Resolved Question
Stop loss question, where should i put my Stops, can i use the high/low to make a volitility scale
hi there, on the daily chart, if i take the high - low, divide by 2. then take that result of the last 10 days to give me an average. this number, should i have my stop around this number. if more or less by how much. i would like to leave my trades in for at least 24 hours.
over 2 years ago
Best Answer - Chosen by Voters
I would suggest putting your stop loss above / below key resistance / support areas. Another way is to place your stop above the daily high or below the daily low. You can also try getting the ATR (average true range) and use that as your stop loss. Check if your charting software calculates it for you. In the end, it all depends on your strategy. For swing trading, you should have wider stop losses to allow your trade some breathing room. For day/ scalp trading, you might want to stick to tighter stop losses. Just remember that the stop loss is there to signal to you that your trade idea has been invalidated and its time to get out :)
over 2 years ago
Answers (3)
Setting stop losses for the purpose of satisfying your "pip loss tolerance" doesn't make sense for me. While what Average True Range does help, it isn't an "end all" indicator because, in my opinion, you have to take major support and resistance levels into consideration. My way of setting stop losses is similar to yours but I also make sure that my stop will go beyond major S/R levels. Like if I have a long trad and the average is 100 pips but the next major support is 110 pips away, I won't be taking the trade. Now, on the other hand, if the next major support is just 90 pips away then I'll go take the trade.
over 2 years ago
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If you're shorting, you should place your stop above a key resistance level. This resistance level maybe a previous support that got broken or significant level like a psychological whole mark. You can also place your stop above the Fibonacci retracement levels. Conversely, you should do the opposite and place your stop below a key level when your going long.
over 2 years ago
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Stops are apart of trading that most people get incorrect. It is not as simple as taking 2 numbers, dividing them then comparing that number to pie :) IMO you need to look at stop placement on the chart where it gives your trade the highest chance of winning. This placement could be above/below a SR level, swing point, trend line or candle pattern etc.
over 2 years ago
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