How Much Stop Loss Are Appropriate?

[Redneck]

Quote from masonlee:

Any advise on how can i avoid the situation when stop loss is hit and price rebound?

One can possibly reduce their affect by; (total avoidance is impossible)

Assuming the rebound continues in the original direction – recognize this is a whip (meant to get weak traders out)

They often happen just before price makes a significant move

Take a B/E stop… the reenter the trade once price resumes

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Improving your entries – likely you’re getting in late – iow away from the point where the trade actually fails – consequently price has the “room” to move about

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Trading when volume is present; during low volume times price is more prone to getting whipped – comes with the territory

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Ultimately these whips will occasionally occur – study the conditions where they happen – then adapt

They leave telltale signatures – learn them

But…, no matter what – never compromise on using stops – they save your ass

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Consider the possibility you're trading too volatile an instrument

Too volatile for your personality / skill (not a slam, rather a possibility to consider)

RN

 

[fxturtle]

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

Stop loss should defend on the time frame you're trading. Look for congestion and put your stop above (if you're short) or below (if you're long) the congestion and DO NOT move your stop loss if the price is going against you.

Cheers,
FxTurtle

 

[FreeMktFisherMN]

Either more so positional trade and look for setups with prudent risk/reward--like maybe buying crude when it was near 91/92 a month ago before the move up to 100 and using an SL on that long of maybe 90.50 or 89.xx-- or scalp and have at least a bigger gain/max loss per trade ratio (winners>losers). Personally I prefer to have a thesis have to be proven wrong reasonably as opposed to getting caught in the crossfires of a stop hunt or algo burst that is just overshooting to flush people out.