1989<\/a>:<\/p>\nTo find the Holy Grail of setting stops, adventurous traders usually start by Googling something like “best technique for setting stops” for hours.<\/p>\n
Upon doing so, they discover that many traders simply set the stop price at a fixed percentage below the entry price.<\/em><\/p>\nThey also learn there are just as many traders who swear by volatility or ATR-based stops.<\/em><\/p>\nFurther research into the best methods for setting stops even reveals that many successful traders simply set a stop below technical support of a “swing low” price<\/em> within a reliable chart pattern.<\/p>\n<\/span>Owww, my head hurts! Who to believe?<\/span><\/h2>\nLet me save you a ton of research time by declaring <\/strong>there is NO HOLY GRAIL<\/strong> when it comes to setting stops.<\/p>\nNo single method will work all the time.<\/p>\n
No matter how carefully planned or painstakingly backtested your strategy, your stop eventually WILL get hit.<\/p>\n
But, that is actually the good<\/em> news.<\/p>\nOnce you understand that no single method for setting stops is perfect, you can free yourself<\/em> of all the pain associated with analysis paralysis.<\/p>\nYou know, that’s when you waste time and energy over-analyzing why a stop was triggered.<\/p>\n\n\n