Shalidor posted: I think it's all relative. There are a lot of strategies now that simply won't work with such an approach. Of course, if you remember about the reserve and the amount of capital in general, if it allows, and you do not let the situation go on its own, and constantly analyze what is happening on the market, then even a narrow stop will not limit you from the profit. Again, everything depends on how each trader is used to trading. I always have some disputes with my friends in the sphere, because absolutely everyone has their own opinion. Everyone already has some experience and copes with these or those situations in different ways. Therefore, it is impossible to say that this approach can become universal and help in any situation without exception. Just try what will suit to you.
Basically, traders need to set their stop loss trading tool according to the market situation; anything like fixed stop loss is meaningless here; that’s the point!
Setting a stop level in trading also falls into the trading skill. Stop levels are sometimes seen to be very narrow due to which frequent stop levels hit. The stop-level is used to protect the account from the unexpected moves of the market. To have success in trading, it is essential to use stop level if you want to focus on money management and risk management.
Yes placing stop loss is an art. Where to place stop loss depends on your strategy. But one thing you need to consider while placing a stop loss which is support and resistance. You also need to consider spike.
I always set stop loss, but very rarely do I let them hit. By the time a trade approaches that point, you should spot those signs of reversal early on and cut your loss short. The sl for me is used in the case of a sudden news event that causes a spike out of my control. Then it serves as the maximum I was willing to lose with that trade.
If you want to have good money management and sufficient risk management, it is better to see when to stop. Placing a stop loss will also depend upon the strategy you are using. It is a good way to manage risk.
Money management is the key for trading success. Stop loss is also important if you do not able to predict the for long term. But the placement of stop loss is very crucial. You need to have good idea about support and resistance level to place an effective SL.