Discussion in 'Forex Trading' started by lemeeeplay, Oct 31, 2008.
How wide are your day trade stops during current market volatility?
Did Cable put you up to this?
lol, no I just want to know what kind of stops other people are using.
My day trade R:R on EUR.USD used to be 10/20. I dropped size and increased R:R to 20/40. Now I am thinking about going to 40/80 and cutting size in half again. If that doesn't work, I'll stop day trading FX for a while until volatility comes back to earth.
I usually have stops at around 1/3rd to 1/5th of my target range - but then I trail stops actively for my scalps - e.g if a trade is +30 I secure +10 for my stop, but when trading fast scalps this might be tighter.
How long is a piece of string?
It depends on the pair, and technicals, and fundamentals, and where price is...and...and...and...
Right now, stops are about 120-250 pips depending on pair.
What is the sound of one hand clapping?
Another thing that I have been doing for some fast moving scalps is that I add to the trade (double up) for a small portion or better if it goes well, so that I secure the risk of the original trade. I.e if I start a trade with -20pips stop loss and a +100pips target, but the trade progresses very slowly with small choppy movements, then I will add to the trade and secure one or more really small scalps - so that I get a +20pips profit from those, or better. Then I can relax totally with the original trade. Of course, 20 pips is 20 pips and it's stupid to let something like that go if you "know it will be stopped". But sometimes the markets move really fast from protracted periods (stalking/creeping, then breaking out), and you just want to relax a little more and decide using a longer timeframe or get more background, time to see the confirmation or cancellation of your original setup.
That suits my style of scalping pretty well. I sometimes do this for different pairs as well. E.g I have a slow moving EURUSD trade with a longer target and "little risk" for a drawdown, but then I see a nice opportunity for small profits on the EURJPY meanwhile - so I secure those as well, being "doubly exposed" on Euro. It just helps with being relaxed about a trade and getting some more time to divulge the trade setup.
Of course, if you lose on the supposedly "securing risk profits", then that is a sign that you might be having a bad day, and that your take on the original trade is not that good.
For the majors on medium volatility, a stop shouldn't be more than 10 pips, including spread.
That is very possible.
On low volatility pairs, you can even get away with a 5-6 pip stop, incld spread.
on EURUSD and EURJPY I have at least a -20pip stop loss, even for short timeframe trades. I quickly adjust this when I get the trade set though, since I don't want the potential setup to fade away and some other movement coming along.
If the setup goes into a delayed move, I might kill a trade much quicker than a stop though - and preferably at a small profit. I frequently bail out of trades when no longer trusting the setup conditions, and I prefer this to letting a stop being hit.
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