Dear AVIJIT,
Normal method of putting stoploss at lowest price of previous 3 candles is what generally followed and savvy professionals have idea where this stoploss is. They can create a deliberate "noise" during intraday activity when upward breakout is on the way, which triggers your stoploss (with stoploss of most others in your category) thus forcing you to sell at lowest price. The same pros buy stocks at these prices (which earns them a good price) and then the market goes into a rally keeping us wondering why we did not keep stoploss somewhat lower.
I have deviced my own method of putting stoploss which is slight modification of SafeZone method invented by Dr. Alexander Elder (to know more about SafeZone, read "come into my trading room" by same author). If today's lowest price is lower than previous day, previous day's low is taken as the basis for my safezone. If today's low is higher than previous day then the difference of today's low and previous day's low is added to previous day's low to find the safezone. Once I go long, I calculate 9 days EMA (exponetial moving average) of safezone and put a stoploss at that price.
It has worked for me very well.
Regards,
Abhay (AAD)
Hi Abhay,
New to the forum. I'm into SwingTrading (pretty raw & new!) I was looking for a better method for my SLs (currently i use the 12d EMA as the basis) when i came across your post. I read your method and would like to give it a try but i first want to make sure i understand it correctly.
As far as i understand this is the way you do it :-
If today's lowest price is lower than previous day (low?)*, previous day's low is taken as the basis for my safezone
(means you place your SL a few pips lower than the previous day low & NOT today's low, right?)
If today's low is higher than previous day (low?)* then the difference of today's low and previous day's low is added to previous day's low to find the safezone.
Once I go long, I calculate 9 days EMA (exponetial moving average) of safezone and put a stoploss at that price.
(means you use the first 2 methods only while
entering the trade, right?)
* i assume here 'previous day' means the previous day LOW (& not close) Am i right?
Please confirm.
Thanks & happy trading
Kalyan.