Hi, I would welcome opinions as to how many (few) points would you consider "too tight a stop" on NQ. Or how many points would "market noise" account for. Thanks, Tbill
I have been agonizing on this one.....I have yet to put a stop in on NQ and not have it triggered and then watch it reverse big time in the favor of my origional trade.....whether its 2, 3, 7, whatever number of points......now I have a mental stop and pull the trigger based on how it trades after it is hit.....I know this isn't "how you are supposed to do it" but it has been working out better for me. curious how others handle this myself!
Whether you're stopped out or not depends more on the entry than on any other single factor. Unfortunately, there have been multiple threads lately which argue that the entry is not all that important if the exits are good. I see no point in prompting yet another thread that goes over the same ground. However, a proper entry makes a stop largely irrelevant, though it remains necessary due to the nature of probability.
I'm with db on this...if your entry is good; your stop will not get hit. If it does get hit, then your entry wasn't good to begin with. With that being said, it's hard to nail the exact entry point and I usually use a 4-5 pt protective stop on NQ. Depending on the setup, I might even drop it down to 2-3 pts. 5 pts is decent though. -Fast
Taking on board the comments about entry being more important ( I agree ), may I ask what people's interpretation is then, of a reasonable stop on YM futs? ( sorry to divert the thread a little ). I have recently started trading futures and I'm curious as to what others use. So far I use a 10 point stop on YM, but ES I'm not so sure about yet.
I use a 2pt stop on the NQ because of the setups I use. With other strategies (which no longer work with these constricted ranges), I've used as much as 5, but hated it. Conventional wisdom is that this stop ought to translate to the multiple of the ES or YM, but I haven't found this to be the case. You just have to apply your strategy to the YM, then see what the maximum adverse movement is after every entry. That will give you your stop. If the stop is too wide for your comfort level, then you're going to have to improve your entries or find another vehicle.
I also vary my stop size based on the setup. Keep in mind I trade mostly ES and DAX, but in general if I am chasing a trend, I find I need to use a wider stop than if I'm trying to catch a reversal at a support or resistance point. For ES, I'll use a 1.5 to 2 pt stop for following a trend. When I shoot for a reversal at a key S/R level I'll drop this down to 1 pt or even 0.75. This, of course, is in the current market, which is does not have very wide ranges. When the ranges were bigger, I aimed for bigger targets but used stops that were twice as wide. One thing to consider when you use tight stops, regardless of what market you trade, is that you need to learn the art of re-entry if the trade first stops you out and then the setup turns out to still be valid. plj