Forex: Placing Better Stops


	Forex: Placing Better Stops

AcesLucky

5-31-2007 12:51 PM

260 views

tags:

forex, investing

AcesLucky says:

Working "with" stop hunters, or foiling them. Good article.

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<div style="margin: 12px 0px; font-family: arial; color: #333333; background: #ffffff; border: solid 4px #e5e5e5; width: 100%; clear: left;"><div class="CM_CTB_Content_Wrap" style="margin: 0px; padding: 0px;background-color: #ffffff;"><div style="border-bottom: solid 1px #dcdcdc; white-space: nowrap; margin-bottom: 8px; background-color: #eeeeee ;background-image: url(http://www.clipmarks.com/images/source-bg.gif); background-repeat: repeat-x; height: 24px; line-height: 24px; vertical-align: middle; padding-bottom: 4px; color: #666666; font-size: 10px;" ><a href="http://clipmarks.com/clip-to-blog/" title="see clips that are hot right now"><img src="http://content.clipmarks.com/blog_embed/b493de4d-5aca-43a1-bc5c-94d7c7d99cf0/3610F316-33D2-470B-8D83-67D493F394AC/" alt="" width="19" height="19" border="0" style="vertical-align: middle; margin: 0px 4px; display: inline; border: none; float:none;" /></a>clipped from <a title="http://placingbetterstops.blogspot.com/2007/04/placing-better-stops.html" href="http://placingbetterstops.blogspot.com/2007/04/placing-better-stops.html" style="font-size: 11px;">placingbetterstops.blogspot.com</a></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://placingbetterstops.blogspot.com/2007/04/placing-better-stops.html"><DIV>Stop location determines position size, not the other way around!Money management and risk control rules are great, but make sure you apply them in the correct sequence. Let's say you have a rule that you will risk no more than 1% of the account equity, or $50, on a single trade. You decide to take a short position on 10,000 NZD/USD at 0.6600 which means that each pip of movement will equal $1.00. So your stop should be 50 pips back at 0.6650 right?</DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://placingbetterstops.blogspot.com/2007/04/placing-better-stops.html"><DIV>Well actually...not really. This reasoning is backwards. We took our money management rule and our position size and used those values to calculate our stop loss point in the market. But this doesn't really make sense because why should the market care what your rules and position size are?</DIV></blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://placingbetterstops.blogspot.com/2007/04/placing-better-stops.html">1. Pick your stop location first, then base your position size on that, not the other way around.</blockquote><div style="height: 2px; font-size: 2px; background: #dcdcdc; border-bottom: solid 1px #f5f5f5; margin: 2px 4px;"></div><blockquote style="text-align: left; padding: 0px 8px; margin: 4px 0px 8px 0px; background: transparent; border: none;" cite="http://placingbetterstops.blogspot.com/2007/04/placing-better-stops.html">2. To find a good place for a stop, pretend that you're considering a trade in the direction of the stop.</blockquote></div><div style="margin: 0px 6px 6px 4px;"><table style="font-size: 11px;border-spacing: 0px;padding: 0px;" cellpadding="0" cellspacing="0" width="100%"><tr><td style="background:transparent;border-width:0px;padding:0px;">&nbsp;</td><td align="right" style="background:transparent;border-width:0px;padding:0px;width:107px" width="107"><a href="http://clipmarks.com/share/3610F316-33D2-470B-8D83-67D493F394AC/blog/" title="blog or email this clip"><img src="http://content8.clipmarks.com/images/c2b-foot.png" border="0" alt="blog it" width="107" height="17" style="border-width:0px;padding:0px;margin:0px;" /></a></td></tr></table></div></div>

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