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Stop Loss Placement To Avoid Market Noise?

1
I am about to fund a $4,000 USD Account and I wondered what's the best Stop Loss amount to risk that'll avoid market noise? I think the ratio is calculated by the size of my account, or is it market conditions that determine stop loss size? I am trying to come up with a magic number where like a 0.25 lot costs $580, then I set aside in my account like $3,000 for stop loss money. Small stops seem to keep getting hit on me in paper trading, yet I don't want a huge market move to wipe out a large stop loss that I can't really afford to lose.


Any help with this would really be appreciated, thanks!


Re: Stop Loss Placement To Avoid Market Noise?

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Cassandra00 wrote: Wed May 09, 2018 12:59 pm I am about to fund a $4,000 USD Account and I wondered what's the best Stop Loss amount to risk that'll avoid market noise? I think the ratio is calculated by the size of my account, or is it market conditions that determine stop loss size? I am trying to come up with a magic number where like a 0.25 lot costs $580, then I set aside in my account like $3,000 for stop loss money. Small stops seem to keep getting hit on me in paper trading, yet I don't want a huge market move to wipe out a large stop loss that I can't really afford to lose.


Any help with this would really be appreciated, thanks!
I hope $4,000 USD is the amount you can afford to loose...but seriously...

Re: Stop Loss Placement To Avoid Market Noise?

3
Cassandra00 wrote: Wed May 09, 2018 12:59 pm I am about to fund a $4,000 USD Account and I wondered what's the best Stop Loss amount to risk that'll avoid market noise? I think the ratio is calculated by the size of my account, or is it market conditions that determine stop loss size? I am trying to come up with a magic number where like a 0.25 lot costs $580, then I set aside in my account like $3,000 for stop loss money. Small stops seem to keep getting hit on me in paper trading, yet I don't want a huge market move to wipe out a large stop loss that I can't really afford to lose.


Any help with this would really be appreciated, thanks!
honestly, there is no direct answer for this.
all depends on your trading style. if you are an intraday trader then from my understanding its based on the previous swing with that add to suit your risk appetite. for position trading, then it is a different ball game and think people use atr to determine stop loss.

then factors like your account size, lot size and risk percentage.. with risk percentage you can determine the stop loss pips easily and there are many calculators if you search in google.

example for eurusd
your account size = $4000
risk = 10% (since you seems to be high risk taker) and thats $400
lot size = 0.25
max stop loss = 160 pips (still not enough for you?)

Re: Stop Loss Placement To Avoid Market Noise?

4
In my opinion, you shouldn't trade real before you aren't clear about your MM and RM. In fact, this is the real core of your system and everything goes up or down with a MM and a RM. Seriously, what you trade can be trashy as hell when your MM is clever. On the other hand when you have a bad MM, you probably lose with the best strategy. On TSD we had a guy named Igor and he wrote down his trading story. He was very good but his MM was bad and one day he lost everything. This happened twice, if I remember correctly. Maybe Mntiwana has still the link. It were split in three parts. I know some more stories how traders with a good strategy lost everything and at the SBN Bomb (15. January 2015) even much more.

The MM depends on your strategy and trading style. As initial SL the ATR is often a good start. As a trend trader you will switch to an adaptive trailing SL later and set it below the last HL + x pips in uptrends or above the last LH + x pips in downtrends. A fix trailing stop is tested often and many traders using this are kicked out before the trend goes on (not clever). As R:R scalper, e.g. buying bottoms and selling ceilings in ranges, you have an expectation of a certain R:R. You also have your percentage of your amount you want to bet per position, so your lot size is here variable and depends on the pip size of the risk of the R:R.

Re: Stop Loss Placement To Avoid Market Noise?

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I want to thank everyone for your comments, they are all very helpful and informative!

I wanted to add something. Are there any magic number ratio setup's that really offers a true unique advantage? Like I am Willing To Scale Down Below 0.25 If It would truly be an improvement, but I am not sure.


Thanks!


Re: Stop Loss Placement To Avoid Market Noise?

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Cassandra00 wrote: Wed May 09, 2018 6:43 pm I want to thank everyone for your comments, they are all very helpful and informative!

I wanted to add something. Are there any magic number ratio setup's that really offers a true unique advantage? Like I am Willing To Scale Down Below 0.25 If It would truly be an improvement, but I am not sure.


Thanks!
What is this about a magic number? I don't get it. Scale below 0.25? When you risk 3/4 of your account, you definitely hit margin call faster than you can open your MT4. In other words: Your 'Risk of Ruin' is very high. Play a bit with it, but be honest to yourself

Risk per trade is 1-2% as trendfollower and 3-5% as scalper. If you are good, you can choose a bit bigger values, but greed is the worst component in trading you can have.

With your idea what you want to risk, you calculate either the pips to the SL (lot size is fix) or the lot size to your adaptive SL (given by the market from ATR or last Low + some pips).

Re: Stop Loss Placement To Avoid Market Noise?

7
Cassandra00 wrote: Wed May 09, 2018 12:59 pm I am about to fund a $4,000 USD Account and I wondered what's the best Stop Loss amount to risk that'll avoid market noise? I think the ratio is calculated by the size of my account, or is it market conditions that determine stop loss size? I am trying to come up with a magic number where like a 0.25 lot costs $580, then I set aside in my account like $3,000 for stop loss money. Small stops seem to keep getting hit on me in paper trading, yet I don't want a huge market move to wipe out a large stop loss that I can't really afford to lose.


Any help with this would really be appreciated, thanks!
for swing trading you may find this atr based indicators useful to assess sl levels.

4000 usd is too small an amount to trade 0.25 lot size, in any case think twice before you increase your lot size on any trade,

because if you have your capital preserved then market will give many more opportunities again, and again and again to win.

Re: Stop Loss Placement To Avoid Market Noise?

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There is no perfect answer for this but using stop loss is a good decision.
Do consider taking into risk management if you are about to put the whole $4000 funds into trading because the result can be either good or bad.
Good luck, mate.


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