cutting losses % ?? (position trades)

Discussion in 'Strategy Development' started by TKOtrader, Feb 24, 2003.

  1. i am wondering where most people cut their losses, based on percentage wise only for position trades.
    ive heard some people say 2% and i know some canslimmers say 7 to 8 % , but 7 to 8 seems like too much for me.

    thanks in advance !
  2. I use a factor of the stock's average daily range, like 25%. I also look for breaks below (or above for shorts) the last couple of bars.
  3. up to a certain point it doesn't really matter how much you risk on the trade... what matters is what percentage of your equity do you risk on a trade... I probably wouldn't recommend much more than 2-3% for the average trader.

    If you using Volitility, 2-3x ATR usually works pretty good.

    Best thing to do is to pyramid up to your position in 3 or 4 steps therefore you are not risking as much when you are wrong. Look at the back of the US one dollar bill for more instructions on this.
  4. I would recommend that you risk no more than 1% of your account equity for your initial stop. The place where you put your stop should have some relevance to overall direction of your trade. In other words, if you get long ... your stop should be under support areas.
  5. 2% is far too low for position trades. 7-8% while high may not be enough.

    By position, you bet on the intermediate term trend.

    You have to choose S/R points or other indicators which if exceeded, negate your premise. Choose a setup which, if it fails by your standards, does so within your comfort zone.