How Much Stop Loss Are Appropriate?
- Thread starter masonlee
- Start date
I think i am trend follower. Basically, i place order when i saw potential trend is forming.
I have attach an image of one of my recent trade. I saw a brief trend is forming and i place a sell order with 15 pips stop loss. Shortly after i placed short order, then trend reverse and hit the stop loss.
My budget for trading is about 3000USD at this moment. If i can get profit constantly i may increase the budget.
May i know how can i backtest my strategy?
Quote from masonlee:
I think i am trend follower. Basically, i place order when i saw potential trend is forming.
I have attach an image of one of my recent trade. I saw a brief trend is forming and i place a sell order with 15 pips stop loss. Shortly after i placed short order, then trend reverse and hit the stop loss.
Your trade is counter-trend. You see that consolidation prior to the breakout to new highs? That's support in the uptrend. Connect those consolidation lows and you'll that you shorted right into support in an uptrend. The uptrend is intact until support breaks with some conviction and price pulls back to that support level and turns back down again ("previous support becomes resistance").
First, learn about trends.
Next, learn at least 2 ways to enter a trend on a pullback (buying at support where you shorted, for example)
Finally, learn to identify trend reversals and learn 2 ways to enter a potential new trend.
All the best to you
Thanks for the analysis.Quote from NoDoji:
Your trade is counter-trend. You see that consolidation prior to the breakout to new highs? That's support in the uptrend. Connect those consolidation lows and you'll that you shorted right into support in an uptrend. The uptrend is intact until support breaks with some conviction and price pulls back to that support level and turns back down again ("previous support becomes resistance").
First, learn about trends.
Next, learn at least 2 ways to enter a trend on a pullback (buying at support where you shorted, for example)
Finally, learn to identify trend reversals and learn 2 ways to enter a potential new trend.
All the best to you
I never realized about those uptrend consolidation lows before this.
In Monte Carlo roulette with Partage/Prisoner Rule
Bet on Black or Red (Gambler win 100 % or loss 100% of the bet) -average Player would win 73 and loss 75 from 148 game's
Advantage of the house approx 1.35 %
If you would bet on Gold by FXCM -spread is 0.5 points
Case of SL = TP need at least 25 point of the GOLD SL =
25 points
Relation of SL to spread would 1:50
Advantage of the House = 2%
in case of SL =TP = 35 points advantage of FXCM would comparable with advantage of the House in Monte Carlo Roullete
###################
! In calculation above price for margin is not included
------------------------------------------------
By FXCM margin depend from direction (long or short)
If included SL=TP must be as 35 points for GOLD
Bet on Black or Red (Gambler win 100 % or loss 100% of the bet) -average Player would win 73 and loss 75 from 148 game's
Advantage of the house approx 1.35 %
If you would bet on Gold by FXCM -spread is 0.5 points
Case of SL = TP need at least 25 point of the GOLD SL =
25 points
Relation of SL to spread would 1:50
Advantage of the House = 2%
in case of SL =TP = 35 points advantage of FXCM would comparable with advantage of the House in Monte Carlo Roullete
###################
! In calculation above price for margin is not included
------------------------------------------------
By FXCM margin depend from direction (long or short)
If included SL=TP must be as 35 points for GOLD
Good calculation.
It seem like brokers/liquidity providers will be the one who earn a lot in Forex market, since i often heard that no traders is ever 100% sure about their analysis. But the advantage of the house is always 100% sure.
Another thing i noticed is that, when the TP is widen to reduce the advantage of the house, it make the TP to have less probability to get hit and an widen SL will increase the losses, in case the SL is hit. What is your comment about this?
when your knees buckle,close it out
some calls it a 'mental stop'
some calls it a 'mental stop'
I mapped out Tokyo ,UK, NY trading hours and it seems that Fx has more volatile from 12midnight EST to 12 noon with quieter "zone" being 12 noon to 12 midnight EST. Do you agree?
2nd- I thought of setting stops based on ATR(12) BUT using ONLY bars that are in the right zone.
Ex . If trade opened at 10AM (busy) then stops should be based on ATR(12) but using solely 12 busy bars (9am,8,7,6,5,4,3,2,1am,12mid,11am,10am)NOTICED how the last 2 skipped the quiet 12 hour period hours and picked up previous days 2 busy bars?
Any less complicated ideas for setting stops ? doing it this way is programatically a pain in the ass. However, it just seems silly to blindly use 12 bars back since you might get stopped out prematurely as market transitions from diff volatility regimes . i.e. open a trade at 2am and you'd end up being stopped out needlessly since ATR is looking back at quiet time as you are entering crazy time. what ya think.
2nd- I thought of setting stops based on ATR(12) BUT using ONLY bars that are in the right zone.
Ex . If trade opened at 10AM (busy) then stops should be based on ATR(12) but using solely 12 busy bars (9am,8,7,6,5,4,3,2,1am,12mid,11am,10am)NOTICED how the last 2 skipped the quiet 12 hour period hours and picked up previous days 2 busy bars?
Any less complicated ideas for setting stops ? doing it this way is programatically a pain in the ass. However, it just seems silly to blindly use 12 bars back since you might get stopped out prematurely as market transitions from diff volatility regimes . i.e. open a trade at 2am and you'd end up being stopped out needlessly since ATR is looking back at quiet time as you are entering crazy time. what ya think.