How do You set your Stops? Got favorite ideas?

[d08]

Sure, but on highly leveraged financial instruments a sudden and unexpected move against you (say a 3-day limit down move on Orange Juice futures) could empty your trading account faster than you can say "margin call Gentlemen".

It's 20% of funds. So maximum (100%) loss for total funds is just 20%. Leverage is already implied in the example, no need to introduce it as another variable. You went with an example where a stop is justified and ignored the one where it wasn't (necessarily). There is no "one size fits all" approach in trading, yet people keep preaching that there is. Tiring.

 

[Tradex]

The idea that it's so easy to find an optimal stop is funny because that's far from reality. It depends entirely on the strategy itself.

That's precisely what I said (post #7).

It's 20% of funds.

You mean trading accounts (Futures or Forex) cannot become negative?
Hmmm...

 

[Tradex]

Let’s just say those traders [Goldman Sachs, Citadel] have robust risk management.

They don't earn billions each year trading head and shoulders like the rest of us, that's for sure...

 

[legionx]

Hard stop but if market shoots up or down in my favor or is trending nicely, I will move my stop to profit. Hoping for that continuation pattern. Other times if I am up 40 ticks, it's very rare that I would let it comeback and stop me out with a loss.

 

[murray t turtle]

Hard stop but if market shoots up or down in my favor or is trending nicely, I will move my stop to profit. Hoping for that continuation pattern. Other times if I am up 40 ticks, it's very rare that I would let it comeback and stop me out with a loss.

%%
Thats the good principle about PSAR, it does that auto......[Parabolic stop + reverse]
Also named parabolic time price.
The actual PSAR indicator tend to be late on a weekly chart\but still good principle.
As far as stops go, lots of things;
moving averages PSAR, profits\ sept sells, stuff like that...................................................................Stuff like sqqq have to plan it; NEVER has trended as well as TQQQ,qld,qqq.
Even in a bear market, sqqq rally is mostly spikes,some exceptions apply.

 

[Master Pu]

Ideally, a stop has to be outside the established range, whatever range is being traded. IMHO, this approach trumps all other stop placements within a range. Therefore, initiating trades as close as possible to swing highs/lows is an optimal strategy.

I subscribe to the adage of cutting losses short and letting winners run. IMO when trading, a relatively tight stop is way more important than when investing.

 

[murray t turtle]

No they are not, if you backtest any trading system (assuming the trading rules are clearly defined) then you will find that there is only one (1) optimal stop (and/or trailing stop).

In other words, any other stop will produce inferior results and a bigger drawdown.

%%
OK;
they are an educated guess /lol.
May produce inferior results 80% of the time/ except some pattern$ like SEPT sells, i'll take that selltop + may make money ,well.
Problem with one stop + you make make a fortune doing it your way; but the ''one stop '' is subject to change, especially a bear trend...................................................
Thanks.
PS Bigger drawdowns tend to produce bigger profits, not that a big drawdown is the main goal.its not.............................................................................................

 

[Bad_Badness]

Like other said, it depends upon the strategy. That being said, factors I consider for a particular strategy's stops are

• Probability over time
• Probability over price delta
• Probability of target versus stop being hit.
• MAE

Those "parameters" are instrument specific, or more precisely tuned for the instrument, not generic across instruments, and certainly not generic across strategies, imo.

To me stops are more about avoiding loss management, not about getting big (runners) winners with a stop as an "auto - copilot". If the stop strategy is focused on "wins" versus "loss", it just seems like using the tool indirectly, and therefore more complicated.

 

[kellycobb]

Ideally, a stop has to be outside the established range, whatever range is being traded. IMHO, this approach trumps all other stop placements within a range. Therefore, initiating trades as close as possible to swing highs/lows is an optimal strategy.

I subscribe to the adage of cutting losses short and letting winners run. IMO when trading, a relatively tight stop is way more important than when investing.

Well, as far as I have seen, traders set stops on the basis of the strategy they are using. If someone is a long-term investor, they choose a higher percentage distance away but when you are an active trader, you may choose a smaller distance.

 

[veronaruffin]

Well, as far as I have seen, traders set stops on the basis of the strategy they are using. If someone is a long-term investor, they choose a higher percentage distance away but when you are an active trader, you may choose a smaller distance.

Oh yes! Considering market fluctuations and volatility are really important. When you are planning to go long, you can set the stop below the market price and when you are going short, it should be above the market price.