Hello. Would anyone mind sharing how they avoid being stopped out in futures trading? It's hard finding a balance on safety for a stop loss that isn't close enough to be stopped out while also not setting your stop loss so far out that you're shooting yourself in the foot. I got eaten alive before in futures when I was trading and lost about $15,000 about a year and a half ago. Not giving up, and trying to plug the leaks that I know were pivotal in my losses before. This was one of my leaks that hurt me quite a bit. Thank you for any feedback in advance.
You have to wait for excursion against the larger timeframe trend before placing entry with a stop loss greater than the average ATR in the direction of your larger trend filter. That excursion can end up to be the turning point in the larger timeframe trend but that's the risk you take. Plus excursions are more valid within(middle) the larger timeframe ATR. But at the periphery of larger timeframe ATR's the excursions have a higher probability of being turning points.
Why don't you test different stop levels, and see what you find? You might be surprised at the results...
Not I, anyway: I don' t want to avoid being stopped out on a proportion of my trades. I use stop-losses every time I enter a trade because they'll stop me out if the price moves beyond whatever I've determined (initially at the time of opening the trade) will indicate that it isn't a trade I want to be in, because its risk no longer matches my predetermined risk-management parameters.
CORRECTAMUNDO!! Not only is this statement fundamental, it must also be "brilliant"(?)... as few seem to get it.
(1) Use of stops is fundamentally crucial to your success (and even survival) as a trader, and (2) where to place them is an art.
Stops are what keep us in business. The question should be, where should I place my stops and that is subject to the methodology and subsequent testing. There may be no "best" place to put them but there are places to put them which leave you profitable after netted against gains given a viable methodology. Also realize that market conditions change which may require adjustments in trade management.
As Scataphagos said, stops are crucial, and placement is an art. Whether hard stop or mental stop may be a debatable topic, the crucial and art characteristics still apply. Given that, I use a catastrophic standard (not limit) hard stop on every trade. It's purely money based and meant to protect me against, well catastrophe... power/internet outage, black swan news, hardware failure, spilt coffee on the keyboard, dropping dead at my desk, etc. A catastrophic event. MY CATASTROPHIC STOPS ARE RARELY, LESS THAN INFREQUENTLY, HIT. That brings up another debatable topic... Because you have a stop in place does that mean the stop is the only way to exit a wayward trade? I say ABSOLUTELY NOT!! Same applies to hard targets imo. During the early (the first 1, 2 or 3 price bars) management of a trade I use a mental stop based on volume, structure, and price action. Trade management stops are ALWAYS significantly less risk than the catastrophic stop. If things are not going as expected, first if I see a possibility, I attempt to exit at BE+1, a true wash trade NET. Otherwise, I exit without reservation. If going as expected I again use volume, structure and price action for placement of a standard (not limit) hard stop. This is to prevent an acceptable profit from turning into BE or worse, a loser. The trick here is YOU must determine what acceptable profit means based on your trade expectations and style of trade. I do not use RR ratio for (my) intraday trading.