Are you using the correct STOP LOSS? ( What is the best STOP LOSS to use? )
Published: 2017-08-18
Status:
Available
|
Analyzed
Published: 2017-08-18
Status:
Available
|
Analyzed
Predictions from this Video
Incorrect: 0
Prediction
Topic
Status
A forex trade on the Pound/Swiss experienced a stop-out just 3 pips shy of its intended exit, before moving 200+ pips in the predicted direction. This highlights the impact of stop-loss placement.
"we had a trade this week that ended up being stopped out by less than 3 pips before turning around and going in the correct direction that we expected it to over 200 pips and that's the trade you see on your screen here on the pounce"
Pending
The speaker's Pound/Swiss trade was stopped out for a 60-pip loss due to a tight stop-loss, despite the market subsequently moving over 200 pips in the favorable direction.
"unfortunately because of stop-loss placed with the topic of today's video this trade was stopped out by three pips for a loss of around 60 pips before it turned around and went in the correct direction over 200 pips"
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Due to suboptimal stop-loss placement, a profit of over 130 pips was missed on the Pound/Swiss trade.
"now for us our second targets probably would have been taken off somewhere around this level which means that because of stop loss placement we did not capture over a hundred and thirty pips of profit"
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A subscriber using a different stop-loss strategy on the same Pound/Swiss trade captured 101 pips of profit, while the speaker lost 64 pips.
"so using the stop loss that this trader has ended up making him 101 pips where I lost 64 pips"
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An email from a subscriber details profiting 101 pips on a Pound/Swiss trade using an advanced Cypher pattern, differing from the speaker's outcome.
"so I'm going to show you an email from one of the subscribers to our email list now all right guys so here we are on that email and this is what the email actually looked like this was a potential trade setup email that sent out to all people subscribed to our email list over at the trading channel net and as you can see it was a pounce with one hour short we're talking about this advanced pattern here this advanced hyper pattern and I had my stop entry and target listed well if I scroll down you'll see an email from this trader if you look me down here so thank you seen last night I followed your pounce with signal strategy and I profited 101 pips"
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A basic method for setting stop-losses in forex trading involves pre-determining a fixed number of pips.
"there's the most simple version of a stop loss which is going to be a certain amount of pips"
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One approach to stop-loss placement is to set it above a significant swing level in the price chart.
"you can put a stop loss above a swing level"
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A specific strategy for stop-loss placement involves setting it a fixed number of pips (e.g., 10 or 25) above the entry point.
"you can choose to just put your stop loss 10 pips above that entry 25th above that entry"
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The Average True Range (ATR) indicator is presented as a method for calculating stop-loss placement.
"you can use a variety of different methods like ATR and stuff like that"
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A common stop-loss placement technique is to set it above the entry price.
"you can place your stop-loss above your entry"
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Another method for setting a stop-loss is to place it above the high of the candle that signaled the entry into the market.
"the second main way is going to be above the entry candle"
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A third primary location for placing a stop-loss is above the previous swing high on the price chart.
"the third main way final place that you can put a stop loss above is going to be your previous swing high"
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The distance for a stop-loss, when not using ATR, can be determined by a fixed number of pips, such as 10 to 20.
"the certain number of pips can be calculated by just saying 10 to 20 pips"
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The Average True Range (ATR) is suggested as a method for calculating the appropriate distance for a stop-loss.
"it can be calculated by ATR"
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Fibonacci extensions are mentioned as another tool for calculating stop-loss levels.
"it can even be calculated by the notch extensions"
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A fixed pip amount is one of three primary methods for determining the distance of a stop-loss from a reference point.
"you can use one of three main ways the first way is going to be a certain amount of tips"
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The Average True Range (ATR) indicator is presented as the second main method for setting stop-loss distances.
"the second way we can do this is by using the ATR indicator"
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An example demonstrates using an ATR value of 19 pips to set a stop-loss above a previous swing high.
"using 180 our stop loss would be putting a 19 pityful of this previous swing high"
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The ATR indicator can be applied to calculate stop-loss distances relative to the entry point, the entry candle's high, or the previous swing high.
"you can use the ATR above any of those three"
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When using a fixed pip stop-loss, traders can experiment with increasing the pip value (e.g., from 10-20 to 30) to see if it improves performance.
"you can increase the amount of your stop-loss if you're just using a numbers like instead of ten to twenty fifths go 30 instead"
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Conversely, traders can reduce the fixed pip stop-loss (e.g., from 10 to 5) to evaluate its impact on risk-reward ratios.
"you can also decrease it instead of ten use five"
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A strategy for using the ATR indicator for stop-loss placement involves multiplying the ATR value by a factor, such as two.
"you can multiply that HDR indicator by two and use that as a stop-loss"
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For advanced patterns or strategies with multiple price swings, the third method of stop-loss placement (above entry, entry candle, or swing high) is most applicable.
"the third and final way to set your stop-loss above your entry entry candle or swing high is most commonly used for advanced patterns or strategies that has multiple swings"
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When analyzing an advanced pattern like a Cypher pattern, a Fibonacci extension can be drawn from the pattern's lowest point (C point) to its highest point (X point) to aid in stop-loss calculation.
"for this advanced pattern we could go from the lowest point of our advanced pattern here which is the C point of the cypher pattern all the way up to the highest point of this pattern which is the X point and we could drag down a Fibonacci extension"
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The Fibonacci extension levels can be customized by the trader, allowing them to test different values to find what benefits their specific trading strategy most.
"you can actually take and play around with that number by double clicking on the extension tool and changing it to whatever you would like and see which number gives you the most benefit in a specific strategy you're using"
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