The basic rule for the initial technical stop is to use the last support or resistance, plus extra SATs or CENTS or DOLLARS depending on the percentage of price movement..another way is to look at the ATR (average true range), using an odd number ending in a 3 or a 7, such as 90.13 or 90.27. Monitor your margin account capital so you also risk no more than 1-2% of your account cumulatively, across all open trades. Be aware that with fractional or SAT pricing, you may get a fractional difference in the spread at your stop which could trigger the broker closing your trade, even if the chart doesn’t show the stop was hit. Note that each time you move a trade to break-even you have in effect, released your principal back into your cumulative balance, again making it available to your 1-2% for other trades.
#1 scout stop loss placement
#3 turtle investing capital stops
#4 scaling in and out and moving stops as the trade develops
#5 2 percent rule ….do u get it yet?
+++ MOVING YOUR STOPS AS TRADE PROGRESSES+++
As the trade progresses, you want to slowly move your stops up so that you are locking in profit as well as freeing up capital as soon as structurally possibly so that you may take on another position without putting your self over your risk parameters. The structure of the Trade as it progresses will dictate where you can move your stop up to. We like to move our initial stop up to BREAK-EVEN as soon as the market will let us, so that we are RISK FREE in that trade. We don’t want to move our stops prematurely just for the sake of becoming risk free. We let the market set new structure which tells us what levels they are respecting with price action. Usually these will be below the FIBONACCI levels or previous SUPPORT OR RESISTANCE levels depending on direction of the trade,BUYING or SELLING.
When Scouting a possible trade we will most often enter these as turtles as they have the potential to take off and become rabbit trades later. So while the traders have set up positive structure we want the trade to prove itself but we can safely enter a position with 1/3 of our position size as a turtle and you will see most turtle structures that start out similar to this so we will look to the “bottom” structure for our stop placement.
NOTICE I DIDNT SAY BOTTOM..its a bottoming structure. NOT THE BOTTOM. So we let the market show us the structure that they have built and respected. We use this as a guide for out stop placement. If you wanted a wider stop on this you could use the swing low on the left that I pointed out as a place to set your stop loss under as they have respected and rejected that area and have built upon it.
To learn more about STOPS is a need to learn about risk and equity management. While some think these are the same thing, They are NOT. You can control your risk without controlling your equity management. You can have nicely placed stops, but if they are too much of your equity, then it only takes a few to blow out your account.
So I will start with the management part to lead into the Stops which are a way to management both.Money Management is Composed of two essential elements:
+ Psychological Management
+ Risk ManagementAs a day trader or investor, risk management is just as important as developing a solid trading strategy. No day trader is perfect and all day traders will inevitably have losing trades. A fine-tuned risk management strategy is what gives traders the ability to lose on trades without causing irreparable damage to their accounts. Think of it this way. A day trader can have a 50% win rate and still be profitable if they’re average profit is twice the amount of their average loss. Contrarily, another trader may have a 75% win rate with average losses that are four times higher than their average profits.
—-WHAT IS RISK?—-
-The point at which you will get out of a position in order to preserve capital
-Let your Defined Risk be your Worst Case Loss.
0:05:05 *Scott talks about Stop Loss and where to place it
0:14:59 *XLM/BTC Chart Build
0:41:23 *Scott talks about stop losses and takes a look at FTM/BTC
0:59:10 *Mo talks about overtrading and the importance of not impulse trading
1:02:42 *Scott Returns