Home Trading Strategies Stop Loss Strategy Secrets: The Truth About Stop Loss Nobody Tells You

Stop Loss Strategy Secrets: The Truth About Stop Loss Nobody Tells You

Stop Loss Strategy Secrets: The Truth About Stop Loss Nobody Tells You

hey hey what’s up my friend so in today’s video right we’ll be discussing about stop-loss strategies I know stop-loss right it’s a it’s a term that trigger a lot of bad feelings for treated or ID they bring back memories like man radio you know what my broker they always hang my stop-loss or the market always know where my stop is right it triggers my stop and then reverse back in my original direction and I’m putting me out of the trade okay so I get it right a lot of feelings inside of you right that’s why in today’s video right we’re going to tackle it once and for all and fix it so you know to you know use a proper stop-loss right so you don’t get stopped up too early in the market and much much more okay so before we begin right just wanting to us of you right if this is the first time the ten-time on a hundred times then you’re watching my video hit that thumbs up button and subscribe to my youtube channel so this way you never miss right another training lesson from here ever again sounds good right just click the button below and do it right now three seconds one two three okay then let’s begin so the first secret that I want to share with you regarding stop-loss is that there is no one-size-fits-all so I always you know cringe whenever here traders say right now my stop loss is always 20 pips right that’s how they define there is affixed 20 people stop loss or a fixer 50 pips stop-loss but doesn’t really make sense and let me explain why if you look at this chart over here okay this is the daily timeframe of the dollar sing let me just pull out the average True Range indicator this one pretty much just measures the volatility of the market so you can see that $4 sing right on the daily timeframe the every strange for a day right meaning that on average right how many pips right does this market move right now it moves about 42 pips a day as you can see over here the value here is about 42 okay so that is $4 sing so this means right if you were to use of less if you were to use a stop loss of let’s say 50 or 60 pips right I would say that is pretty reasonable because that is outside of the average daily range for this market dollar sing on the other hand let’s say you look at another market let’s say in the pound yet if you notice the poundin on average its average range for the days about 126 pips right you can see it my curse over there I dare write 1.

26 this means that pound on average one day it moves about 126 pips so if you’re going to use a fit a fix 50 60 pips stop-loss on this uh this time frame on this trade then you can see that it’s pretty much you know uh doesn’t doesn’t quite make sense because the range of the day right would probably hit your stop-loss before it can even move in the direction because this this market right typically has an average range of 126 pips per day come back two dollars in which you’ve seen earlier it’s about 42 pips so this is why the first thing that I want to share with you is that when you use stop-loss right there is no one-size-fits-all number one you have to take into consideration the volatility of the market okay and that’s not all because number two you also must take into consideration the time frame you’re trading right if you look at this right town yen daily time frame it moves about 126 pips but if let’s say we go down to the one-hour time frame the range for this market right on each hourly candle is about 19 to 20 pips 19 to 20 pips so you can see that usually right the smaller the time frame then your trading the the title the stop-loss that you can use because the range of the market in the time frame right is not as crazy well if you just I mean if you just look at this or a common sense if you just look at this one swing from one forty five fifty to one forty four twenty that’s about 30 pips wing on this one hour time frame if you look at a daily time frame right you just look at just measure that one swing right from here this is like one four nine and here’s one for four this is a mount of 500 peep swing okay so first thing to bear in mind right let’s just move back to the slides right number one there is no one size fits all because some number one is volatility of the market it changes from market to market and number two your time frame matters as well the smaller your time frame generally you can adopt with a smaller stop-loss so that is the first secret there is no one-size-fits-all number two your broker doesn’t hang your stop I know I know it’s hard to believe right and and I do agree right there might be a few bad eggs out there maybe you know 1% or less than 1% of brokers that actually you know do honey oh stop loss but the vast majority of them right those of them who are regulated by mas FCA they don’t hang your stop-loss because from a risk to reward perspective right it doesn’t make sense let’s say you know let’s be honest right what is the size of the trading account you’re trading I’m guessing few dollars to a few thousand dollars maybe some of you five figure comes right back but not many most of you are probably enough hundreds to thousands of dollar figure and if the broker wants to honey oh stop loss what does he get well he gets your treatment what does he profit like what 50 her dollars eternals five hundred thousand dollars their bout okay and the risk right to the broker is that you might screen-capture your chance you can actually prove it right broker a and broker b1 broker a hunch your stop-loss broker be the datafeed right the price didn’t spike and all they need to do