3 Ways To Choose a Stop Size When Day Trading 👍

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Ideas for stop placements when day trading. How do you determine proper position sizing when day trading? One of the challenges we have as day traders is where to place our stops. When we're trading a particular key pattern we tend to think about putting a stop above or below a key level and that makes sense. OK.

I have three ways for you which make it easy to find a location for stops. Say, you're trading the DAX, 5 minute chart - what is the biggest candlestick on the chart I'm trading? One way is to use the ATR. Another way to do is to quantify the rotations. Of course this depends on what you are doing, if you're scalping you don't want a wide stop.

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[-xm]

I set my macros to 3 possible stop distances to chose from. I scale in and take profit around 4:1 of the risk. Net profit is less due to the tight stops while I scale in, makes me lose up to 30% of my positions, but that's part of my strategy. I hope to stay consistent, I've made a checklist to judge my performance in between trades, based on how good I follow rules rather than how much money I make or lose. Thank you for the great content, really makes the difference.

[robertquigley]

Use zone and time stops. But ATR is definitely good for shorts. Out of 10 trades 6 or 7 close quickly and profitably. 1 or 2 will close the same day profitability. 1 will take a week or two to close profitability. 1in about 50 trades end up taking months to close profitability. 1 in about 250 will close with a lose. Trade stocks only for the most part. Simply hate hard stops but clearly useful if not monitoring the markets constantly. On the other hand, I will use limit sell orders and walk away for the afternoon if necessary.

[laurenth]

Well, another year i didn't win a dime, i never believe what the market is doing, or too late. I always miss the right TF... for example today, i didn't believe the reversal; I'm a calm person i think people and market should stay calm. In this sens it's all about psychology. I should have seen the double retests etc... there is always something i don't see or think about... it's unbelievable.

[caezar]

Using the average trading range now is NOT a good idea. In fact it's the opposite of what you should be doing. Low volatility is a predictor of high volatility to come. Your first suggestion of taking the highest range over a time period is a better approach.