2% or 8% loss

Discussion in 'Trading' started by laeott, May 24, 2007.

  1. laeott


    Right now I'm paper trading and keep getting stomped out with a 2% stop orders. Some people say 2% to 8% stop orders. What does anyone think?
  2. Do you have a method to 2% - 8% or is that just a figure you are using?

    Place your stops based on average volitility, technical s/r areas, mas, etc.

    Your stop percentage must also fit in with your overall trading plan: r:w, timeline, probabilities of your system.

    Basically, as far as a stop goes, it's pretty variable.
  3. gov


    Just a thought. Maybe you should work on refining the entry so that the 2% covers it...
  4. laeott


    I'm using 2% everytime. How do i work on an entry point?
  5. gov


    This is a lesson that took me some time to master. This fact is simple; the market does mot care what your entry price is. Therefore, your stop must be set more intelligently than simply adding or subtracting two percent from your entry price.

    So, you must set your stop in a spot that proves your original idea incorrect, having absolutely no connection to your entry price. The entry is in fact made after the proper stop is determined, and therefore the position is sized and/or the entry is adjusted to maintain your risk allowance.