There are some traders who say risk management is the "Holy Grail" of trading. I totally agree with this. We could add to it position sizing, based on percentage risk capital allocation, risk-to-reward ratio (R:R), and a properly tested, working trading strategy.
Almost all indicators mainly focus on entries and exits, but not on stop loss (S/L) placements. Once upon a time as the man said about money, I could say about S/L. Tell me where I should place my S/L and then I don't care about entries and exits.
Here is a brief AI summary about S/L:
"Better stop loss placement in forex trading requires a blend of technical analysis, an understanding of market volatility, and alignment with your trading strategy and risk tolerance. By placing stops beyond key market levels and accounting for volatility, you reduce the chance of premature stop-outs and protect your capital effectively."
It would be a waste of time to try to reinvent the wheel. You can find all the information on these subjects online. My intention here is to invite community members to share their experiences with S/L placements.
What kind of S/L methods do you use?
What is the performance or success rate of the methods you use?
And any other ideas, suggestions, or information about using S/L?
Re: Risk Management
2I'm adding the first share about S/L placement. I hope you guys share yours too....
1. I use static S/L (SS/L) during possible reversals and ranging markets based on supply/demand zones and SR lines. Success rate is less than 50% with this method in my experience. However, R;R makes the positive return as minimum 1:3 R:R achieved when it works.
2. I use dynamic S/L (DS/L) during trending markets, based on EMA's and trend lines. Success rate is around just over 50% with this method in my experience. R:R varies from 1:1 to 1:2. I only take buy setups during up trends and sell setups during downtrends. I take setups if there is a minimum 1:1 R:R only according my own analysis.
I have tried to illustrate my S/L placement methods on the current M30 spot Gold chart below.
1. I use static S/L (SS/L) during possible reversals and ranging markets based on supply/demand zones and SR lines. Success rate is less than 50% with this method in my experience. However, R;R makes the positive return as minimum 1:3 R:R achieved when it works.
2. I use dynamic S/L (DS/L) during trending markets, based on EMA's and trend lines. Success rate is around just over 50% with this method in my experience. R:R varies from 1:1 to 1:2. I only take buy setups during up trends and sell setups during downtrends. I take setups if there is a minimum 1:1 R:R only according my own analysis.
I have tried to illustrate my S/L placement methods on the current M30 spot Gold chart below.