is to screenshot it upload the social media and dancing right the broker risk losing the license because of trying you know to hand your stop-loss so from a risk to reward perspective right trainer you know make five hundred dollars off of you a thousand dollars of you and the risk of losing their license losing the reputation and losing their credibility to me doesn’t make sense right so this is why I say that most broker they don’t handle stop-loss because it’s not in the best incentives to do so from a risk to reward perspective right traders right risk to reward right it’s not very favorable for them to do it okay so this is why I say most broker they don’t handle stop-loss however I do agree that often your face how many times you know you enter trade the market somehow it seems to know where your stop is and then it triggers your stop-loss before moving back into your intended direction okay so the third secret is how to avoid this stop hunting scenario but first right let me explain why does this scenario happen in the first place well is because right of what you’ve been taught right if you studied textbooks if you you know read materials you know that you know most textbooks and stuff like that cost us they will tell you to put your stop-loss right a buffer is right it’s a there you know put your stop-loss above resistance because if the price breaks above resistance right that’s where your trait is invalidated and you’d want to stay in the trading any longer so you put your stop-loss above resistance you put your stop-loss below support and this is actually one of the worst places that you can put your stop-loss why is there right let me share with you why so this is gonna be a bit technical but just follow me step by step right and this will all make sense I mean it’s gonna be like a matrix though you will you know open your eyes for the first time man Rayner I didn’t see this before okay so so bear with me right and just a walk you through step by step so again right let me just redraw this it’s okay let’s say this is the market is in a range okay let at this point right okay say it starts to retrace a little bit and you know traders will go shot right because hey you know prices at resistance right selling pressure coming in right price seems to be reversing let me go shot so where will shot traders you know put your stop loss well if you follow the textbook we follow the forums blocks and website they say a lot of them will tell you to put your stop-loss above this highs or maybe even above this highs over here okay so it’s crazy when more traders are shot right this stop-loss would accumulate so I said accurate more this stop orders is essentially buy orders because if you are shot right and you have a stop loss that stop-loss is actually a buy order to get you off the trade so let’s call it B by let’s call it by just be right so buy order to get you off the trade for short traders okay so that’s the first thing that I want to cover number one so let’s call it the traders who are shot at the same time right there will be traders who are long and this is price around here they are they alone may be traders Doster the smart money in the institution those that can really move the market so they are long right let’s say yeah they’re long somewhere this price or maybe they’re long somewhere here or even near the lows over here whatever the case is that if you are the smart money if you are someone with a lot of money let’s say ten billion one hundred billion right you know you can just exit the train at any price level why is that it’s because of something called slippage if you just randomly exit your trainer you will move the market in let’s say you know you over here the market could just collapse all the way down lower because you are the will in the market so what would you know this trader do this group of trader this has spun money so what they’ll do is that they want to exit their trade right where there is an opposing order to help them you know so color neutralize their position so let’s say traders over here their long right and you want to sell so where would they sell to if they sell over here as I’ve said right the market could possibly just reverse down lower so what they will likely do is they will push the price up higher okay up to here and when you just push the price up higher you know just a few pips right the market would take up this highs over here and what is above this highs over here what lies above it the buy stop orders from the earlier group of traders who are shot right you’re short you put a buy stop orders just above resistance okay and that buy stop orders right and this the traders were a long right now push the price up higher and sell their position and who do they sell it to they sell it to D traders who have their stops all above it so if they push the market higher and start selling those positions right it would trigger this buy stop orders in the market so the buy stop orders comes in the sell orders come in any kind of neutralize right so the price right would collapse because there is a buying pressure to support the selling pressure can you see what I mean okay so this is why often you see the price move up above a certain market structure above the highs and then reverse lower after all the the buying pressure has exhausted itself from the traders who are long right they push the bright the price up higher it triggers on the buy stop order this group of traders exit their traits as well now there’s no more buying pressure and the price 10 reverse lower okay so let me explain through that chance right so you can see this clearly okay so I know it’s a bit technical so just bear with me right I’ll explain it through the charts so you can see over here