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Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Jun 21, 2011.
Please use this thread for questions, answers, and comments on this lesson.
I have a problem even when I use fibs candles etc on larger time frames In my demo accounts soon as I place a trade the intraday movements go crazy and I am always stopped out by the smallest time frames whiich can be very eratic. How can I overcome this problem. Do I use larger stops based upon the support and resistance on intraday/10 second, 1 min charts or what.
Accepting nothing is foolproof
I would be very grateful if you could guide me on this matter.
Stop placing procedure is very wide topic and contains a lot of important issues, but let's dicsuss the common rules.
1. First, your stop should correspond with your target and context. For instance, if you trade on daily time frame and enter, say, long, based on daily trend by MACD with some target, based on Fib extension. You can't place stop on 5-min chart just 20 pips lower, because move 20 pips against you will not cancel your trading foundation. That's what I mean with "correspond"
2. Stop has to be placed in an area, that will cancel your context for trading, if market will reach it. Simple example - let's suppose that your context is MACD trend and you enter long from some Fib support. You have to place stop so, that it will be triggered only if trend will turn bearish - i.e. your context for trade will be vanished and you will be wrong. If you place stop tighter - then you could be stopped-out, but your context for trade still intact.
3. Risk-reward. When you plan some trade, you have decide where you will place stop first, and where to enter - second. Risk/reward ratio should not be less than 1.0.
4. Do not risk more than 2% from your total assets in single trade.
Other issues depend your trading strategy, style and other specific and personal moments.
if you want to find mistakes - welcome to my forum education page. You can post your analysis there and all participants discuss it and together we will find out what you do wrong.