kovner, Prof. Charles Bassetti, author of TA of stock trends (edwards/magee) down the tubes. Not to mention Dr Hank Pruden, head of Finance who with Charles did the definitive work of the century on STOPS. Title: STAIR STOPS

Its a work of ART bone. Study it bone. Report back to me when you are done. I will test you on it. :). :). :)

Learn bone learn, learn before its too late. God told me to forgive my enemies,, to hug and kiss them, but in your case may I recommend a gift?


http://www.edwards-magee.com/ggu/2stairstopsk.pdf
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Thanks for the recommendation I look forward to reading.
 
GrowleyMonster said:
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?
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I use the liquidity indicator for where to put my stops. I take to consider the size of the stop and if it is one that is to big for me I don't enter the position. As the chart shows, I'll put the stop after a big red line.
ROKU@DXFEED_screenshot_20181108_155508_832.png
 
I've just automated my Stop, 1 less thing to forget, enforces good Stop useage and reduces the odds massively on big losses ( death by 1000nd cuts still possible )

Time to get cracking soon, damn work hassles :(
 
Turveyd said:
I've just automated my Stop, 1 less thing to forget, enforces good Stop useage and reduces the odds massively on big losses ( death by 1000nd cuts still possible )

Time to get cracking soon, damn work hassles :(
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I thought about that. I think if I automated my stop I would set my own auto stop fairly loose, though. In light of what others have said and after looking at a bunch of charts, it is obvious that there is a lot of stop running out there in the wild. Too many reversals that re-reverse for a tick or two and then carry on with the original reversal. Too many strings of bull or of bear candles interrupted by a single small contrary candle halfway up or down, to be statistically probable. I would probably manually tighten it up on less certain setups, maybe, but set my auto stop loose enough to eliminate maybe half of the stop runs. I know sometimes the big boys will win at my expense. I am okay with the things I can't change. I just want to win more dollars than I lose, each week or month of trading. I am also okay with watching a sub minute chart and manually initiating an exit if it is looking bad. Stuff happens though, so some stop of some kind is in order, for me anyway, I think,

What about trailing stops? Looks like a no brainer at first glance. A wonderful idea, to a newb just starting to read up on day trading stocks. So it seems. Now it is looking like something I would rather do without. Thinking now that instead of a trailing stop, I would just move my initial stop up to break even or a bit better, after two or three good candles, and manually exit if the trade starts looking like a possible loser. Bottom line is I think I always want some sort of stop in case of internet issues, etc. so no loser becomes a catastrophic loser.
 
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