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Chapter 35, Part II. Ways to Place Stop-Loss Orders. - Q&A

Discussion in 'Complete Trading Education- Forex Military School' started by Administrator, Apr 29, 2012.

  1. Administrator

    Administrator Just Administrator :-)

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    Please use this thread for questions, answers, and comments on this lesson.
     
  2. Onyebuchim C. Obike

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    Thanks for this part. "Commander in Pips: Right, I’m glad that you’ve got it. Stop is not an issue that tells you how much you’re ready to lose – this is a question of money management. Stop is an area that tells you that the market will continue move against you with high probability."
    I've been in the Forex for quite a very long time and the explanation below broadend my knowledge about stops.


    I have a question or observation:
    It is popularly known that some brokers manipulate their systems to test your stops no matter how good your system is. What do you think about this ? and what do you advice because some say its better to hide your stops or use mental stops which can also be bad.

    Thanks.
     
  3. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Well, I see couple of solutions:
    First - choose broker with solid reputation and test their action with small position initially. If you suspect that it hunts your stop - make correpsonding conclusions;
    Second - trade on currency futures. There could not be any "occasional" price. You can check all quotes and trades for any session to the tick.
    Speaking about mental stop - yes, this is possible, but this demands really huge experience and hard rock discipline. Usually this approach is used by solid and highly experienced traders. Personally, I do not use it.
     
  4. Pharaoh

    Pharaoh Colonel

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    Even if you have incredible mental discipline and can always close exactly where you've placed your mental stop, having an "emergency SL" somewhere a little further out can save your account if you lose your connection to the broker. Even a broker that hunts stops isn't likely to try to grab more than 5 or 10 pips, so an emergency SL 20+ pips beyond your mental stop can keep you covered while you shop around for a better broker.
     
  5. rajesh bhujbal

    rajesh bhujbal Recruit

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    hi Sive, thank you very much for you incredible affords. this education is really helping me alot.

    My question is about the the butterfly pattern stop placement.
    it is totally logical that placing the stops beyond 1.618 target. but HOW MUCH BEYOND 1.618 LEVEL?
    i know its judgement call, but how much further do YOU put your stops ? (suppose we are on 1 hour chart.)
    is stops at 10 Pip further is ok?
    also there is great volatility at important levels.

    also , we have to put our order few pips billow the 1.27 level. again HOW MUCH BELLOW 1.27 LEVEL? in order to make sure that our order gets filled..


    i see that you have put your stops 25pips away from 1.618 level.

    i actually do Not feel comfortable with stop loss at MORE THAN 50 PIP away from the entry , because of reward/risk ratio.
    so if i put order and sl 25 pip billow and further respectively in this case, then total risk for the trade will be much more.

    also same thing about any support or resistance level. How much further do you usually keep your stops to avoid WASH N Rinse ? there has to be some rage (pips) to compensate with W&R..?
     
    #5 rajesh bhujbal, Oct 6, 2012
    Last edited: Oct 6, 2012
  6. Sive Morten

    Sive Morten Special Consultant to the FPA

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    Hi Rajesh,
    if you've read this chapter carefully, you should remember the term as "harmonic" number. On Eur it stands about 35-40 pips. That is the major distance for stop placing, when you trade harmonic patterns. Also, as you decrease time frame, you may apply fraction of it. For example, on 5-min chart, I suppose 20 pips will be enough. Probably on hourly you can use 20 pips as well, but in recent time volatiliy has increased and safer still to apply 35-40 pips.
    Speaking about entry orders - you can place it just some pips before the level 5-7 pips will be OK, I suppose.

    Speaking about W&R - here is no any rule of thumb about stop placing to avoid it. Usually there are some reasons for W&R - obvious long-term top/bottom, some Fib extension target that stands slightly higher/lower or something of that sort. In this case it's better to wait of W&R and only after that take action.
     
  7. forbroker

    forbroker Recruit

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    It seems that the first 3 were rather wastful time wise since thee is only one way to set the risk .....and even trade ratio although the later is never perfect.

    I would like to know where /what are trhe details of that spot on Mac D you show on the last lesson...I have only ever seen lagging ones....
     

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