StockFetcher Forums · General Discussion · How to determine stop loss values<< >>Post Follow-up
tmaugham
115 posts
msg #46075
Ignore tmaugham
7/26/2006 7:25:01 PM

A puzzle to me has always been how to determine the best stop loss value. If you set it too tight you risk being sold out during a temporaty dip, too loose and you risk substantial loss. Some people advocate 3% below the buy price then change to a 5% trailing stop, other people use different values, some even go as far as to suggest no initial stop? What suggestions does anyone have?

Tom


nikoschopen
2,824 posts
msg #46077
Ignore nikoschopen
7/26/2006 8:18:48 PM

There is no easy way to use stops. After so many years of trading, I still have hard time deciding when to glue my ass in place and when to bail out. Having said that, the dumbest way to place a stop is by using some arbitrary offset value (eg. 3 points or 5% below the entry, etc.). In my opinion, the best method is to use stops in conjunction with the the technical trendlines, support/resistance levels, as well as the high/low/open/close of the preceding bar or candle.

One of the most important books I have come across dealing with this dilemma in a direct in-ure-face approach is Marcel Link's "High Probability Trading". Some excerpts from his book can be found here:

EXITS & STOPS, PART I
http://www.stockfetcher.com/stockdb/fetcher?p=forum&fid=1001&tid=40321&mid=40988&sb=view&start=30#40988

EXITS & STOPS, PART II
http://www.stockfetcher.com/stockdb/fetcher?p=forum&fid=1001&tid=40321&mid=41004&sb=view&start=30#41004

EXITS & STOPS, PART III
http://www.stockfetcher.com/stockdb/fetcher?p=forum&fid=1001&tid=40321&mid=41050&sb=view&start=30#41050

EXITS & STOPS, PART IV
http://www.stockfetcher.com/stockdb/fetcher?p=forum&fid=1001&tid=40321&mid=41085&sb=view&start=30#41085


In addition, I suggest that you check out the following two writings by Van K. Tharp on money management:

http://www.stockfetcher.com/stockdb/fetcher?p=forum&fid=1002&tid=41276&mid=45336&sb=view&start=30#45336

http://www.stockfetcher.com/stockdb/fetcher?p=forum&fid=1002&tid=41276&mid=45419&sb=view&start=40#45419

Hope that helps.


TheRumpledOne
6,358 posts
msg #46109
Ignore TheRumpledOne
7/29/2006 9:41:04 PM

I WROTE A TRADE PLANNER FILTER.

It gives you targets, stops, exits, etc...


StockFetcher Forums · General Discussion · How to determine stop loss values<< >>Post Follow-up

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