Using Stop Loss each time we go to market is one way to manage risk in trading. Some traders may think this is 'how queer', but I do not .... I like trading with a Stop Loss. And in this way, in the end I often get a satisfactory result. Fixed make me be in a controlled trading system properly.
When we decide to use a stop loss, then we must be disciplined in its implementation. If the market price Stop Loss moved closer to us, then do not do anything. Do not ever try to move the stop loss away from our open positions.
Move your stop loss for only one reason: Trailing Stop Strategy (although I myself rarely use this strategy).
Well, now the problem is ... .. Where we should put our stop loss order to get maximum results? Below I have a few tips:
1. Measure the gap stop loss your open positions with your level I usually just use this rule:
Eur / Usd: gaps between the stop loss and open position = 35 pips
Gbp / Usd: gap between stop loss and the open position = 50 pips
Gap represents how much you are willing to accept defeat at any time trading. Always bear in mind in our minds that we will not go into a market without rules that gap.
2. Entry strategy
Then make a prediction, at what level you will go to market using a trading system that you have made. And when you've decided to go to a certain level, do not ever forget to pay attention to the Stop position Lossnya. Where is the stop loss will be based on the rules I created a gap-me (tips # 1).
Try to put your stop loss positions under the support level (for long positions) and above the resistance level (for short positions).
For example:
We have the data support and resitance Eur / Usd as follows:
R3 1.3052
R2 1.2962
R1 1.2906
Pivot 1.2816
S1 1.2760
S2 1.2670
S3 1.2614
After measuring the trend, you then mark that level of 1.2870 is the best level to do short positions. That means, using the rule of 35 pips gap (see examples in tips # 1), stop loss you will be at 1.2905.
But unfortunately, the level of 1.2905 is not a good level to put a stop loss. Why? Because this level is not protected by the resistance level. When the market moves up, your stop loss will not be protected and will be quite easy for the market to touch your stop loss. The nearest resistance level at 1.2906, above 1.2905. So what we will do here is to move our stop loss slightly above the original plan. For example, we move this to a 1.2910 stop loss. Now, both technical, you already have a stop loss position is well protected.
When you move the stop loss, do not ever forget the rules of the gap (as mentioned in tips # 1). So we also have to move the plan of our open positions.
And now you plan to sell at 1.2875 (5 pips above 1.2870) and stop loss at 1.2910 (5 pips above 1.2905).
3. Stay calm when approaching a stop loss market.
All things may happen in the Forex in a relatively short time. No one can control the madness of the people in the market when they enter the market. But the most important thing for us here is a 'risk management'. The successful trader always aware that sometimes they have to deal with failure.
So, if your stop loss to the touch. Let it go. Rightfully so.
hopefully useful for all of us