again all right this is one example right price comes up into this area of resistance traders go short where do they put their stop-loss above this highs or above this highs then the market spike up three and reverse lower okay so you can see the market take out this highs take out this high so whoever have that stop-loss above this high stand this sides right don’t stop tout only to see the market reverse lower so if you’re someone who is always long okay and let’s say you don’t just want to sell at any level a good place to be shopping or rather to be selling your position he said a level right where there is a opposite position or opposite pressure opposite order they can absorb your selling pressure so traders were let’s say they are long over here or long over here whatever the case is as the market come up higher they can look to sell over here because there will be opposite there will be others right from the opposite side of the trade to absorb their selling pressure so you come in you sell over here okay but over here you have buy stop orders right to absorb to absorb these are sell orders that’s coming in for traders who are long to take profit so this is why often run you will see market trading above the highs and then reverse a lower okay if you just look back just look at your chatter and you’ll see what I mean over here market comes down okay trigger the lows and then reverse higher so can you imagine right traders who are who are long at this point in time right textbook say oh you know bullish candle let’s go long stop-loss below the low so below this low over here market sweeps those stop-loss and in reverse back up higher okay so this is why I know you get stopped hunter because your stop-loss so it is always at this obvious price level right where the smart money has incentive right to push the price to the level right exit at rate and then you know have the market reverse back in your opposite direction so this is why this is the truth right this is why and this is how the market moves so one tip I got for you is that how would you actually avoid this scenario this so-called stop hunting scenario I mean they’re not really out to get you right it’s just the way the market moves it flows so anyway how do you avoid it right one tip that I have for you is that don’t put your stop loss and this obvious level like below this lower below this low give it some room to breathe right so let’s say for example if you wanna if you are long let’s say you’re long over here for whatever reason okay maybe a retest of this swing low give your stop-loss you know more room to brief so this means what you can do is uh use the average true range indicator let’s say this one is let’s say the value is about 37 pips alright what you have to do is identify the swing low okay and then deed up 37 pips from it so if you let’s say the swing low the value is X right so just like X minus 37 right and your stop loss right Willoughby’s be at this level called y so just from here to here – 37 pips right and let’s say over here will be your stop loss and let’s call it Y okay so this way right even in the market were to spike down to a level right you won’t get stopped out immediately because your trade has more room to breathe compared to another trader who set the stop-loss below the low and then go stopped out immediately okay so this is a one tip to share with you on how you can actually avoid stop hunting in this scenario don’t send your stop-loss it obvious market structure give it some buffer and more room to breathe all right so that’s the this is number one number three right there – thing that I want to share with you the FAFSA cred right the larger your stop-loss the smaller your position size so this is a this is quite logical actually let’s say for example you want to risk $100 per tree okay that is maybe this according to your risk management that is maybe 1% or 2% of your trading account and let’s say you’re trading euro dollar and you’re you have a 10 bit stop-loss 10 people stop-loss right in this case right you can actually trade right up to 1 lot because if you know right 1 lot right every pip movement for 1 not 1 euro dollar is a $10 per pip so $10 per beam right $10 per P okay $10 x tenner if the tree hit your stop-loss right excluding any slippage s or whatever right you will lose hundred dollars on this tree okay now let’s say you know you want to increase the size of your stop-loss maybe you’re trading a higher time frame or whatsoever your stop-loss now is hundred pips okay obviously right in this case you cannot be using the same one lot previously because now that the size of your stop-loss has increased right to 100 pips right you need to reduce write your position size so in this case write your position size you would be trading zero point one lot right so right now zero point one it’s about $1 per pip for $0 so the general idea that I want to bring across to you is that the larger your stop-loss right the smaller your position size should be if you somehow sense that hey you know my my my stop-loss is large but my position size is still the same then hey this is a red flag and it’s something that you want to know check and make sure that you know you didn’t mess up anything with your calculations okay and the fifth secret they want to share with you is you know your new trick without stop-loss because I’m sure you know often you feel heard of triticeae oh I don’t use stop loss because you know after all the market always come back in my favor right why uses stop-loss you know I get stopped out and you know stuff like that so let me just you know share with you a very typical classical example of what happened to traders who who got involved with a this market a Bitcoin alright so if you can