stop loss percentage strategy for day trading

able to identify the stocks most recent level of support. Why Use a Daily Stop Loss. This means every trader will be wrong sometimes. If you subscribe to the newsletter you would invest in the ideas you receive the month the investment is sold Of course it will not always work These studies all showed the success of a stop-loss strategy over long periods of time, this of course. Once losses start to mount it can become very tough to stay focused, and not get into "revenge trading" mode, which typically results in even bigger losses. Write this percentage down in your trading plan, then each day determine what your stop loss (in dollars) is for that day. With leverage and the number of trades I can make each day there is no reason to risk more than that since even with keeping risk low, great returns are possible.

In Figure 5, we used the RSI to illustrate this method on a GBP/USD hourly chart, but many other indicators can be used. This method of risk control may vary slightly depending on the winning percentage of your strategies though. Just as in the example above using the support method, you should set your stop loss just below the moving average to give the stock a little room to breathe. When exceeded the portfolio was sold and the cash invested in long term US government bonds. To find out I deducted the results of the traditional stop-loss strategy from the trailing stop-loss strategy. If risking.5 per trade, set a daily stop loss limit at 2 or 3 as well. By using a certain percentage of ATR, you ensure your stop is dynamic and changes appropriately with market conditions. If so here is an idea that will help you limit your losses if the underlying business of your investment starts to go downhill. This is why we read all the time? This is why using stop orders is so important. If you do have winning trades during the day, but you are still hitting your daily stop, then your trades may have some risk/reward issues.