by christian » Sun Nov 15, 2009 7:22 pm
Where are my Stop Loss?
How wide a stop should be?
It depends on:
* a time frame,
* volatility of the market price,
* the point where you entered the market,
* a lot size you trade with
* etc.
In practice...
...may be you could use the widest point you could still afford comfortably and till which your trading position can remain open.
This is sure not a agreeable thing to accept but it allows traders to pick wider stops (e.g. 80 pips on 1 h TF), thus giving the market a room to evolute the price actions and choose a direction in which to trade without triggering the stop ahead of time.
Smaller size stops could be made and have to be selected wisely. Taking a rule of set number of pips, like 20, 30 or 40 etc. for stops isn't the best choice, however the simplest.
To do something else, focus on support and resistance levels in the market and make sure to place your stop according to those important levels like:
* price swings,
* trend lines,
* Fibonacci levels and
* Pivot Points.
Kindest regards