Stop Losses 101

[DrCornwallis]

I hadn't heard that distinction before: logical vs probability stop. Makes sense. So say I set the stop that much further down, then it's a matter of sizing the trade so I can live with the amount not panning out? Reason I ask is I'm wondering what a good beginner's rule of thumb is for max % of total account risked on any one trade?

2% max on any one trade, at least for a short term time frame trader....or even just 1% until you prove to yourself you win more than you lose.

It goes without saying, that the wider the stop, the less chance you have of being stopped out, but you also drastically reduce your rr.

 

[easymon1]

Here's one from today I regret not playing but there's a "tight ass stop" conundrum in it, as you put it. Arrow for entry point with my system, and I put the stop where it seems I should along that support line from the previous 4 candles, I can ride this one all the way up, inching the trailing stop along the way. Problem: the amount is huge! With an entry right around 34 and a stop at 32, that's closer to a 5% stop loss than my tight ass preferred one, yet my tight ass one stops out very next candle missing the whole ride unless I reenter. 5% stop on 50% of the account is 2.5% of my account, is that too large a risk for a single play or actually wise to avoid stopping out all the time? Please advise!?

View attachment 252893

When your exit rule kicks in for this paper trade, post the exit price?

 

[easymon1]

5% stop on 50% of the account is 2.5% of my account, is that too large a risk for a single play or actually wise to avoid stopping out all the time?

Food for thought...

 

[Dollardogs]

Alright I've got another play that was a cluster. Really struggling lately, first arrow is entry, 2nd arrow is where stop loss got tripped. As you can see, I didn't set it too tight, set it at that previous low of the wick, maintained discipline at least and stuck to my stop, but in the process managed to perfectly buy the high and sell the low today. Yay!

 

[easymon1]

Alright I've got another play that was a cluster. Really struggling lately, first arrow is entry, 2nd arrow is where stop loss got tripped. As you can see, I didn't set it too tight, set it at that previous low of the wick, maintained discipline at least and stuck to my stop, but in the process managed to perfectly buy the high and sell the low today. Yay! View attachment 253482

Where can i learn about trading clusters?
Got any links?

https://www.elitetrader.com/et/thre...solid-trading-plan.340340/page-4#post-5031706

 

[radex78]

I don't understand why to buy the high then sell the low
usually trader get profit if buy at low then sells at high. but this reversion.

 

[Dollardogs]

LOL. Easymon and anyone else, just one more rookie question on this, and yes I know this is laughably rhetorical, but if the amount of the risk on a reasonable stop loss is too high, I just have to size down my trades huh? I've been trying to play catch up last couple trades to make up for those couple blunders I referred to, so I tried to maintain that 50% account rule, but then the right stop loss for it is a pretty large loss. Size down and be more patient?

 

[Dollardogs]

I don't understand why to buy the high then sell the low
usually trader get profit if buy at low then sells at high. but this reversion.

A

I don't understand why to buy the high then sell the low
usually trader get profit if buy at low then sells at high. but this reversion.

So true Radex!

 

[easymon1]

LOL. Easymon and anyone else, just one more rookie question on this, and yes I know this is laughably rhetorical, but if the amount of the risk on a reasonable stop loss is too high, I just have to size down my trades huh? I've been trying to play catch up last couple trades to make up for those couple blunders I referred to, so I tried to maintain that 50% account rule, but then the right stop loss for it is a pretty large loss. Size down and be more patient?

My 2 cents worth.
Shortcuts work as well in trading as anywhere else. lol

Now, why not
Generate some stats on the one or two setups you trade most.
The numbers in sufficient quantity,
generated by consistent procedure
and followed to the letter,

...will deliver numbers that reflect the probability of positive outcome
of the process if followed.
Past results are no guarantee of future performance.
ymmv
not fdic insured
may cause bleary vision.

 

[easymon1]

but then the right stop loss

For recent trades that you took, paper traded, got set up for or looked at seriously, look back at the setups.
How many stops did you set 1) enough, 2)too tight, or 3)wayy to big.
Numbers.