Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

BennyHey

Where Do You Place Your Stop Order?

Recommended Posts

I wanted to start a thread on stop placement. I know the most popular answer would be placing it behind the last swing high or low, but I wanted to hear what other ideas are out there. A few I know of are using ATR as a guide and using 2% of total acct size.

 

I know it is totally dependent on what type of trader you are, investor, swing trader, day trader etc. but I would appreciate any new ideas either that your using yourself or have seen or read about.

 

Best of luck guys can't wait to see some responses ;)

Stop.thumb.JPG.0a4cf23a2334fac0a5851e40c230c2c1.JPG

Share this post


Link to post
Share on other sites

The best way to know where to put your stops...is to Know and understand your setups so well...that way you will Know at what point your trade idea is wrong and that point should be your stop.

 

The chart you show, I agree most would place there stops there. An important factor, that most traders dont pay attention to, is when to put their stop there.

 

By the way Im a big believer (specially daytrading) of attaching a stop with every position, even if its a wide stop... at the least, it will be there in case something unexpected happens.

 

Regards..

Share this post


Link to post
Share on other sites

For my style that chart is a work of art. I would have been looking to short the break of the flag around 862, would have been trying to sell the ask hard and probly would have had to do it a few times before getting filled on the retrace. My hard stop would have been a bit tighter at the top of the green candle body but I probly would have already been out if it had tested more up in that area manually. I love breaks of flags like that with breakout potential because you can use a real tight stop risk wise but still have the chance at a big winner.

Would have booked profit on the test of the breakout, then that green bar that bounces off the breakout level would have taken me out though and I wouldn't have got the breakout with the second half of my position.

Share this post


Link to post
Share on other sites
I wanted to start a thread on stop placement. I know the most popular answer would be placing it behind the last swing high or low, but I wanted to hear what other ideas are out there. A few I know of are using ATR as a guide and using 2% of total acct size.

 

I know it is totally dependent on what type of trader you are, investor, swing trader, day trader etc. but I would appreciate any new ideas either that your using yourself or have seen or read about.

 

Best of luck guys can't wait to see some responses ;)

 

To place a stop, I need to know where I sold from?

 

Where and what time on the chart did you sell?

Share this post


Link to post
Share on other sites

I'll echo Pappo's sentiments. "When" is crucial in making ones entries inviolable, not to mention the stops.

 

I view stops much the same way...protection against the 'sudden break' either way. Outliers are rare, and potentially costly.

Share this post


Link to post
Share on other sites

Thanks for the info DarthTrader. Guys obviously your stop placement will depend on what style/time frame you are using to trade with(ie. daytraders will differ from swing traders who will differ investors) that said I am more interested with the methodology used that pertains to your individual style.

 

I know Larry Williams (Day trading) always closes all his trades at the close of the futures session(4:15est).

 

Hope all u guys have a great 08' and new year. I am looking forward to continued learning from my fellow traders and (hopefully) increased profitability.

 

May your limits be filled and your stops not hit.

 

Benny Hey Hey;)

Share this post


Link to post
Share on other sites

Thanks for the post WRR. "Drawdown Minimizer Logic" makes a lot of sense. The only potential problem might be that it does not take into account the current volatility of the market being traded.

 

Cheers :)

Share this post


Link to post
Share on other sites

I think where to place your stop depends on a number of factors;

assuming here a automated signal and a manual entry/exit type system

 

1. the type of setup signal to get in. The more automated and defined the signal /setup the greater the opportunity for a tighter stop.

2. The ability of the trader to execute quickly once system signal is generated. The slower the respnse the greater the stop required.

3. The volatility of the market (which can have an effect on 1 and 2 above)

 

In general on the YM for eg I use a stop of anywhere between 3 ticks (from order execution) if I am on the ball and 5 if not so. Or if market is more volatile anywhere between 5 and 7 on ave...

 

best

John

Share this post


Link to post
Share on other sites

My stops are dependent on each individual trade. Never found much use in a set stop as there are a number of factors that can influence stop runs IMO:

1)
Volatility
- big one. When volatile, stops normally have to increase or the likelihood of being stopped out on a a quick spike is to great.

 

2)
Recent price action
- if selling near the HOD, then placing a stop at/near the HOD can make sense. If you are expecting price to drop either you are right or wrong. For me, when selling the HOD, it's a rather simple trade - I expect to nail the HOD or not. If not, then I want out ASAP; not trying to be a hero.

 

3)
Other levels
- good to know where other possible S/R levels are and consider stops based on that (High/low of day, globex high/low, etc.).

As we've all heard and read before, the big guns can go stop hunting at times and you can see that on your screen when it's happening. Stop placement is critical to success and IMO cannot simply be a function of 'how much I can stomach to lose before I start to panic'.

