Stop loss hit and trade goes your way/direction without you

#1
Hello Traders,

I'm very sure many of you'll have experienced this situation where you get Stopped out of a trade and the trade eventually does go in your direction, just without you.

This does happen to me occasionally trading my strategy and I'm looking to implement a new rule into my trading strategy that will help me around this and wanted to get your opinions on this

I've narrowed down 2 rules, both of them involve manually stopping myself out (so I would never put in a stop loss order into my trading platform).


1-15m Candle Close - The first rule would be to wait for a 15m candle to form fully and close below my stop loss. Several times I've noticed the 15m candle usually stops me out with a full candle which eventually turns into a wick and usually never CLOSES below my stop. So I basically get stopped out by a wick and the trade then resumes to go in my direction.

2-Double test - The second rule is to wait for price to hit my stop loss 2 times. So I would never exit a trade the first time it hits my stop (assuming it hits my stop and retraces back into a wick) and I would wait for the price to hit my stop loss a second time, and this is when I would exit the trade.

These are just a few ideas that came to my mind, what do you'll think would be a better strategy to implement keeping risk management in mind, and if you'll had any other experiences using different strategies to get around this problem.

Thanks
 
#2
my personal experience

1. Its ok to let the SL hit. Getting out is better.

1-15m Candle Close - The first rule would be to wait for a 15m candle to form fully and close below my stop loss.
What if 15 min candle closes 15 Points below your SL, what if 15 min candle is a WRB, in real life it doesn't work as it is of no help in managing the trade ( that's the bigger picture)

I have tried this and for few trades it works great, then all of a sudden you have a bad day and price just keeps moving in opposite direction. ( So personally I would not recommend this). Sometimes u will see the price falling and you will think it will come up, but it won't. That day you will regret choosing step 1.

To over come this you need a strong trading mind. You need to accept when your SL gets hit and get out.

-Double test - The second rule is to wait for price to hit my stop loss 2 times. So I would never exit a trade the first time it hits my stop (assuming it hits my stop and retraces back into a wick) and I would wait for the price to hit my stop loss a second time, and this is when I would exit the trade.
yes this could work only if you have a SL in the system, you can decide where its going to be, BRN prev candle low etc. However you must have it in system. You also must design the system to have that built into RR also in long run you will start loosing.

Most of the times we find it difficult to understand other's points of view. So what works for me is to test a new thing with very small qty over a longer period of time.

So my position size is x, lets say I would like to try a new SL method. So I will keep trading my original method + I will take x- 98% qty to test the new method.



PS: your nick reminded of Saint Sir.
 
#3
It's better to have automatic SL than manual SL, both of your rules are very risky, you might be right 2-3 times but there comes a time when a stock price will make big move, sometimes that can be 4, 5, 6+ % in that 15 minutes period which will wipe out most of your capital, also not to forget human psychology, with manual SL you migh think now price will retrace only for it to move farther away from your exit point. Rather than going with any of this methods just have fixed 1-2% trailing SL according to your risk appetite.
 

AlphaT

Well-Known Member
#4
It is mostly liquidity hunting by Institutions! This happens when there are more retail Stop Loss orders (which we can't see but they can) at the price level where you have placed your SL. So a cluster of SL orders becomes very inviting for smart money to fill their own orders at a better price!
 
#7
Hello Traders,

I'm very sure many of you'll have experienced this situation where you get Stopped out of a trade and the trade eventually does go in your direction, just without you.

This does happen to me occasionally trading my strategy and I'm looking to implement a new rule into my trading strategy that will help me around this and wanted to get your opinions on this

I've narrowed down 2 rules, both of them involve manually stopping myself out (so I would never put in a stop loss order into my trading platform).


1-15m Candle Close - The first rule would be to wait for a 15m candle to form fully and close below my stop loss. Several times I've noticed the 15m candle usually stops me out with a full candle which eventually turns into a wick and usually never CLOSES below my stop. So I basically get stopped out by a wick and the trade then resumes to go in my direction.

2-Double test - The second rule is to wait for price to hit my stop loss 2 times. So I would never exit a trade the first time it hits my stop (assuming it hits my stop and retraces back into a wick) and I would wait for the price to hit my stop loss a second time, and this is when I would exit the trade.

These are just a few ideas that came to my mind, what do you'll think would be a better strategy to implement keeping risk management in mind, and if you'll had any other experiences using different strategies to get around this problem.

Thanks
what % is your stop loss that gets hit sooner
 
#8
It's better to have automatic SL than manual SL, both of your rules are very risky, you might be right 2-3 times but there comes a time when a stock price will make big move, sometimes that can be 4, 5, 6+ % in that 15 minutes period which will wipe out most of your capital, also not to forget human psychology, with manual SL you migh think now price will retrace only for it to move farther away from your exit point. Rather than going with any of this methods just have fixed 1-2% trailing SL according to your risk appetite.
That makes a lot of sense, all it can take is one bad trade to register a big loss. Thanks
 
#9
It is mostly liquidity hunting by Institutions! This happens when there are more retail Stop Loss orders (which we can't see but they can) at the price level where you have placed your SL. So a cluster of SL orders becomes very inviting for smart money to fill their own orders at a better price!
Definitely. I trade using a supply and demand strategy and usually place my stop right below/above a demand zone/supply zone. I do get stopped out occasionally but I guess there's no way around it, other than using slightly wider stops.
 

Similar threads

Broker Special Offers

Intraday Higher Leverage

Save up to 90% in brokerage and get higher leverage for intraday trades.

Name:Phone:
Email:City:
State:
Are you a day trader?