" BEST " method to use for Stop Placement ?

I have been reading through Articles and Forums this morning , and have been trying to narrow down, what the most " Meaningful / Accurate " form of Basing your Stop placement.....is ?

There are arguments for each of the following methods to use, for where and how you should base and place your Stops :

1. ATR ( a Volatility based metric )
2. at the 2 SD level ( Bollinger Bands for instance )
3. Just above the Last Swing High/ below the last Swing Low

I tend to lean towards placing my Stops , Just below / above STRUCTURAL Lows and Highs , and then based on the distance of my Entry to where that Stop placement will be ....... I use the Distance of my Stop , to determine the number of Contracts I will trade , as the goal is to have a Fixed Risk ( say 3% of my account size ) at Risk , on any given Single trade. So that if the Stop is hit ...... I only will lose a predictable fraction of my Account/capital

Wanted to get other Traders thoughts and ideas, as to how they determine where to place their own stops

Looking forward to the discussion

 

Placement of stops is first of all dependent on your strategy. Which you haven't addressed.

 

We wrote about this here: http://www.optimusfutures.com/trade...nge-stops-profit-targets-signal-confirmation/

 

I vote for #3. Maybe even simplify it to the n-day high/low.

 

Place the stop at the value which maximizes your profitability while adhering to your risk tolerance. -- Another way of stating, I agree with lindq above.

 

My stop-losses go where I'd no longer want to be in the trade if the price reaches them, because my entry would no longer be valid.

This current thread might interest you, too (it started with a specific question, 5 pages earlier, but developed into a more general discussion about exactly what you're asking).

 

I use back testing to show me what losses are then use 90% of the MAE, I want to keep 90% of winning trades as they often show risk that is acceptable to me. And I test for time I can live with to get to so much profit in so much time as usually stagnation ends up becoming a loss.

 

Placing stops is an art.

That said, I go along with "#3-ish", or the break of any logical level you expect/are playing to "hold if tested".

 

Thank you for everyone's replies , Very Informative and puts perspective on the topic at hand

 

If you make me choose I also go with #3. That reduce risk to a minimum for any given trade without stopping you out of good ones if the market is choppy.