Hi Shravan,
Very informative thread. Thank you for sharing.
My rules for stops are very simple.
1. First decide an entry and exit price based on trading plan and profit targets.
2. Based on resistances/support levels in multiple time frames(not just one time frame chart)I pick a stop level.
3. Now I know my risk. Next question is, is the risk within the requirements of my trading and business plan? It's easier to remain objective before, during and after trading when risk levels are minimal. If risk is not within my range I skip the trade.
4. If risk is within acceptance level, then what's my reward to risk ratio? Ideally a minimum of 3:1 on swing trades and more if the time frame is longer......say 9:1 if the trade is supposed to last for weeks/months. This is primarily based on pattern picking research. I also have one intraday pattern where even an RR of 1:1 works.
5. If # 4 above is met, then I place my order. If the order is filled it triggers both a protective stop loss order based on my risk and the profit orders.
Hope this helps.
regards
Shreenath