Hi guys! Last chart I posted my first video chart format and that was new for me. Last week I also held a webinar, and that was also new. The topic was STOP LOSSE, and I explained many things about this subject. I will share some points with you that you can use in your trading.
1. What is a stop loss order and how can I use it? The stop loss order is without a doubt the most important tool in your trading arsenal. It is basically the order you place when you enter a trade to be protected if the market goes against your position. For example if you are long BTC/USD from 6400 then a selling stop loss order can be placed under at 5XXX. Furthermore, if you are short BTC/USD from 6400 then a buying stop order can be placed at 6600. Basically your stop order for a long position is a sell order placed lower than your entry point and a stop order for a short position is a buy order placed higher than your entry point. Until I show you more example of how you should place your stop loss orders in another post please remember that a good practice is to use strategies of money management where you risk at most 5% of your capital if you trade aggressively (and have a really good strategy) or even lower like 1-2% for a more conservative approach. I use conservative approaches most of the time. It keeps my capital safe and I like keeping my money, not losing them in a silly way. This percentage of your trade is what you risk, and this is represented by how much you will lose if your trade gets stopped. That is actually that risk we are talking about when we enter trades. Remember that all trades pose a risk of loss.
2. Should we use stop losses and are they really that important? Short answer YES (please notice the caps). But let me tell you more about this. If you are serious about trading them you must understand that no trader has a 100% reliable trades. In every strategy there will be losses but keep in mind that these losses should be kept under control. This is the purpose of a stop loss to manage how much money you lose and to avoid the situation in which you have no capital left. Because with 0 capital there is a 0% chance to recuperate your money or make any profit. In the end any market will give results if you control your risk and protect your capital. Here are some a few things to keep in mind when using stop losses some GOLDEN RULES if you want: - Do not widen you stop loss ; - Do not move your stop loss (just treat it like an immovable object); - Placing stop order should be done in accordance to a trading plan but a bit more on that latter;
3. So where to place stop losses? There are many variants of placing stop losses depending on your strategy and style of trading. Only you can decide which is the best for you. I will show you one in this chart, and one in another post later on. Here are some rules for placing a stop loss: - there must be a «barrier» between an entry level and a SL level (a support/resistence, an indicator, a historical high/low etc) - SL size have to allow the market to «breath» - Use a buffer to protect yourself from random movements (market noise)
Example: Stop Loss Order using swing highs/lows For this type of SL remember: - We can use previous swing highs and lows - Use a buffer to protect yourself from random movements (noise)
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I agree but setting them is a clear indicator to market makers how and at what price they can rob you blind. I either set an alert close to my stop or I set a mental stop loss if I am going to be monitoring actively. I only use a formal limit or market stop if I am not going to be monitoring and will not be able to exit manually and I do it exactly like he explained so eloquently above. This is especially common in US markets as market makers can drop a rising stock price just enough to hit peoples stops and then the climb just continues on. It happens quite often and the more orders are sitting out there the more tempting it is.
I do however recommend that if you have the discipline to monitor and maintain a mental stop loss or if you're monitoring the markets constantly then set an alert to notify you that a position is nearing a stop loss. Then you can easily have an order queued up but not entered so you don't get caught by these traps. The benefit being, your order is not sitting there in the order book for all to see and prey on. Again, this isn't recommended for most people but I know it has saved me from being stopped out of positions with a lot more potential to go then it has cost me a few extra dollars. Yes it has cost me up to a few dollars a share or a few cents a contract and I try to calculate that into my risk. It hasn't happened to me but if you are really unlucky you can lose a lot more if a crash happens but it can save you from a flash crash as well.
Again this is my own personal opinion and Mr. Lavrov is one of the best traders I have met recently so I am not going against his advice in anyway, I just am adding my own personal experience to it. You should definitely listen to his advice over my own because he really does care to create smarter traders. Remember I calculate this into my risk and am willing to accept the losses from it so chances are it isn't a suitable idea for most people starting out. Placing a stop loss just outside the previous area of value also typically avoids the market makers manipulations so the way he's talking about here is a great way to use stop losses with a lot less chance of what I mentioned. He doesn't use the term area of value but I am referring to the area above the red lines. So my stop loss would be just about exactly where he drew his.
Have you done anything on candlestick indicators? I believe everyone needs to know the basics of reading candlesticks because I have recently found out that a lot of people have no idea what the candles actually mean or even that they represent different amounts of time frame on different charts.
pkb6698
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Total Coin Market Cap : 2014 vs 2018
pkb6698
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I'll just let you walk only the flower road!!
FrederickDupont
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The future of bitcoin
SwissView
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24h Tradingvolumina collapsing:
Bitcoin vs. SPX
Never before since December 2017 24 Tradingvolumina had been so low on a regular trading day Monday - Friday. This low volume until now occurred only at weekends, an there mostly on Sundays only.
All Cryptocurrencies
Number of Currencies: 2,451 Total Market Cap: $209,906,276,507 Vol (24H): $9,533,056,648
"Notably, while Ripple has previously made some mention of new customers in its markets reports, to the point of saying it saw its "best quarter ever in Q2" in terms of customer growth, ---> its latest report ---> did not discuss ---> adding ----> any new clients.
I do however recommend that if you have the discipline to monitor and maintain a mental stop loss or if you're monitoring the markets constantly then set an alert to notify you that a position is nearing a stop loss. Then you can easily have an order queued up but not entered so you don't get caught by these traps. The benefit being, your order is not sitting there in the order book for all to see and prey on. Again, this isn't recommended for most people but I know it has saved me from being stopped out of positions with a lot more potential to go then it has cost me a few extra dollars. Yes it has cost me up to a few dollars a share or a few cents a contract and I try to calculate that into my risk. It hasn't happened to me but if you are really unlucky you can lose a lot more if a crash happens but it can save you from a flash crash as well.
Again this is my own personal opinion and Mr. Lavrov is one of the best traders I have met recently so I am not going against his advice in anyway, I just am adding my own personal experience to it. You should definitely listen to his advice over my own because he really does care to create smarter traders. Remember I calculate this into my risk and am willing to accept the losses from it so chances are it isn't a suitable idea for most people starting out. Placing a stop loss just outside the previous area of value also typically avoids the market makers manipulations so the way he's talking about here is a great way to use stop losses with a lot less chance of what I mentioned. He doesn't use the term area of value but I am referring to the area above the red lines. So my stop loss would be just about exactly where he drew his.
Have you done anything on candlestick indicators? I believe everyone needs to know the basics of reading candlesticks because I have recently found out that a lot of people have no idea what the candles actually mean or even that they represent different amounts of time frame on different charts.