How do you set your stop-loss orders? I struggle with setting them just right. I have a tendency to set them close to my entry price, but feel like they're often triggered for no good reason.
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7 comments
Yeah, stop-loss orders can be tricky. I’ve found that setting them is a bit of an art. If you set them too close, they can get triggered by even the smallest price movement. Too far, and you’re not really protecting your capital.
Exactly. I had a few trades where my stop-loss was hit by a tiny fluctuation, and then the price went in my favour right after. So frustrating!
I hear you. One thing that helps me is looking at the average true range (ATR). It gives me an idea of the average price movement over a certain period. I usually set my stop-loss a bit beyond the ATR to avoid getting stopped out by normal volatility.
That’s smart. I haven’t heard about ATR yet. I'm just starting out.
ATR stands for Average True Range. It's basically a tool that measures how much a currency pair moves, on average, over a given period. It gives you an idea of the market's volatility.
For example, if the ATR is 50 pips, you might set your stop-loss 60 or 70 pips away from your entry point to give the trade some breathing room.
Hi @intergalatic, ART is an important metric, but I also recommend considering support and resistance levels when setting your stop-loss. I've noticed that this can be particularly effective when these levels are around round psychological numbers (e.g. $30 for silver, or $20,000 for Bitcoin).
Absolutely. Those levels can give you a good reference point. If I enter a buy trade, I might set my stop-loss just below a key support level. If the price drops below that, it’s a signal that the trade might not be working out.