In regards to trade entries on breakout trades, when on the long side of a trade do you place your stop at the most recent swing high or the most recent swing low? Obviously it is a much tighter stop at the most recent previous swing high. Or do you give the trade a wider stop to prevent premature stops and place it at the previous swing low?
I will place it below the previous swing high and give it a few more ticks so I am not prematurely stopped out.
Isn't that a pretty tight stop? If trading a breakout of the most recent high, that can't give too much room right? On the long side of a trade, wouldn't placing it a couple ticks below the most previous swing low give some more space to prevent premature stops?
It is tight but with a breakout it either becomes a winner quickly or fails just as quickly. That being the case I want out as soon as it fails to do as I expected. Having said that nothing would prevent me from re entering the trade if technicals permit. Typically my breakout trading would like this. Break and does not touch the stop and I stay in until I reach a technical exit. Or Break, price retests precious resitance that has now become support. Likely I will be stopped out for a small loss but I would re enter long upon completion of what would now be a double bottom pattern or an inverted head and shoulders. These for some reason seem to result in the most profitable trades. Or Failed breakout with a reversion to the mean. I often do not trade these just because I dont feel the potential profit is there. Or Break to the other side after a failure. These trades will be choppy so Intrade these on a retracement. Sorry about a long answer to your question.