Stop Loss Strategies for Trading

Why has the E-Mini S&P been so slow in the last couple of months? Political turmoil, tax regulation and fiscal cliff talk has scared investors. Many people are hesitant to spend money with a great risk to lose and then pay taxes on top of it.

Speaking of losses, an important part of effective day trading is knowing where to place your stop loss. Traders always want to have the smallest stop possible. Taking this into consideration, our stop can’t be so small that the random movement of the market cannot stop us out. What can be used to guide your stop for the current market conditions? Three stops are recommended, and whichever one happens first will get us out of the trade. At 8:40 in this video, John Paul begins to explain the three stops. A Catastrophic Stop will prevent a major world news event from wiping out your account. Having something that will prevent major loss like this is very important. It’s not something we want to get hit. By using an ATR value of four (mentioned in NinjaTrader), we double the current ATR value to determine the Catastrophic Stop. To learn the remaining stops, watch the video above. There any many more trading videos at Day Trade to Win.

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