Been doing swing trading and have even tried day trading. Not very successful with either, though swing trading has been better. One thing I noticed is stops are killing me in both. Prices often go away but by that time I get stopped out. Been out of the markets for several years and came back to invest in the cheap oil prices. Noticed buying low and holding seems to work better for me, no stop, just investment. But wondering about getting into day trading. Again tried some swing and day trades but again keep getting stopped out. Wondering what I'm doing wrong. Maybe I should try scalping or more quick momentum trades, or scanning markets for major company moves and then try to trade the momentum. Little experience in scanning for stocks, mostly looking at mini S&P, which has been sort of a sitting game. For some reason don't like stocks, but I guess that's where the daily big news and momentum is going to be, while in S&P it's not always a daily event. But I hear there are algos that do these sort of quick trades better. At the same time I know some day traders are successful.
Stop Losses are killing me
- Thread starter Sequoia1321
- Start date
Tight stops can be deadly. No stops can be deadly too.
On average, you should do fine with a 5 point stop on the e-mini S&P 500, although there have been times during this heightened volatility where a 5 point stop would stop you out immediately. So, volatility needs to be considered.
It really boils down to your entry. The better your entry - the tighter your stop (risk) can be. If you enter randomly in the middle of nowhere, you need a wide stop to stay in the trade.
It takes a great deal of skill and preparation to daytrade ES or any other market successfully. It's my impression you have not done that, so my personal advice is to focus on swing trading instead.
But if you want to give it a shot. Start identifying low-risk entries where a smaller stop would have worked and see if you can find a way to enter in those areas in real time.
On average, you should do fine with a 5 point stop on the e-mini S&P 500, although there have been times during this heightened volatility where a 5 point stop would stop you out immediately. So, volatility needs to be considered.
It really boils down to your entry. The better your entry - the tighter your stop (risk) can be. If you enter randomly in the middle of nowhere, you need a wide stop to stay in the trade.
It takes a great deal of skill and preparation to daytrade ES or any other market successfully. It's my impression you have not done that, so my personal advice is to focus on swing trading instead.
But if you want to give it a shot. Start identifying low-risk entries where a smaller stop would have worked and see if you can find a way to enter in those areas in real time.
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Both get you with and without, just had 1 -$30 SL in profit +$60 NQ jump down and cost me -$150 
Another trade, hit SL just and turned for what would of been +$300.
Sadly your better off, keeping losses small and taking the death by a 1000nd cuts, but this will only work if you can hold and let good trades go 3-5x's the SL loss risk, then it's a down down down down, getting annoyed back in profit deal, which is ANNOYING I'll admit.
Another trade, hit SL just and turned for what would of been +$300.
Sadly your better off, keeping losses small and taking the death by a 1000nd cuts, but this will only work if you can hold and let good trades go 3-5x's the SL loss risk, then it's a down down down down, getting annoyed back in profit deal, which is ANNOYING I'll admit.
If you are getting stopped out a lot, it is because your stop losses are too tight. You need to adjust it. I swing trade and if my stop losses get hit, my position is automatically, closed. A lot of times that saved me monies. If it goes my way, I just manage my position. You have to check the stockchart each market close to see if your assumptions as to the trend is still intact. If it is, no reason to bailout or panic each time there is a pullback. Assuming your stock is strongly, trending, it is in your interest to ride the trend as long as it lasts.
I don't use SLs because I know exchanges and institutions know where everyones stop losses are at and can easily trigger them at any time. Instead I use phone alert to tell me when a certain price has been hit, and then use my professionally trained judgement to determine if it's a market sell off or a fake out.
I save more money on stop losses this way, but when it comes time to sell because the market isn't moving up then my losses are bigger than normal. This is the price I would rather pay than dealing with being stopped out 100s of times.
I save more money on stop losses this way, but when it comes time to sell because the market isn't moving up then my losses are bigger than normal. This is the price I would rather pay than dealing with being stopped out 100s of times.
The alternative to using SLs is to have a small enough position that losing 100% doesn't materially impact your capital (if long, if short it's not really viable without hedging or a 100% stop on something like an index unlikely to ever gap more than that). In that case, you will stay in the market whenever your signal/bias tells you to without being worried about stopping out. With that scheme, it may be necessary to hold more than one asset to have any sort of meaningful return, which in turn means return correlations need to be considered as simultaneous drawdowns add together. Of course, this is not something "new" (in fact portfolio optimization is a very old and well studied topic) but it can be helpful to consider there is more than stoplosses w.r.t. to risk management.
@Sequoia1321
If you keep getting stopped out on the e-mini because your stops are too tight maybe back up and test your entries with a single share of SPY. For obvious reasons, they trade mostly the same during RTH and since you'd be risking a lot less, you can try different entry strategies without using any stop loss at all. Worst case scenario you lose a few dollars but without the fear of big losses you can just get in where you think the right spot is and see where it goes.
If your entries suck you'll know because the price will just keep going against you but if, more often than not, the price goes against you then turns back around you'll know the fix is to just loosen your stops a little and let it rip. Figure that out then go back to the e-mini for the big money.
If you keep getting stopped out on the e-mini because your stops are too tight maybe back up and test your entries with a single share of SPY. For obvious reasons, they trade mostly the same during RTH and since you'd be risking a lot less, you can try different entry strategies without using any stop loss at all. Worst case scenario you lose a few dollars but without the fear of big losses you can just get in where you think the right spot is and see where it goes.
If your entries suck you'll know because the price will just keep going against you but if, more often than not, the price goes against you then turns back around you'll know the fix is to just loosen your stops a little and let it rip. Figure that out then go back to the e-mini for the big money.
you're asking a loaded question that gets to the heart of trading.
without getting in the weeds too much. trade smaller size, widen your stop and go for bigger target.
start with that.
without getting in the weeds too much. trade smaller size, widen your stop and go for bigger target.
start with that.
This is where I got stopped out yesterday in the last hour in S&P. Was looking for a pullback, fading of the resistance, but all of the sudden big volume buying came in and stopped me out, not even a small pullback happened. Not very experienced, is that a decent trade that just got stopped out? Or was something wrong with the trade? To me it seemed like a prime trade that I thought highly likely would succeed. That's the 1hr chart but I was using the 5 minute chart, waiting for a small pullback. That got me to thinking maybe I need to focus also more on momentum, 1 minute charts, things like that.