How should you set stop loss

[euro]

We all know that stop loss is a life saver. Without it, we will get our entire account wipe out. We need to set it so we don't get it wipe out so we can make some money without fearing for the loss of our account. Its good to use in short term as well as long term trades. However, we must set it wide enough to allow the price to bounce back since it fluctuates so much a narrow range will kick you out of the trade very soon so you won't have a chance to make profit. If the trend is going upward very strong, you can use a narrow margin like 10-30 pips and if its weak then use a wider margin to allow bounce back like 20-50 pips. If its a long trade, then use wide margin to allow bounce back. 

[Decub]

This is a question that most newbies ask and of which, a concrete answer to it is quite difficult to find. There is no specific point one would say he would set the SL and it will be the best area. Just as it is best to set it close to the support and resistance, it can also be best from our analysis, that is how we can dictate the best point.

[rexway]

Stop os good so we need to know the proper way which the security instrument need to be set and that is just true stoploss help us a lot aside from this you get more loss and trade in tears if you dont know how to set the sl

[standart]

to point out stop loss level, depend on traders strategy. if traders use scalping technique, probably will set fix stop loss with tight level. but if traders use long position strategy in trading, will set wide stop loss level.

[budado]

First of all you must know your trading strategy. If you going to trade long term or short term. For example I do trade long term and I do have 50 SL and 50 TP. But if I do short term then I guess I will just going to put 30 SL and 25 TP. In this way I can loss less. Since my earnings is less also. I'm really happy that some how I do end up making some profit in here.

[standart]

tight stop loss level apply for short term traders. they are have small profit target and it reasonable if they are choose to set tight stop loss level. while for long term traders which have high pips target, they'll have wide stop loss level. basically, calculation about stop loss level usually based on risk reward ratio.

[Decub]

Long term traders too should have the equity to take care of that wide spread. Stop loss is an important tool as it helps the trader minimize huge losses but If he knows it will be pretty difficult for him to implement, lest, he suffers losses instead of loss.

[standart]

any traders I am sure have different parameter to set stop loss. the level depend on risk reward or previous support or resistance level. the key point is traders not set stop loss too tight which causing it to get hit many times when market spikes and very volatile.

[tray22]

No matter the method which you are using to set your stoploss what you just need to know is that you must set it very tight and that is real thing which i know when you set good tight stoploss its for your own good and lossing too much money will never be possible

[standart]

no exact parameter to point out ideal stop loss level. all based on assumption. there are traders which set stop loss based on risk reward calculation, but others use previous support and resistance level of price to determine stop loss level. all work based on traders strategy and risk tolerance calculation.

[kaito kid]

There is no absolute law. It all depends on your system. My preference is :

 

If you are a swing trader, just put the stop loss below/above the last swing low/high (few - 10 pips).

 

If you are a pure price action trader, just put the stop loss below/above the previous candlestick pattern

 

If you are a long-term trend trader, try to put the stop loss below the previous very strong support/resistance level (at least one higher timeframe).

 

Give the trade room to breathe, at least 1-2 ATR in a given timeframe.

 

Hitting stop losses is part of the game. Just backtest backtest as much as you can, so you can understand where to properly place SL and the related average risk:reward and win:loss. Larger SL will increase the latter, but decrease the former. You need to find the proper balance with your system.

[Decub]

Setting stop loss all depends on your trading strategy. Swing traders set in quite a different way from the scalpers and in other to save yourself some stress, you can avoid the use of the SL if you rarely understand how to set it. It's not that which is a must to use and instead of confusing yourself the more, it's better avoided.

[standart]

strategy significant to affect on traders decision in set stop loss. short term and long term traders has different range in set stop loss level. short term traders use tight stop loss while long term traders set wide stop loss level. however, though parameter very clear, it require analysis still to define the exact level.

[kenawly]

to point out stop loss level, depend on traders strategy. if traders use scalping technique, probably will set fix stop loss with tight level. but if traders use long position strategy in trading, will set wide stop loss level.

Edited March 5, 2014 by kenawly

[gaban]

yes, I always use SL when trading, the trading using SL then we will be able to minimize the risk well. therefore we need to always use the SL so that when the price reversed or our prediction misses so the risk happened can be minimized with good

[myregister]

Important, because with stop loss, a trader can easily control their trading, More over stop loss also does not involve any kind of emotions and with using stop loss we can do loss calculations in any trading before. That is definitely becoming more automated trading.

[pepy]

So the key is about automated trading isn't it? Well if that is the case then just using real robot for trading, simple and does not very hard to use. Anyway, i prefer SL is not about automated even that is still counts, it is more like myself to prepare more about what will happen in future.

[myregister]

But this one is different, we are the one who open a position not the robot even in robot we can use SL and TP too but like i said before it is all about who open a position,i see myself have more credibility when entering the market rather than thousand robots outside.

[aliforex]

We need to set SL according with trading plan. And then try to discipline with Stop Loss which we already put when trading. We also need to understand the market movement if we want to earn more profit.

[pepy]

But this one is different, we are the one who open a position not the robot even in robot we can use SL and TP too but like i said before it is all about who open a position,i see myself have more credibility when entering the market rather than thousand robots outside.

Robot can open it for sure i mean with a programmed command they can do mostly automatically based on the parameter that we put in the code. I even have an idea to make a robot that works based on the news, that will execute the news from more than one sources and if the condition favouring will trade based on the result. SL will be set automatically.

[gaban]

trade using a stop loss is very important because by using stop loss will allow us to minimize the risk of forex properly. Risks that may have minimal it will allow us to get maximum results. therefore, I always use a stop loss when trading

[radex78]

Maybe different trader have diferent view about stop loss, some trader might put stop loss based on support and resistance area, and some another using pivot point calculator to determine support resistance, but might also there are trader using ATR indicator to calculated stop loss

[Dolgart]

I heard that Stop Loss must bee ton more than 3/4 of Take profit. Is it right?

[radex78]

I heard that Stop Loss must bee ton more than 3/4 of Take profit. Is it right?

There are tarde which they use risk reward ratio between 1:1 which if they put stop loss twenty pips hence they also have target twenty pips also, and there are trader which use risk reward ratio 1:2 which it's mean if trader put stop loss twenty pips hence they will set target forty pips and so on

[myregister]

@dolgart: Well that is fine too, but you may meet your SL faster rather than me where i don't apply that amount , i do recommend 1/2 of your SL based on your TP. So with 60 pips TP you put then you should put 30 pips for SL or if that is 80 pips for TP then 40 pips for SL.