Where to Put Your Stops
Leave a CommentMany people say that different brokerages hunt for stops. However, that is just not true. Let me tell you what happens. Many people place their stops all in the same place, and doing so draws the market to that area. Some of these areas are at pivot points, Fibonacci retracement levels, at round numbers on long positions placed below round numbers (10, 20, 25, 50,75, 100), and on short positions above round numbers.
You need to pick different places to place your protective stops. There are areas you can place your stops, and when your stops are hit there is a good chance that the market has turned and is going in the other direction. This turns out to be good when you get taken out of the market.
With the right trading system or strategy you can be a little different than the rest of the market, using all the same indicators.
Topics: Trading Tips
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