Where to set stop loss and Target Price

Some argue that one shouldn't ever use a stop loss or target price.

Some set it at say 150 points every time both ways

Some use Bollinger Bands etc. to set them just above ( TP ) or just below ( SL ).

What do you do ?

 

I use soft stops and no target prices on my stocks. To sell I use technical analysis to exit. I am often out early in trends, but can re-buy or move on. I have BBs and MAs on my charts, but only as guidelines. While indicators used to work better a decade ago, I find the choppiness of the markets now makes them less reliable for trade management. My concerns are about position risk and then portfolio risk in that order.

For every trading method, a different policy could be used. A trend follower should use stops and no targets. A counter-trend should use stops and targets. A breakout person may use both or just stops. Just my opinion. I am sure that successful traders use many different combinations.

 

Only through hard stops one can control risk. No risk control leads to blow up down the road.

 

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Mr Hum;
Percent move is better measure than points ;
for example QQQ has gone from below $20 to above$120

Trailing stops may help more than targets[speaking generally];
especially since a good trend goes better+ goes more time than i figure.

Wisdom is profitable to direct. More than one right answer on this.

 

Would you agree in tighter, flat markets, a target is superior? Where in more trendier, active markets, trailing stops are better?

 

That would probably depend on your trading style.

 

Personally I like 2.5 deviation BBs plus a little

 

Set your STOPLOSS where nobody can find it

 

Each trade should have a thesis for entering (a signal..., a reason) - once invalidated - exit..., as remaining any longer is needlessly pissing money away

Place the stop loss where the invalidation occurs - it not necessary to over think / over complicate this




RN

 

Here is a framework that will work for most products, assuming you have the right signals.

Try a stop loss that's volatility based. Statistical or ATR.

If the potential R:R is bad. Don't do the trade.

If the potential loss is too great, reset your position size smaller.

If you will be potentially stopped out, go up a time frame, trade for a bigger move and size smaller.

If the commission cost that eat x% too much of your potential gain, go up a time frame, trade for a bigger move and size smaller.