recall right let me just get rid of the ATR for now if you recall right Bitcoin in 2017 massive right massive insane huge bull run all the way up higher so you can see that no traders who trade without stop-loss right traders who believe in hol hold on to dear life traders who believe in PG FD right by the peep dim right so you can see that you know market pulls back right let’s say pull back to this load they go long maybe they didn’t get it at the lowest price but hey after all market is an uptrend right you don’t need a stop loss the market always come back to your favor so they hold on to dear life right an exit at the heist right we test those swing high they exist Wow nice a winning trade this time around market pulls back again right eBay they belong somewhere they go along somewhere here market retrace against em right but Aaron it they believe in a man trap hold on to your life market always rebound then take profit at the highest right market retest by the heist they take profit whoa another winning trade again two-time market retrace right by on the deep right if the BTM thief to buy the dip market will always return back to your favor take profit at the high so then take profit at the highs nomad market rallies ok so we can see that our the market rallies once again over here by the dip right so markets dip down bye-bye right after all the market always returned and in this instance right if you look to right the market never returns so we can see that you have a few winning trades right very high percentage of winning trade but all you mean is that one time one time for the market to collapse right right now I collapse until to a low if we can see right three thousand-plus right there’s no turning back right so yeah you book a small profits along the way right a few bucks here a few bucks there a few bucks there but when the market takes it takes everything it got from you okay so you can trick without the stop-loss but you have to be prepared for this scenario to happen you will get many small wins let me just let me just illustrate to you your equity curve right will look something like this win win win win win win win win win win right small wins along the way and then BAM deep so that’s how your equity curve would look like so if your I could think of currently looks something like I mean if you’re at this juncture over here the market haven’t reverse right this is still not too late you can you know take whatever you have me learn your lesson and move on right if not that one day will come right where the market just takes everything back and more so this largely applies to I would say traders who trade with margin right there are cases where you don’t necessarily need a stop loss if you’re an options trader you buy a call option a call option is pretty much the whatever you can lose is really in the premium that you have paid so more options trader there is this alley way of trading without stops alternatively right if you are the trader that goes with a mental stop where you pretty much will manually exit the trade if he hits a certain price level then hey you don’t necessarily also also need a stop loss so this our special case scenario the general advice I would suggest is you know to always go with a stop loss so with that said right let’s do a quick recap right to what you have learnt today the first thing that we discuss is that for stop loss there is no one-size-fits-all depends on the market volatility depends on your trading time frame number two generally your broker doesn’t have your stop-loss there is just no incentive to do so right what happens is that you usually put your stop-loss it obvious market structure and that’s why the market you know is a track that your stop-loss alright it triggers it and then you know reverse back in the opposite erection that’s what we talk about you know how you should actually set your stop sign a distance away from market structure you can use the every screw inch indicator to help you define how much buffer you want to use the fourth thing we talk about is that generally I mean it’s not generally this is this is a confirmed blast job right the larger your stop-loss is right the smaller your position size will be right this is just mathematics okay and the smaller your position size be the larger the position I mean sir the smaller your stop-loss is right then the larger the position size that you can put on and still keep your risk constant and finally right I suggest you know trading with stock unless you know you know what you’re doing maybe I’m trading options you employ hedging right or even mental stopping and stuff like that all right so with that said I’ve come towards the end of today’s video I know some of you you don’t want to learn more today we could dive into a stop losses if you’re a little more about you know entries all right then go and download this price action trading guide over here right this is the ultimate guide to price action trading and we will talk a lot about trading entries techniques market structure how to read price action and much more so this kind over here right we definitely complement what you’ve just learned today which is about stop-loss this one will be our entries market structure support resistance and a whole lot more so go down to my website right trading with rhino come over here scroll down click this orange button alright this guide is free and I’ll send it to your inbox for free so that’s it I wish you good luck and good trading right hit the thumbs up button subscribe to my youtube channel okay do it right now and anything back or comment let me know below and I’ll be glad to help so that’s it until next time I’ll talk to you soon you


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