All I need is to know 1) what price the stock is currently trading 2) Either a support or resistance zone. From these two things I create my stop loss. Resistance or support is my target price depending on the side of my trade. resistance - current price / 3 = the stop price (in an up move) example: stock price: 45.00 Resistance: 58.00 (PT) PT: 13.00 stop: 4.33 Normally, this is not too much of a problem, and should be reasonably obtained with a longer holding period. on stocks that have bigger swings like RIMM, GS, GOOG, ICE... ect.. such a "small" stop could be easily taken out. Although I dont trade such powerful names. Come to think of it... a stop method like mine would probably work best on big swingers, because small movers would take FOREVER to reach a 13pt target... It looks like my stop method is best for intraday trading, however this is not my style. let me give a real life example of what I would do on a stock like LEH. It closed at 73.03 yesterday, and it looks like resistance is at 77.00, which is a difference of 3.97 (my pt), and my stop would be 1.32 http://stockcharts.com/h-sc/ui?s=LEH&p=D&yr=0&mn=4&dy=0&id=p21011395105 What do you guys think...would your stops be about 1.32 as well? cm
http://img252.imageshack.us/my.php?image=longtermpc1.jpg Long term charts are better indicators. I would put my stop 1 or 3 % under the resistance. Picking a bottom is a hard on these types of stocks.