Where Do You Place Your Stop Order?

[BennyHey 10]

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

[sep34 10]

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..

[darthtrader3.0beta 10]

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.

[Ants88 10]

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?

[EsotericRule 10]

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.

[BennyHey 10]

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;)

[WRR 10]

Here is an interesting report on placing stops.

 

http://www.webtrading.com/specrpt2.htm

 

WRR

[BennyHey 10]

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

[JBWTrader 10]

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

[efx 10]

Stops??? who uses stops??? lol I take the A T R of the day plus broker spread seems to keep me beyond the hunters radar.

[brownsfan019 17]

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.

[Dacamic 10]

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.

[BennyHey 10]

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.

[brownsfan019 17]

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.

[efx 10]

Getting out to early is another one of my demons also..lol

[BennyHey 10]

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

[Jene 10]

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.

[Tams 20]

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.

[ant 10]

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.

[bathrobe 10]

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.

[jajuanm2 10]

Place it a couple of ticks below a level where you know your trade idea is wrong.

[bathrobe 10]

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.

[xburbx 10]

HOD/LOD - Know where you are wrong

[Tams 20]

pay attention to the "Wall".

 

 

Where is it?

... is it moving? (some is pulling orders!)

 

 

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