Stop loss selection
- Thread starter srinivas.nukala
- Start date
Yes, pivots would help to place stops, in certain market conditions. There is no formula. Place your stop just below previous pivot low for long and just above pivot high for short positions.
Besides this, pivots could be used as stopping spots in certain market conditions. When you see a consolidation or not seeing a clear trend or expecting a breakout you may use ATR values to place stops. IMO, strategy of stops is inextricably mingled with your trading style and personality.
Know yourself; know the market then you would know your stop.
Happy Trading
Besides this, pivots could be used as stopping spots in certain market conditions. When you see a consolidation or not seeing a clear trend or expecting a breakout you may use ATR values to place stops. IMO, strategy of stops is inextricably mingled with your trading style and personality.
Know yourself; know the market then you would know your stop.
Happy Trading
Everybody has their own belief about trading.. and there is no single right answer to it.
Best part of trading, we can make money even if we don't share the belief.
Who cares, as long as it is not limiting the performance and it is producing satisfactory results.. Enjoy the fruit.
Problem comes only when we believe in something but results don't show it and then we start doubting our belief or start blaming everybody else for our result. (eg.- strong belief that FA works but we see loss on our holding of all fundmentally strong companies.. or when we believe that trend following hence MA is the way to make trade but then see getting stopped out in rangebound market).
Happy Trading
Best part of trading, we can make money even if we don't share the belief.
Who cares, as long as it is not limiting the performance and it is producing satisfactory results.. Enjoy the fruit.
Problem comes only when we believe in something but results don't show it and then we start doubting our belief or start blaming everybody else for our result. (eg.- strong belief that FA works but we see loss on our holding of all fundmentally strong companies.. or when we believe that trend following hence MA is the way to make trade but then see getting stopped out in rangebound market).
Happy Trading
Stoploss criteria doesnot need to be complicated. Your post clearly shows that you dont have a system which ideally should be backtested or forward tested, reason being when you develop a system you will come to know how much distance you have to leave from your entry point considering a historical Noise of entry Timeframe. With time you will develop the skills to minimize this distance or by getting a perfect entry.
'Plan the Trade and Trade the Plan' what is Trade management is all about.
So, when you say you are willing to buy a stock @100, then you need to know beforehand why you are even willing to buy @ 100, why not sell @ 100.
A trader will only buy if he/she believes the prices should probably move higher because there is support comming @100 or below zone thats what I call a pivot zone where historically prices have touched and reveresd at 100 but doesnot means prices have always touched 100 and reveresd, could be that prices have gone till 98, 97,96 or even below or even the prices must have touched 102 and reversed, it all depends on your entry Timeframe of your chart. If you look at Daily Tf you will see huge range but less noise but when you look at lower TF pivot zones are narrow but a high possibility of noise which could take your stops away.
Only advice I would give you is to open any chart and draw as many horizontal trend lines (IMO is more valid) where prices have formed a support or resistance and shift your TF's to see what influence those horizontal line had on different TF. suppose a daily Horizontal line will show you on a 60 min TF that prices have formed alot more support and resistance than Daily TF similarlly a horizontal line drawn on 15 min Tf may not be valid in 4hrouly. Learn Support/Resistance thoroughly, ofcourse you can draw different kinds of trendline apart from Horizontal but in the begining stick with Horizontal and slanting lines.
Comming back to selecting a Stoploss. I always try to keep it below/above these support/resistance lines leaving some space for Noise regardless of what system I am trading. Support and resistance can be anything a round number, fibonacci numbers, Bollinger band deviations, Moving averages or anything ,so dont get confused with it, stick to one and get deeper into it with time, practise and patience you will come to know that everything points in the same direction. I mean a support/resistance has more strength when there is more confluence with everything.
Pls Note: Keeping a Stoploss desnot guarantees you that it will not be hit, you are just managing your risk of a tested & proven system. If you dont have a system then go look for it, play with it on demo and unless you are confident that this system will generate profits do not attempt any further.
'Plan the Trade and Trade the Plan' what is Trade management is all about.
So, when you say you are willing to buy a stock @100, then you need to know beforehand why you are even willing to buy @ 100, why not sell @ 100.
A trader will only buy if he/she believes the prices should probably move higher because there is support comming @100 or below zone thats what I call a pivot zone where historically prices have touched and reveresd at 100 but doesnot means prices have always touched 100 and reveresd, could be that prices have gone till 98, 97,96 or even below or even the prices must have touched 102 and reversed, it all depends on your entry Timeframe of your chart. If you look at Daily Tf you will see huge range but less noise but when you look at lower TF pivot zones are narrow but a high possibility of noise which could take your stops away.
Only advice I would give you is to open any chart and draw as many horizontal trend lines (IMO is more valid) where prices have formed a support or resistance and shift your TF's to see what influence those horizontal line had on different TF. suppose a daily Horizontal line will show you on a 60 min TF that prices have formed alot more support and resistance than Daily TF similarlly a horizontal line drawn on 15 min Tf may not be valid in 4hrouly. Learn Support/Resistance thoroughly, ofcourse you can draw different kinds of trendline apart from Horizontal but in the begining stick with Horizontal and slanting lines.
Comming back to selecting a Stoploss. I always try to keep it below/above these support/resistance lines leaving some space for Noise regardless of what system I am trading. Support and resistance can be anything a round number, fibonacci numbers, Bollinger band deviations, Moving averages or anything ,so dont get confused with it, stick to one and get deeper into it with time, practise and patience you will come to know that everything points in the same direction. I mean a support/resistance has more strength when there is more confluence with everything.
Pls Note: Keeping a Stoploss desnot guarantees you that it will not be hit, you are just managing your risk of a tested & proven system. If you dont have a system then go look for it, play with it on demo and unless you are confident that this system will generate profits do not attempt any further.
Last edited:
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