Flag Pattern Stops

Where do you set your stops losses and targets for your flag patterns?

Recently listened to an interview that a trader claims he has tight stops. Was wondering what he meant by that, how tight can it be? Sometimes he'd get stopped out but would re-enter if things changed.

Any opinions?

 

Is it too hard to recognize the hard stop entering the pennant?

 

The trader was correct. Since the flag is the consolidation pattern, with a whipsaw movement inside it , the only way to play it is by defining the borders of the flag and then to enter and exit off them with tight stops. Any attempt to define and play trends within the flag and one will be chopped to pieces....

 

In addition to the above, differences in volume and time-of-day will support comparing and contrasting which ones signal continuation and which signal change.

 

Before worrying where to place your stops, can you really identify a flag correctly? Most people can't You might want to post 5 or more examples of what you consider to be flags. If you get those right, I'll show you how to place stops.

 

there are two important questions trader must answer:

first, if one is already in the open position should he play the flag?

second, how to determine the tightness of the stops (this really applies to any stops)?

 

? You're implying that every single trader places their hard stops in the same places. Every trader is different and have different strategies.

Yes I can.
Let me be more specific. Typically, you put a stop when the pattern breaks/at the bottom of the pattern or whatever... but he specifically said he uses a "tight stop". So I am wondering if he implied that he stops out even before the pattern breaks, like when he sees it moving towards the break, but it hasn't yet, but he backs out anyway. I was wondering if it is common to stop out before the pattern breaks.

 

If the price movement warrants doing so, by all means.

 

I'll ask my question in simpler words... According to you guys, what would you consider a "tight stop" on a flag pattern to be, in relation to a "regular stop"?

 

No matter what the pattern, the terms will be different from one trader to the next. The 'tight stop' you're questioning may vary from 1 tick below support for some to 2% below support for others. There are too many ifs, ands and buts to give a precise definition as to how tight is tight. Experience will tell you where to place the stop on a case by case basis.