Stop Loss %

[mustang]

What is a "reasonable" percentage to set stop loss (trailing) at. I changed mine from 10 to 5 and ended up with a pile of sell offs! An advice for a novice?

[Wumpus]

I ONLY sell on stop-losses :) I set mine to 15% when I buy and when I'm 5% up, I change to 10% and leave it. When the charts suggest that a fall is probable (like a very overboaght RSI) I set it lover than 10, but always higher than 5. This strategy may seem stupid and short-sighted, but it works well for an emotional trader. On the long run I make money...

[Tango]

depends on the volatility of the underlying, and the gearing of your instrument. If you are geared 10x, and set a trailing stop at 20%, a 2% move will shake you out. 20% seems to be a common stop level. I think it's best to use the break of a support level below your trade entry as an initial stop (for long trades) and then use a mechanical system to move your stops up if the trade goes your way. Classic trend-following systems would use the break of the most recent low (ie, a lower-low) as a stop.

[SimonPB]

there is no perfect level. I've crunched 20 years data on a few large caps and the answer was nothing. Basically it depends on the system you use regarding speed/duration of trade, liquidity and product you trade. Short quick trades can live with tighter stop losses, longer trades need more breathing space. Lower liquidity will see spikes that could stop you out while a highly liquid stock will mostly see smoother price progression. Lastly, if you're trading a derivative product you need to widen your stop. I trade warrants with a gearing of around 5x so use a 20% stop loss. This allows a 3-4% move against me before I get stopped out.

[#5]

Tx guys...cool