 

If you find yourself thinking 'I'll put my stop here b/c that won't hurt as much' then odds are your stops are very tight and also very likely to get hit. Find some appropriate level to base your stops on and then honor them. If your stops are too big for your comfort level then you need to reexamine your trading plan. Stops are there to get you out when wrong NOT to minimize the fear of losing or being hurt.

Share this post


Link to post
Share on other sites

As already implied in this thread, stops tend to be circumstance-specific. For example, volatility is correctly noted as an important factor to be considered when choosing stops; however, I have a system that becomes active during high volatility whose stops are static. It has also been cited that stops should be set near technically-important levels, which is certainly appropriate. Again, though, my systems use stops without consideration of technicals (or fundamentals), instead relying upon other criteria to exit a trade (almost always before stops are hit ... but not always ... sigh).

 

Research will eventually lead you to stops that fit your systems, preferences and philosophies. The specific ideas presented above by brownsfan019, at the very least, offer a very good toehold in that regard.

Share this post


Link to post
Share on other sites

Great post BrownsFan.

 

I think most nubie traders start with a set stop (ie. a 20 pt stop on the ym.)

As you gain experience you realize sometimes this is too small a stop and when the mkt is really slow this may be too BIG a stop.

 

The more I delve into Profit Targets and Stop placement the more I realize how important it is . Personally I wish I would have not spent so much time in my early trading days looking at 100 of indicators and moving averages to get entries and realized that with proper trade mgt. entries could be taken on a coin flip and still be profitable. :)

Share this post


Link to post
Share on other sites
Great post BrownsFan.

 

I think most nubie traders start with a set stop (ie. a 20 pt stop on the ym.)

As you gain experience you realize sometimes this is too small a stop and when the mkt is really slow this may be too BIG a stop.

 

The more I delve into Profit Targets and Stop placement the more I realize how important it is . Personally I wish I would have not spent so much time in my early trading days looking at 100 of indicators and moving averages to get entries and realized that with proper trade mgt. entries could be taken on a coin flip and still be profitable. :)

 

Very true.

 

I've found that entries are the EASIEST part of the plan for me. Where to get out - profits and losses - continue to be my personal demon (esp profits). So easy to think one time to let it run and the very next time to not get greedy.

Share this post


Link to post
Share on other sites

So true BrownsFan,

 

Now I am trading multiple cars it makes life a little easier that I can slide stop to B/E and let it ride. But ultimately you don't know if the mkt is going to go 30 more pts in your favor of if its run its course and your best move is to get out. Thats a good idea for another thread.

 

One thing that has helped me is looking at a LARGER time frame during the day to judge if my trade has potential to turn into a runner or not. If its Counter Trend I'll take my scalp and get out but with the trend I'm more likely to trail stop and try to get a nice runner out of it.

 

BennyHey

Share this post


Link to post
Share on other sites

Well most of the traders have fixed percent to cut their loss at 5 %. If they have $10000 in the account, they would probably take a risk of 5% the maximum loss would be $500. If we are trading one standard lot this would approximately 50 pips. You can also use support and resistance to know better where the specific point of profit is and cut losses.

Share this post


Link to post
Share on other sites
I wanted to start a thread on stop placement. I know the most popular answer would be placing it behind the last swing high or low, but I wanted to hear what other ideas are out there. A few I know of are using ATR as a guide and using 2% of total acct size.

 

I know it is totally dependent on what type of trader you are, investor, swing trader, day trader etc. but I would appreciate any new ideas either that your using yourself or have seen or read about.

 

Best of luck guys can't wait to see some responses ;)

 

 

2 stddev.... that should do it. LOL

 

 

you got the idea on the right track, it depends on what you are doing.

Share this post


Link to post
Share on other sites

Short-term traders should strive for good trade location. Good trade location means that your entry is close to a reference level that you can lean on. If the market trades through that reference level by a few ticks, then you don't want that trade anymore. You should get out. For example, let's say you have a 5-day trading range and overnight the market breaks out of the trading range and gaps open higher. The market starts to move with confidence to the upside and then pulls back to the open. As a short-term trader, I would enter near the open, but I don't want the market to trade through the opening print, because if it does it will probably try to fill the gap. My stop would be a few ticks below the open. So I entered the long trade based on the break out and the high confidence opening. Stop placement for longer term trades is not as simple.

Share this post


Link to post
Share on other sites
I wanted to start a thread on stop placement. I know the most popular answer would be placing it behind the last swing high or low, but I wanted to hear what other ideas are out there. A few I know of are using ATR as a guide and using 2% of total acct size.

