Podcast:

In this video:

00:24   A good way to manage your stop losses

01:31   Stop loss base on a horizontal level

04:10   A Russian client made an incredible 4.7 to 1 risk to reward

06:26   A lot of strength in the GBP, Euro and Swiss Franc

Forex Tips and Advice of How to Manage Your Stop Loss

I want to give you some information, some tips and advice of how to manage your stop loss. Let me share more information with you right now.

Hi it’s Andrew Mitchem here the Forex Trading Coach. Today is Friday the 24th of January and on today’s video and podcast I want to explain about a good way to use your stop losses, so how to manage your stop loss when you’re in a trade. You see it’s a question I get asked quite a lot and I even had the same question arrive in my inbox this morning from someone just seeking some advice and say, “Hey Andrew can I use something like a Parabolic SAR or that’s the example he gave this morning or any other type of indicator to help manage the stop loss on a trade once the trade is open.

The problem with most indicators and the parabolic is no exception is that it tends to lag badly on the price and time. And you can’t really just use one indicator and rely on that dot on a chart to say this is where my stop needs to be or when it changes from below the price to above the price, this is where you know when I need to get out of the trade. That’s just not a good way of using or managing a trade.

A stop loss based on a horizonal level

What I suggest the people they do and my clients know this already is that I suggest you use a stop loss based on a horizontal level. Now that could be something like any type of support from resistance level so rather than just using an arbitrary figure like an indicator or like say 20 pips or 50 pips or whatever it might be that has no relevance to the timeframe of the chart or has no relevance to the currency pairs or the time of day and what I suggest you do is look for horizontal levels.

For instance if you were taking a buy position and your trade was in good profit. What you can do is move your stop loss. Let’s say you have your stop loss at the low of a setup candle. The trade moves into some fairly good profit but hasn’t reach the full profit target yet. What you can do is look for let’s say like the daily pivot point. Look  for the next swing low or previous swing low so you’re moving your stop loss up in gradual increments but based on technical levels of what’s been already respected by the price in the past.

You could move your stop loss up to below a round number so for instance if you are trading the EUR/USD, instead of putting your stop loss at say 1.3510 if you’re buying you were better off having your stop loss down below 1.3490; 1.3495 something like that down below a horizontal level such as a round number and I’m calling round numbers anything ends in 00 or 50. If the price tends to move up you could then move your stop loss up to just below the 50 level or it keeps going and you still haven’t reach your profit target up below the next 00.

If you’re in a shorter timeframe charts you could be looking for swing lows or previous bounce levels, things like that. That’s going to give you a lot better protective stop loss in place that allows the trade to go through and hit your hit full profit target and without coming back and taking you out to a stop too often. So that would be my advice there.

4.7:1 reward:risk trade on the 1 hour charts

I held a live webinar for my clients yesterday. We had a full room again. Just a fantastic webinar, lots and lots of live trade examples between trades that I took myself  and trades that clients had open ...