Volatility - Trending Trades & Stop Losses

[I-Forex]

In my previous strategy I was using the Fibonacci indicator to measure drawbacks when riding a trend to prevent loss of profits already gained and re-entering a trending trade. I also found that the average drawback range hovered between the 38.2% and the 61.8% mark (50% average). I kept my Stop Losses at a safe distance, I found that number of time the "swings" would attain my Stop Losses were rare in general.

When I started observing volatility on various time frames, I discovered that I could easily improve the accuracy of setting a safe stop loss by measuring the actual volatility of the currency pair. I studied this for a while and noticed that it is actually a very common practice for many traders when measuring the drawbacks. Some use a percentage to calculate the volatility others take the highest or average volatility. I use the average measure to re-enter a trending trade, I have however ceased using a Stop Loss (adjusted my risk management chart accordingly). I'd be curious to hear from other traders using this or similar strategies and if they use stop losses

 

[Enivid]

I sometimes use ATR to set volatility-based stop-losses. More commonly though, my stop-losses are based on the nearest support/resistance levels.

 

[Michelle Yeoh]

I sometimes use ATR to set volatility-based stop-losses. More commonly though, my stop-losses are based on the nearest support/resistance levels.

Same here! Means, I also set my stop loss and take profit levels based on support and resistant levels! I see, the market always respect higher time frames support and resistance levels.

 

[I-Forex]

Same here! Means, I also set my stop loss and take profit levels based on support and resistant levels! I see, the market always respect higher time frames support and resistance levels.

- 100% agree with you that the strongest SR levels are higher timeframes, does your strategy manage TP's as well?

 

[I-Forex]

I sometimes use ATR to set volatility-based stop-losses. More commonly though, my stop-losses are based on the nearest support/resistance levels.

Makes sense, once your SL are set, do you manage drawbacks or let the trade run it's course?

 

[Enivid]

manage drawbacks

What do you mean by this?

 

[Michelle Yeoh]

- 100% agree with you that the strongest SR levels are higher timeframes, does your strategy manage TP's as well?

Yes, in my trading I use only support/resistance level for identifying my SL and TP levels! Same strategy for both of them! In addition, I am quite satisfied with it.

 

[I-Forex]

Yes, in my trading I use only support/resistance level for identifying my SL and TP levels! Same strategy for both of them! In addition, I am quite satisfied with it.

Channel or trend trading, or both?

 

[I-Forex]

What do you mean by this?

I assume you like to trade and ride trends, I was wondering if you exit a trade when faced with a retracement or if you hang in there and let the trade take it's course

 

[lucacrebbe]

I sometimes use ATR to set volatility-based stop-losses. More commonly though, my stop-losses are based on the nearest support/resistance levels.

sorry how can you use the ATR to set stop losses? I mean it's an ''oscillator'' how can yu put stop losses using it? I mean pratically cause I can figure it out (sorry I am noob)

 

[Enivid]

I assume you like to trade and ride trends, I was wondering if you exit a trade when faced with a retracement or if you hang in there and let the trade take it's course

If the retracement hits my SL, I'm out. Otherwise, I let the trade recover.

 

[Enivid]

sorry how can you use the ATR to set stop losses? I mean it's an ''oscillator'' how can yu put stop losses using it? I mean pratically cause I can figure it out (sorry I am noob)

ATR is a short for Average True Range. Its value shows how on average the price fluctuates during a period. So, if I set my stop-loss to entry minus ATR(20) times 3, it will be taken out only if the price fluctuates farther than 3 average values, which is a strong movement. This results in a sort of a volatility stop-loss.

 

[Ary Barroso]

I sometimes use ATR to set volatility-based stop-losses. More commonly though, my stop-losses are based on the nearest support/resistance levels.

Same here; I also consider the support/resistant as my major to set any SL/TP. It helps me a lot.