Percentage between limit price and stop price in stop loss

[ncbeachdude]

I'm just curious to see what everyone is doing when doing a SELL stop loss, specifically the spread between the STOP PRICE and LIMIT PRICE.

I've always used 50% of whatever the USD spread is, so if it averages between 10% and .01 percent, I do 5%

Example, for a LIMIT PRICE of 32,000 I take 5% of that which is 1600 and add it to 32,000 to get my 33,600 STOP PRICE.

Is this too much, to little?

Thoughts?

What do you use?

[1715207659]

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[jackg]

Why are you using percents?

If you're going to do that, grab yourself a copy of some historical data and see how much the price can move for as long as you keep your trade active would be my recommendation...

[ncbeachdude]

I guess I read somewhere and it just stuck that there should be a significant separation in case the market is falling REAL fast.

In your example you used 100 for limit and 95-99 for stop

I for some reasons learned if you have 100 for limit you should have somewhere around 70 for stop to MAKE sure.

Though, I will say that I've yet to reach a stop loss trigger.

[logfiles]

It all comes to your risk management and trading strategy. There is no specific formula. I always first look at the possible resistance and support levels before setting my Stop Loss and Take profit target price. That's my strategy  

[ncbeachdude]

I understand, I'm still pretty new to this and have yet to figure out which is more important, to add a greater spread here to insure a fast falling market doesn't blow through the stop loss, or a more conservative approach to stop the hemorrhage quicker.

[tbct_mt2]

I guess I read somewhere and it just stuck that there should be a significant separation in case the market is falling REAL fast.

In your example you used 100 for limit and 95-99 for stop

I for some reasons learned if you have 100 for limit you should have somewhere around 70 for stop to MAKE sure.

Though, I will say that I've yet to reach a stop loss trigger.

It would be based on your risk management and the percent of loss you afford to lose. From the percent you will get the price for stop loss. From the price for stop loss, you lift it up a little to get a price for stop limit.

You might get troubles if exchange orders get technical troubles and your capital is big enough. If yours is big, you should split it to a few different stop limit and stop loss orders at different price.

I don't think there is a formula here for all. I don't set the gap between stop limit and stop loss bigger than 5%. The stop limit orders should be placed on somewhere around the strong resistance at which if it is broken, price will be dumped to the hell. 2% to 5% above resistant price can be good.

[exstasie]

I'm just curious to see what everyone is doing when doing a SELL stop loss, specifically the spread between the STOP PRICE and LIMIT PRICE.

I've always used 50% of whatever the USD spread is, so if it averages between 10% and .01 percent, I do 5%

Isn't that kind of arbitrary? Do you find yourself.....constantly getting stopped out?

Example, for a LIMIT PRICE of 32,000 I take 5% of that which is 1600 and add it to 32,000 to get my 33,600 STOP PRICE.

So you're a forex trader and you're trying to short Bitcoin during a bubble? Good luck!

Anyway, my stop losses are usually near important pivot points (below if I am long, above if I am short). I aim for a reward vs. risk ratio of 3:1 or better. So if my entry point can't net that much (i.e. my stop would be too wide, too much risk) then I don't take the trade.

[mrkfdr]

If you are in the crypto market it's better to consider the support 's for determining the stop loss.
calculating pips or percents are not working well in a volatile market.   

[AicecreaME]

It all comes to your risk management and trading strategy. There is no specific formula. I always first look at the possible resistance and support levels before setting my Stop Loss and Take profit target price. That's my strategy  

Yep, that's the easiest to do that or just choose "Market" instead of "limit market" to fill your order instantly and manually do the stop loss and take profit scenario, if you're scalping or day trading. It's risky but the profit is easy. Unlike if you're going to wait for your order to be filled is just a waste of time for me, but I guess it depends on which kind of Trading you do.

[hugeblack]

This percentage varies according to the trading strategy you want to perform.
Those who want to day trade set trading limits less than 5% to win a small amount per day, for example 1% is sufficient for that.
As for those who prefer trading in the medium and long term, they set barriers according to the levels of resistance and accordingly they determine the rate of change. There is no fixed percentage of change.

[michellee]

I do not think people will calculate so many details to use stop-loss because they will set the price below the price they buy. They will not use percentages to set the price because not many traders will use it that way. Maybe only pro traders will use that, but most traders will place the stop-loss below the buy order. As long as they can accept the price, they will quickly place the sell order before the price is down too deep. But we have a different method to determine the stop-loss price.

[el kaka22]

I would assume that 10% should be fine, but this is more about the situation and not a general blanket number can be used for everywhere. I personally believe that the best way to go with this would be to actually check where you are at that time and change that number according to what you want.

I would say 10% on 32k to 33.6k would be fine, that is not really that bad, however when we were at 20k for example, that would have been not decent, I would say a bit lower could have been better, or when we were at 34k for the first time, 20% would have been better. So basically what number you will have to pick would need to be depending on the situation and if you picked the right number you would make a good profit, best part is that if you do not pick the right number it would still be decent as long as it goes on the right directions.

[crazy-pilot]

Why such difficulties? Your task is to ensure that both prices are as close to each other as possible, but at the same time that a situation does not happen when your order is passed.
That is, you specify the stop price 100, and the limit price 95-99.
I don't understand why you need to use such complex calculations, because stop loss is the moment at which you want to fix.