Happy Sunday
everyone
The trading
week will soon begin and I was working on my stuff today i was looking at my
stop loss setting and try to improve it. So I will share with you on that!
Why use a
stop loss
Using a
stop loss allow you to get rid of the emotions on a particular trade. If you
set it to a point of no return and it cross this point it will automatically
close the position. But when the market have gap or too high volatility it can
close at a different price has it can skip your stop loss.
How I use
my stop loss with my money management
Each position
I open had predetermined size of loss of 0.5% of the account size loss on a
weekly positons and 2% of the account size on the daily positions. And I never
open more than 1 position daily and 1 weekly per trading instrument to avoid
too much exposure. So I always got a max 2.5% risk per position. I know it may seem
a lot but I am able to deal with that kind of risk. For a beginner I would recommend
a 1% stop loss of the account size.
How you can
set your stop loss
Has a
technical trader you can place in a lot of way. But how I place mine his base
on simple moving average it is really simple to use this way. If you want to
use it you can build your on stop loss tool/finder doing back testing with your
strategies and see where your strategies fail and come up with a simple moving
average crossing when that failure happen that could make you quit that
position at that time. When you find it you’re done but it is not a one size
fit all so you got to carefully back test every instrument that you want to
trade!
Hope this
tip help!
