Need advice on breakout stop placement

[justrading]

Quote from NoDoji:

ES is notorious for breaking out, retracing far enough to shake out all the weak hands, then continuing in the direction of the breakout for real.

+1

 

[murray t turtle]

Quote from hlpsg:

I'm not looking for a holy grail. I'm just looking for an intelligent way to minimize the chances of being whipsawed to death. I mean, there has to be a stupid way to do this, and a smart way. I'm asking advice on how to do it the smart way.

For e.g. I might choose to place a stop order a few points below a known strong support level on the assumption that a lot of people are going to jump on and enter trades when the support is broken.

So that's one example of what I'm looking for. Just common sense, intelligent ideas and advice on the best place to place the stop order.

================
Hi Hl;
You, & to get another ''frank reply''. 'multiple'' stop hits in a day;
are too many for profitable breakout. trading. Bright capital may do that, but Mr Bright has huge capital/experience.

Wisdom is profitable to direct

 

[Blotto]

Quote from hlpsg:

What methods can I use to select stop order levels so I don't get whipsawed?

Comprehensive strategy which shows you where the market is going next and provides your buy and sell triggers.

What you appear to be doing is either entering late when the move is over, forcing you to bail on your position at a loss, or you are entering ahead of a retracement which although not a reversal you choose to take yourself out of the market at a loss only to watch it carry on in the former direction.

This isn't correct or professional trading. Bottom line: know your market front to back and you won't be "whipsawed".

 

[hlpsg]

thanks for all the tips. They'll be helpful in my studies.

 

[Visaria]

If you don't want ANY whipsaws, then simply put the stop at the point where it's a breakout in the opposite direction. So basically, you would be stopped out and reverse.

I suspect though the distance would be quite a lot and may not be comfortable for you to trade.

The turtles used breakout systems, you may wish to read about their alternative stop system, called the Whipsaw (page 23):

http://bigpicture.typepad.com/comments/files/turtlerules.pdf