Using Stops

You should have a method that determines your stops dynamically. Things change as trades progresses.

Just like determining a "setup" for an entry, a Stop and Exit should also have "setups".

 

100% you should enter a trade knowing where you plan to get out good or bad.

 

I never use stops. What gets me is when people refer to stops as some sort of 'hedge' Really?

Interesting side-note. Paul Tudor Jones never set physical stops, always kept them in his head so his opponents couldn't burry him if they found out.

Niederhoffer used to have an insider (girlfriend I think?) who worked at a big bank and would tell him where his opponents had their stops set.

Not that the little guy has to worry about the bigger fish manipulating the market against him, but it's amazing how many millennial videos I see on youtube with self-declared gurus whining about how they only lost a trade because some crooked hedge funds were running their stops. LMAO!!

Oh really?!

 

How do you control risk?
What do you do when a trade moves against you?

 

The only time I start to 'panic' is because I have over-leveraged on trades.

There are many books written that warn against doing this...

 

I’m a newbie, so take this from where it comes, but isn’t managing risk and panicking, 2 different things?

 

That doesn't really answer deaddog's question. At what percentage do you stop-out at on a trade that's moved hard against you? Down 5%? Down 25%? 60%?

 

The important thing is not how much you lose.
It can be more (within a limit), or it can be less.
The important thing is that you are correct with the direction that the market will take.

 

I'd say the important thing is you have risk control in place when you are wrong.
You can't win if you don't play and you can't play if you are broke or have your capital tied up in a losing trade.

 

Of course you have to have risk control but think.
If the stop is small you will lose little but more frequently.
If the stop is big you will lose more but less often. So what determines whether the balance tips in your favor is the number of times you are correct about the direction the market will take.
You have to open operations at points on the chart where the risk-benefit equation plays in your favor.
That would be the best possible scenario.
Learn to identify support and resistance.
Learn to wait for the price to get there.
When the price is there, don't hesitate.
Follow the plan you have in your mind.
Luck.