What is the safest (but most profitable) way to set a stop loss? - page 5
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SL is a lazy way of approaching market with already loosing mentality.
Trailing is what provides extra edge.
If you use a strategy (instead of gambling), then there are rules to follow. And within those rules, there are necessarily both trade entry conditions and trade exit conditions and/or stops. Generally, there are multiple entry conditions to be satisfied in any given strategy. For example, let's say you're using an 8 period EMA and a 21 period EMA for crossovers, and a 20 period RSI oscillator for 30/70 level OB/OS, all for entries.* The underlying idea is to capture short-term price swings based on the EMA's while filtering out "false" entries using the relatively slower RSI. So if the EMA's are a statistically reliable way of determining short-term price direction, then simply omit the slower RSI filter and reverse the EMA conditions for exits. IMHO, much of profitable trading is simply having your exit conditions specified faster than your entry conditions. Of course, it's always responsible to set a trade server-side "fail-safe" stop a good distance away from the entry price (to potentially execute if you lose your trade-server connection, internet connection, or electricity altogether).
* This is not an actual strategy that I have tested nor traded, but I do use the general faster exit conditions principle for profitable live trading.
In my experience a stop loss is absolutely necessary. It could stop you from a complete wipe-out.
It is obvious that there is an ideal stop loss for every base time frame. The ideal stop loss to use on the M5 is not the same as the one you use when your base time frame is H1.
Obviously you have your ideal stop loss for your base time frame and then it is also absolutely essential to have your Blind Rule: you Get Out Blindly when the rule happens. You do not think or anything. You just get out and only get back in when you are absolutely sure you know what is actually going on. It is clear from this explanation that your Blind Get Out is often before your stop loss.
Then there are also situations where you cannot use a stop loss, that is in extremely volatile moments like the Non Farm Payrolls instance with the EuroDollar, for example. The price movement can be so violent and so fast that it simply goes right past your break-even stop loss and your stop loss only gets activated a lot later and you land up with a big loss. You simply cannot be in the market at the start of that moment.
At the moment my base time frame is the M5.
This is my view of the ideal stop loss when you trade the M5 as your base time frame.
The stop loss is there under normal trading conditions to keep you in the trade even when you get sudden small spikes which do not lead to the activation of your Blind Get Out rule.
Therefore I use a 12 pip away from Price or M5 50 EMA stop loss while trading the M5 as my base time frame and you are present watching your trade all the time.
When a sudden spike is happening I can move the 12 pip stop loss to 15 pips while watching the proximity of my Blind Get Out rule.
Obviously you must have MT5 on your always fully charged phone too. When no internet or no electricity you always have your phone´s mobile data to keep you connected to MT5 and the internet and you can watch what is going on, watch your stop loss level and you can also manually get out on your phone when your Blind Get Out rule tells you to Get Out or whenever you decide to take that profit. You can change your stop loss level on your phone too.