Stop Placement

Lets get into the Stop Placement of a trade in this article.

Table of Contents

Initial Stop Loss Placement

Two final points…

1. A common question is… how far beyond these levels should the stop be placed.
- The answer is that it depends on your premise. Referring back to the last chart in figure above, if price action gives you sufficient confidence that 513 should not be hit, then that is your stop – immediately below the recent lows.
- If you don’t have sufficient confidence, and expect a possibility that price may retest these recent lows, possibly even exceeding them by a pip or two, then place the stop further away. Maybe even as far as Fibonacci 78% level i.e. 508.95.
- Personally, ‘immediately below’ for me means two pips (or points). For no other reason than I absolutely hate those occasional occurrences of stop out, when price breaks the lows by one pip before moving in my direction. This of course comes at the cost of 1 extra pip loss when I am stopped out.
1. Please note as well that we don’t just simply place our stop and target orders and then hold till either is hit. We use an active approach to trade management and will attempt to exit any losing trades well before their stop. The stop loss position is a worst-case stop. More on that later!

That’s it for SL placement in next article we will see what should be our target.