Where's the best place for a stop and how to trade the stop?

[DJXput]

This is my first time placing a attachment so bear with me if I dont get it right the first time -

First off as you can see from the chart this is some past history of a chart on the YM (15 min).

My 2 questions on this chart are:

1. if I choose to enter at the close of the large white candle 10042. Where is my sellstop? I know its easier to set a stop after the fact but where should it be if you didnt know the future data.

2. Should this stop be mechanical ie if it hits a price then you sell; or should it be mental ie if the YM closes at a certain point then you sell?

The chart is saying that I bought in at the close of the large white candle ie 10042; figuratively I placed a stop below the doji hammer's cross. The cross is at 10024

The test comes in when the YM reverses and it tests the support at the doji cross. The low of the test is 10023

IF you were making this trade and bought in at 10042 (the close of the larger white candle) where would you place your sell stop at? and would it be mental - meaning would you look for a close below that stop? and if you were looking for a close how many ticks below the stop would your drawdown be (meaning if the YM took off south past your stop but it wasnt the close yet; how far would you hang on?

 

[rossored]

First off, I'd never enter at that point because the risk is too great compared to where the stop is. I'd wait for a pullback (which you get in this instance, but obviously not always) and then buy in with a reasonably tight stop.

Second, why on earth would you put a stop on the cross of the doji?

If you want a stop on this trade as you enter, it ought to be either around the 10017 area (recent minor low at around 11), or better still, the low of the day at that point, circa 10009.

With that in mind, you're long at 10042, stop at 10017 (best case), giving you a stop of 25 points. For an intraday trade, I think that's a hell of a lot because you ought to be aiming for a 2:1 R/R, which means your target is 50 points - or 10092 - which in this case you would have achieved. YM is such a volatile, jerky instrument though ... would you have held it, or would you have sold it back when it failed to break the 10050 high just before 2pm and looked like it might sell off short again?

The 10023 would be the level I'd move my stop to as the price started to go back in my favour, but as that price level hasn't established itself when I enter the trade, the nearest low (10017 or 10009) has got to be your stop.

I don't know if you're trading without a stop when you first enter from what you're saying, but if you are then I hope you're prepared for those days when it tanks unexpectedly and you're left holding the baby.

In my opinion, a stop is always better to be a mechanical stop, a couple of points above/below a recent high/low. Could you trust yourself to pull the trigger if it sails past your "mental" stop? Better to have something in place that just takes you out of the market with no decision making involved on your part.

 

[commanderco]

Hi DJXput,
I do not trade in the manner which you describe, I moved on from it long ago.
However, consider this for what it is worth.

Firstly, put your pro stops out of reach the Stoprunners .
You put yours in the middle of the tracks and this time you were lucky.

Secondly, enter your trade stop "n" points from your stop.
ie If you are happy with 10 points of risk, and you want to go long, enter your
trade stop at n+10.
Your trade then becomes ... buy at n+10; if done; sell at n.
Never trade off the end of a big candle as they are usually followed by a retrace
and always always think in terms of risk ... profits tend to take care of themselves.