How Much Stop Loss Are Appropriate?

Quote from masonlee:

Hi there,

Anybody can point me to the right direction on how to set my stop loss appropriately?

Quite many of the time when i place a larger stop loss, the price hit my large stop loss and end up heavy losses.

But when i place a small stop loss, the price seem like tend to hitting the stop loss line very frequently and i have to repeatedly place multiple orders with the same small amount of stop loss and toward the same trend for a currency pair. With small stop loss, even i catch the right trend for a certain pair and earn significant amount of pips but overall i still having negative profit because i have lost quite many pips from many small stop loss trades during the starting of the trend.

Can you give me some guideline on how to set a appropriate stop loss?

Thanks
More...


Hi Malsonee.

This is in your own brain...all of it. You've got the answers, the charts are sceaming, but your subconscious radar is not tuned in just tet.

This game is all about losing, YES LOSING. tHE markets are random as hell, so don't worry too much about your stop, you don't even need one if you get good.

Use a SMA....simple.

Knowledge is power when it comes to trading, so read anything related to the financial markets. Study charts for 20,000 hrs (not just 10,000) and you will live a life that most normal people don't.

Good luck buddy!

(hey get back to us all after 15000 hrs of study, you'll be making us jellus...im sure)
 
Quote from Rorschach_test:

when your knees buckle,close it out:D

some calls it a 'mental stop':D :D
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Not bad, i will try it out.
Do we still need a large real stop when we are using "mental stop" in case there is an NFP style price movement?
 
Quote from MushinSeeker:

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.
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Are you using an ATR indicator to set your stop?
Can you explain in more detail on how you set your stop by looking at the ATR reading?
I am a beginner in ATR.
 
Quote from burt_schroder:

Hi Malsonee.

This is in your own brain...all of it. You've got the answers, the charts are sceaming, but your subconscious radar is not tuned in just tet.

This game is all about losing, YES LOSING. tHE markets are random as hell, so don't worry too much about your stop, you don't even need one if you get good.

Use a SMA....simple.

Knowledge is power when it comes to trading, so read anything related to the financial markets. Study charts for 20,000 hrs (not just 10,000) and you will live a life that most normal people don't.

Good luck buddy!

(hey get back to us all after 15000 hrs of study, you'll be making us jellus...im sure)
More...
Thanks for the advice.
Do you mean setting a stop by using SMA? How can we do that?
Yeah, i will get back to you after studied the charts for 15000 hrs.
This should be not easy, if a spend 12 hours every day to study, i should need 3.5 years to accomplish that.
:D
 
Hello everybody. I'm new member from Italy. Part time active trader on Forex spot.
How much stop loss... interesting topic!
My experience follows:

1) Yes stop loss. No Mediate. Hedging.... sometime but i do not really believe in it.

2) Your set up should dictate the stop loss. In other terms stop loss should be technical one.

3) Stop loss should be outside the standard volatility in the same time frame.

4) Most important. Stop loss is the max loss you decide to tolerate in the trade. This should be a small part of your trading account. Ideally 1% or below.... If This is contraddition with N° 2 or 3... than reduce size...
 
Quote from masonlee:

Thanks for the advice.
Do you mean setting a stop by using SMA? How can we do that?
Yeah, i will get back to you after studied the charts for 15000 hrs.
This should be not easy, if a spend 12 hours every day to study, i should need 3.5 years to accomplish that.
:D
More...


You wellcomb! B cairfull of the noise! take it eezee! BIG THUMB UP YOU!
 
About the point you mentioned on "hitting the large stop loss and ending up with great losses", that is actually exactly what a stop loss is meant for. If not for it, you might have had MEGA losses compared to great losses.

So remember, a stop loss is meant to well, stop your losses. When it is hit, it has saved you from a potential catastrophe. The only situation where this is different is if you notice over time that every time you stop loss is hit, the price rebounds. In those situations, it might be better to take a step back and readjust your stop loss strategy :)

Hope that helps! I'll be glad to discuss this further if need be :)

Cheers,
Desmond
 
Quote from Massimo1:

Hello everybody. I'm new member from Italy. Part time active trader on Forex spot.
How much stop loss... interesting topic!
My experience follows:

1) Yes stop loss. No Mediate. Hedging.... sometime but i do not really believe in it.

2) Your set up should dictate the stop loss. In other terms stop loss should be technical one.

3) Stop loss should be outside the standard volatility in the same time frame.

4) Most important. Stop loss is the max loss you decide to tolerate in the trade. This should be a small part of your trading account. Ideally 1% or below.... If This is contraddition with N° 2 or 3... than reduce size...
More...
May i know what is Mediate and Hedging? Is it another special kind of stop loss?
 
Quote from burt_schroder:

You wellcomb! B cairfull of the noise! take it eezee! BIG THUMB UP YOU!
More...
I am staring at the charts everyday now, just like a zombie. See when i can reach 15000 hours.:D
 
Quote from dezzzy:

About the point you mentioned on "hitting the large stop loss and ending up with great losses", that is actually exactly what a stop loss is meant for. If not for it, you might have had MEGA losses compared to great losses.

So remember, a stop loss is meant to well, stop your losses. When it is hit, it has saved you from a potential catastrophe. The only situation where this is different is if you notice over time that every time you stop loss is hit, the price rebounds. In those situations, it might be better to take a step back and readjust your stop loss strategy :)

Hope that helps! I'll be glad to discuss this further if need be :)

Cheers,
Desmond
More...
MEGA losses, nice word. Any advise on how can i avoid the situation when stop loss is hit and price rebound?
 
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