Here is my latest article on placing a stop. Hope it helps.

Discussion in 'Psychology' started by Andrea Wylan, Sep 8, 2020.

  1. Andrea Wylan

    Andrea Wylan Sponsor

    The Importance of How You Place Your Stop

    The way that you place your stop can have a significant outcome on the results of your trade. I just coached a client through this, and it had such a positive impact on him I decided to share it.

    How do you place the stop? Do you place the stop at the start of the trade? Or, do you watch the trade, wait for price to hit your stop location, and then manually and quickly place the stop?

    I know there are reasons traders wait to place to stop. But, is this really supporting you?

    Waiting to place your stop can raise your anxiety and make the trade less successful. The way I see it, there's a number of reasons why. . .
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    One-you need to be physically sitting at the computer when price reaches the proposed stop level so you can place the stop.

    Two-traders tend to get anxious having to decide quickly when and where to place the stop in the moment, especially in high volatility. Who needs more anxiety!

    Three-you are making a decision on the fly. It becomes harder to stick with your initial trade plan (and stop target).

    Some of you will start bargaining with yourself, then move the stop, double down, etc. and potentially watch the trade go downhill. Now your plan is out the window and you are in precarious territory.

    I am suggesting, therefore, that you place your stop initially when you place the trade. Then, you have the ability to leave the office . . . get some coffee . . . or even go to the gym! Let the trade run on its own.

    Your anxiety level will likely go down. And, this will push you to clarify the trade's exit before you take it. It's critical to plan out your trade, establish your targets, and then trust it to play out.

    For my client, the impact was significant. His anxiety went way down. His ability to take the intended stop became easier and more solid. He was trusting the plan and himself and he felt a new level of success not having to struggle with his stop.

    If you're having any of the above challenges placing your stop, give this a try.
    I invite you to contact me for a free 20 minute consultation if you haven't achieved your desired results.
     
    Last edited: Sep 8, 2020
    ET_Resources, Onra, comagnum and 4 others like this.
  2. Disagree.

    Stops are an art, not a science... IOW, an informed "guess".

    My guess on a play is "around support/resistance, with stop the other side".
     
    GrowleyMonster likes this.
  3. Andrea Wylan

    Andrea Wylan Sponsor

    I am sure this isn't for everyone. I just know it helped my client so much I thought it might help others as well.:D
     
    taowave and murray t turtle like this.
  4. Anything that is "correct" is for everyone.

    There isn't any "challenge to placing the correct stop". There is not such thing as the "correct stop".... only the "logical technical stop and hope it is correct". (There is also the "momo stop play and hope you get away with it"... which is completely legit from a gambler's play perspective.)
     
  5. Andrea Wylan

    Andrea Wylan Sponsor

    I am addressing the psychology of placing the stop really more than what is technically accurate.
     
  6. The "psychology of the stop" is arbitrary... that is "how comfortable am I risking "x" on this play"... which in itself is arbitrary... IOW, a guess. Some guesses are likely more correct than others, beyond just "good guesses".
     
    Dazz likes this.
  7. Beginners should use wide stops but reduce size to compensate for risk and just get over
    your stop getting hit.
     
    yc47ib and monee like this.
  8. Tavurth

    Tavurth

    Agreed 100%, my best stop is quite often far less than I'm willing to risk on the trade, and sometimes far more. If you know the best stop before opening the trade, then size position to match.

    If the position size is fixed, then suck it up and pick the best stop based on your system anyway. Allowing "psychology of trading" to overcome your best stop, shows you most likely don't have a profitable system in the first place.
     
  9. Totally disagree.
    Beginners should not even be playing the markets at all until they understand "price TA' and can reasonably trade with TIGHT stops. "Preservation of capital" is always #1.... and you can't do that without risk control and stop discipline.

    "Hope" ain't a strategy!
     
    Last edited: Sep 8, 2020
    birdman likes this.
  10. for example, wide stop on spy this morning.

    spy.JPG
     
    #10     Sep 8, 2020