I am stuck between using a 5 or 10 pip stop trading the m5 charts, please help! My stratgey is based on break of support/resistance, therefore I believe a tighter stop could be used because if price is going to breakout it should not be turning back 10 pips. However I need someone experiencd to help?
On the 5 min – I’m guessing you’re trading one of the major pairs like the EUR/USD. The answer really depends on what swings you’re playing
My advice would be to
control risk/reward – don’t have your stop at 10 pips if you only expect to make 5. It should be at the very, very least 10 and preferably much more.
Watch the markets and try to define where the best "point" to place the stop – this is the price at which if it is hit your target will likely not be hit. For trades similar to yours I put them around the 80% retracement of the prior swing (I think there is a fib like .782 which I used but haven’t traded since the summer).
Really, just watch the market, watch the market, watch the market, be creative, be smart, and protect your money.
{ 3 comments… read them below or add one }
On the 5 min – I’m guessing you’re trading one of the major pairs like the EUR/USD. The answer really depends on what swings you’re playing
My advice would be to
control risk/reward – don’t have your stop at 10 pips if you only expect to make 5. It should be at the very, very least 10 and preferably much more.
Watch the markets and try to define where the best "point" to place the stop – this is the price at which if it is hit your target will likely not be hit. For trades similar to yours I put them around the 80% retracement of the prior swing (I think there is a fib like .782 which I used but haven’t traded since the summer).
Really, just watch the market, watch the market, watch the market, be creative, be smart, and protect your money.
References :
2 years in forex
Hi, noise level on 5 minutes charts is always high. This noise is going to keep on tripping your stops. You need to trade on 15 or 30 minutes charts so as to reduce the noise. Support and resistance is an area in the price action where it bounces back. It does not mean that it will bounce at some precise price. It will be good if you consider a band around support and also around the resistance and place the stop loss just under that band.
You can observe that band watching a price action bounce back from that area. You should use candlestick patterns like the Hammer or the Hanging Man to determine when the price action is going to reverse. Good Luck!
References :
http://www.ninjatraderblog.com/trading/2009/10/swing-trading-can-be-a-better-option-than-day-trading/
Frankly speaking when you are new to trading environment you do lots of mistakes in trading. Even i did the same. It has been more than a decade now i am playing in market and one thing that i learnt that if you want to be an expert it is always to learn the ways an expert do. follow him and it will be easy for you.
Give a try to http://e59ddgpb-4oflds4710qrazx7e.hop.clickbank.net/?tid=22 Copy and paste the link in your web browser. I hope this will give you much insight for the same.
Wishing you all the best.
References :
http://e59ddgpb-4oflds4710qrazx7e.hop.clickbank.net/?tid=22