 

I know it is totally dependent on what type of trader you are, investor, swing trader, day trader etc. but I would appreciate any new ideas either that your using yourself or have seen or read about.

 

Best of luck guys can't wait to see some responses ;)

 

My initial stop is 3 points, but I move it depending on where the nearest S/R level is and place it up to 3 ticks behind it depending on how strong I feel the trade is.

Share this post


Link to post
Share on other sites
Place it a couple of ticks below a level where you know your trade idea is wrong.

 

I would add, if you are in a trade and the market does something unexpected (spike in volume, lack of volume, etc.:crap:) close up before a small loss becomes a large loss.

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • NFLX Netflix stock, with a solid top of range breakout, from Stocks to Watch at https://stockconsultant.com/?NFLX  
    • NFLX Netflix stock, with a solid top of range breakout, from Stocks to Watch at https://stockconsultant.com/?NFLX  
    • It depends. If you have lots of money that you can buy a house without a loan and if you don't have any parents to sponsor then it is a good idea. Otherwise it might be a bad idea depending where in Canada you are heading to. I earned a good middle income in my home country and I migrated to Vancouver 5 years ago at the age of 35. I had to start right from the bottom, lowest of the low.. Now i am finally earning a middle income in Canada but I still cannot afford to buy a one bedroom apartment. Having left behind friends, family and home, most of the times I think it is not worth it.   In short, do not migrate if you already have a good life in your home country and you are happy. Only migrate to Canada if you really have to leave your home country say there is a war or something really bad. Discrimination still exists here and its really tough for newcomers unless you are super rich. Good luck. David Chong, Quora  
    • This is bigger than the internet. Bigger than mobile. Bigger than social media.   While everyone was distracted by stock market fluctuations and political theater…   Most people have NO IDEA what just happened last week with ChatGPT.   Their new memory feature allows ChatGPT to remember EVERYTHING about you across all your conversations.   Think about that for a minute...   While most tech companies have been collecting mere breadcrumbs about you - your likes, your clicks, your browsing history - OpenAI is now collecting the most valuable dataset in human history: your complete psychological profile.   This is Zuckerberg x 5,000.   The more you use ChatGPT, the more it understands you, becoming a supercharged reflection of yourself that improves at an exponential rate.   Are you a regular ChatGPT user?   Consider whether it’s time to turn off the “you can train on my information” feature. To prevent your data from being used for training while still using the memory feature:   Disable Model Training: Navigate to Settings > Data Controls. Toggle off "Improve the model for everyone". Manage Memory Settings: Go to Settings > Personalization > Memory. Here, you can: Turn off memory entirely. Delete specific memories. Use Temporary Chat for sessions that won't be saved or used for training. Now the investment implications…   Why This is Bigger Than You Think Consider this: the relationship between humans and ChatGPT is evolving beyond a mere tool.   People are now treating these AI assistants as friends, confidants, and even romantic partners.   I'm not making this up - there are already documented cases of people ending real human relationships to pursue “connections” with their AI companions.   A viral Instagram meme shows a person going through life with a glowing, featureless humanoid figure - representing ChatGPT - as their companion.   The post has over 1.1 million likes and comments like "Bro ChatGPT is like my best friend. Ain't even ashamed to say it" with 25,000 likes.   But here's where things get really interesting for investors and entrepreneurs...   Three Things to Watch For starters, hardware is the next big thing for the big players.   The iPhone form factor is dead.   It hasn't meaningfully changed in nearly a decade. The next evolution in hardware will be designed specifically to interface with these AI companions.   OpenAI is already working on hardware with Johnny Ive, the legendary designer behind the iPhone and iPod. But you can’t ignore Elon Musk’s edge here.   So what does all of this mean for you?   The companies that control the personal AI relationships will be worth trillions. OpenAI and Elon Musk will have the coziest moats. We're witnessing the birth of a new internet - one built on agents that can communicate with each other across platforms. Google's new agent-to-agent protocol allows AI agents to work together without sharing internal memories or tools. The hardware companies that create the perfect interface for these AI companions will dominate the next decade of technology. And almost nobody is talking about what this means.   My prediction? Within five years, most people will have a personal AI that knows them better than anyone else. And they will interact with it in ways that seem foreign today.   (And, yes, it will almost certainly have dystopian elements.)   In the meantime, the biggest gains won’t come from household names. And, right now, James is seeing a prime opportunity to invest in the most under-the-radar plays in AI…   For dirt cheap. By Chris C. Source: https://altucherconfidential.com/posts/use-chatgpt-protect-yourself-now
    • KBH KB Home stock, nice day and rally off the 50.82 support area, from Stocks to Watch at https://stockconsultant.com/?KBH      
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.