If you are going to trade futures with exposure equal to about .80 of account funding, there is really no point to trading. Just buy an index fund.
In your view, small traders shouldn't set a stop because they will be stopped out. Then should the big trader set a stop when they trade? In your view.
the capital requirement to trade in the futures market a minimum $500,000. To day trade es, 1 contract equal $100,000. $500, 000 account is still consider small trader. $5 million is recommended to trade in the futures market. There is no such thing to trade in the futures market as little as $5000. High volatility and High Leverage do not equal $5000 to start trading in the futures market. Small Traders will lose and continue to lose being duped by using price action and TA methods. Higher Education is required with strong advanced Math or math degree to trade in the futures market. There is no room for small traders to trade in the futures market. They will just lose being led price action and TA method will make them a successful trader. More than 90% of small traders lose! They just lose! Higher Education is the key to become a successful trader! Higher Education! http://www.elitetrader.com/vb/showthread.php?s=&threadid=236628
Its a true fact that having knowledge is very much important to excel in any field and the same applies in the forex trading business as well. So, one should be aware of placing the stops at the right level so that its not easily hit by the market fluctuation just lose money.
With $5K or $5M on the account there is no difference: day trading only makes sense on leverage, which means smaller move constitutes higher relative risk and higher reward. It's amazing how "higher math education" people don't get such a simple idea. Which consequently means STOPS aka cut your losses. Not necessarily hard stops, but mental at least. Day trading ES on $5M account without a leverage and extracting say one handle a day on average equals to just about 1% ROC per month. Who needs to sit in front of screens all day for that? P. S. One ES contract is $85K, not $100K. Surprising looseness in numbers for "higher math education" fan too. P. P. S. I use about $2000-2500 to trade one NQ contract. With tight stops. Do they regularly get hit? Absolutely. Is it something bad? Absolutely not, stops are meant to be hit to protect my capical and I say thank you stops for protecting me.
One should not use the stop loss at the place which is easily hit. Thus, take up the trade at strong support or resistance levels.
What's the difference when stops are being hunted? Anyone who has traded live can easily tell you this is a fact and has happened once or twice to them. Just don't trade on light volume and during a time of day with low market participants.
Stops are insurance. Like all insurance, they cost money. It is very possible, easy actually, to doom a particular trading plan by "over-insuring" (misusing stops). What is insidious about that is the untrained eye will not even notice. The kind of stops depend on the kind of trading. It needs to be done correctly. Most people don't even know the proper way to figure it out. Some people figure it out by experience.
Only time I don't use a stop is when trading news or with a predetermined setup with a point or so target or minimally time-based scalp. Other than that, I ALWAYS have a catastrophic stop in place, based on money. Sometimes, I'll adjust the stop after I've entered to match the structure of the market, but only in my favor. If I get a quick larger then expected move I'll replace the catastrophic stop with a protect profit trail. Just as important, I only use brokerages/FCMs that maintain orders server-side... orders are not maintained on my client-side rig. Trade On!