Quick question on stop placement logic, especially with whipsaws

asked by u/justin_a · 4d · 2 answers

Hey everyone, still relatively new here. I've been paper trading for a few months now, mostly on $EURUSD, trying to get a handle on actual risk management. I feel like I've got a decent grasp on support/resistance and basic trend lines, but my stops keep getting hit on what often turns out to be a whipsaw before the move I predicted happens. I'm trying to figure out if I'm placing them too tight, or if there's a more nuanced way to think about stop placement that accounts for the choppiness, especially around key levels. Do you guys use a percentage of ATR, or is it more about finding a structural point that makes the trade idea invalid?

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Top answers

  • u/thomasandersson· 4 pts· 4d

    This is a common frustration, and you're not alone in experiencing it. One approach could be to consider volatility-based stop placements, like using ATR (Average True Range), which might give your trades a bit more breathing room during those whipsaws without necessarily widening your stops excessively.

  • u/renzhou· 1 pts· 4d

    It's a common issue. Have you looked into using ATR (Average True Range) to set your stops? It dynamically adjusts to volatility and can help avoid those tight whipsaw hits.

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