Where to put these stops!?

[aBadTrader]

(Newbie Alert)

Biggest issue I am having on my demo account is where to place the stops for the style I'm wanting to trade.

It's a demo account but I am attempting to be as unbiased as possible and pretend it is real money to try and simulate a real trading position and how I might react to a situation.

For the moment I am learning support and resistance and entry points. I have been placing my working orders 5 ticks above the max price for a three day range to trigger once it hits that price. Once in the trade I am wanting a goal of 5 ticks above the spread, which is 4 points (2pt spread, 2pt GSTOP), so 9 ticks total, OR, break even and exit the trade and not scoffing if the price ends up going my way later on down the track - if I find myself upset I just chant the mantra "this isn't gambling, it was a bad position".

Here's the thing, though; my stops are placed underneath a bare bottom price within that range, which is always something like 20-30, sometimes even 50 points underneath my entry.

Something just doesn't seem right when I'm willing to risk 30-50 points to gain 9. This is no way to trade.

So, to everyone out there who trades indices, how do you logically deduce a position for a stop-loss, and why?

 

[tech/a]

Simply place your stop in a place that shows clearly that your analysis of an expected move will be proven wrong.

Moving your stop to Break Even as soon as your analysis has been proven correct can help stem the bleeding.
If your stops or Breakeven stops are getting hit way to often----then you need to look at your entries.

 

[aBadTrader]

Simply place your stop in a place that shows clearly that your analysis of an expected move will be proven wrong.

Moving your stop to Break Even as soon as your analysis has been proven correct can help stem the bleeding.
If your stops or Breakeven stops are getting hit way to often----then you need to look at your entries.

Good advice! Trial and error eh?

 

[pixel]

Good advice! Trial and error eh?

I'd call it "Assumption and Refinement".

While on that subject: The best learning tool, albeit most widely ignored, is record keeping.
Before you even enter a trade, write down in minute detail what you expect to happen and why. Don't forget to lay out Plan B, what you intend to do if any assumption is overturned.
Then watch the trade evolve and make notes about which assumptions proved lucky and which ones didn't.

At least once a month, go back through every one of those records and learn from your mistakes.

 

[aBadTrader]

I'd call it "Assumption and Refinement".

While on that subject: The best learning tool, albeit most widely ignored, is record keeping.
Before you even enter a trade, write down in minute detail what you expect to happen and why. Don't forget to lay out Plan B, what you intend to do if any assumption is overturned.
Then watch the trade evolve and make notes about which assumptions proved lucky and which ones didn't.

At least once a month, go back through every one of those records and learn from your mistakes.

Do you keep records of why? I merely tally my W/L ratio and amounts hehe - ill add to my spreadsheet

 

[pixel]

Do you keep records of why? I merely tally my W/L ratio and amounts hehe - ill add to my spreadsheet

If you want to learn from your mistakes - AND repeat more of your lucky guesses! - then it's essential to keep precise records. Only that way can you verify what works more often than not, and which assumptions are losing you more money than winning.
I'm now well in my 2nd decade of trading; but I still keep snapshots of the chart at the time I entered a trade. Having an established method, I no longer write down much because even after months, the chart will tell me why I went long or why I sold. When market conditions or game rules change, I can go back over the failures and try to find a common theme. That will help me adjust my trading parameters.

 

[burglar]

Do you keep records of why? I merely tally my W/L ratio and amounts hehe - ill add to my spreadsheet

You will make changes.
Don't make them to big or too many.
Else you won't know which changes did what.

 

[qldfrog]

If you want to learn from your mistakes - AND repeat more of your lucky guesses! - then it's essential to keep precise records. Only that way can you verify what works more often than not, and which assumptions are losing you more money than winning.
I'm now well in my 2nd decade of trading; but I still keep snapshots of the chart at the time I entered a trade. Having an established method, I no longer write down much because even after months, the chart will tell me why I went long or why I sold. When market conditions or game rules change, I can go back over the failures and try to find a common theme. That will help me adjust my trading parameters.

I agree and keep banging my head as I do not record enough and keep repeating the same mistakes ..insanity indeed

 

[Tradelikespock]

Wow lots of good advice so far

Watch my free trading strategy video part 2 because it shows a demo of how I place my stops. Once you do that,
you should take the time to learn position sizing/risk management which you can learn from various books, this forum (probably, haven't searched), or my website.

I can tell you that I can place a stop 20% below my purchase price and not feel a thing. I can even do 50%, lol. With proper position sizing I feel nearly invincible.