What’s Size Should Your Stop Loss Be?
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#507: What’s Size Should Your Stop Loss Be?
In this video:
00:23 – How many pips should you risk per trade?
01:03 – Why pips are irrelavent
01:47 – What does a 20 pip stop loss mean?
02:14 – Where you should place your stop loss
03:34 – Win a place on our coaching course
04:17 – Where to find a good broker
What size stop loss should you set and how many pips should you risk on every trade? Let’s talk about that and more right now.
Hey there traders Andrew Mitchem here The Forex Trading Coach with video and podcast number 507.
How many pips should you risk per trade?
I want to talk about how big your stop loss should be. How many pips should you be risking on every trade you see? It’s something that I get asked by non clients all of the time. And it’s really interesting because unfortunately most people out there set a certain amount of pips for their stop loss on all of their traits.
And to me it’s the completely wrong way of trading and you know, it’s the wrong way of trading because if most people are doing that and you also know that most people losing money, there’s kind of a correlation there isn’t there. You see it makes no sense at all. I’ll let you know why.
Why pips are irrelavent
Well, how can you have a set amount of pips as a stop loss on a trade? It has no relevance to that trade whatsoever and it has no relevance to the currency pair your trading. It has no relevance to the timeframe chart. It has no relevance to the movement in the market at the time, and none of it makes sense. But most people do it, and most people will say, as an example, I have a 20 pip stop loss and a 40 pip profit target.
Therefore I have a 2 to 1 reward risk, which is exactly what you say you should be doing Andrew, have two, three, four to one. The problem is, is what is 20 pips really mean? Well, it means nothing.
What does a 20 pip stop loss mean?
You see 20 pips on a Euro/Swiss Franc is something that’s, you know, takes quite a while to move 20 pips, 20 pips on the Euro/New Zealand dollar and it can do that within seconds.
And so people who use a set amount of pips as a stop loss are making a massive, massive mistake. So the way around it, it’s quite simple.
Where you should place your stop loss
We never look at how many pips our stop loss is. Our stop loss is placed at a level that’s really easy to know where to place stop loss, but it’s relevant for that particular trade, It’s relevant for the current market conditions, it’s relevant for the pair you’re trading, it’s relevant for the timeframe chart you are trading and the movement in the market at that time.
And so it’s all relative to what’s really happening. And all we do is we adjust our lot size to allow for size of that stop loss. So you put your stop loss at a level that safe for the trade and you then make an adjustment in your lot size. You see every pair or most pairs have different payouts per pip depending on what the currency pair is and also what your own trading account is denominated in.
So you’ve really got to understand your lot size and get your lot size according to your risk and the stop loss size of that particular trade. So we can massively help you with that and that will help completely change your trading around and probably mean you’re going to get stopped out of trades far less often because you’re putting the stop loss where it needs to be on that trade for a reason. A couple more things I want to cover with you.
Win a place on our coaching course
You have two chances This week is the end of this offer with the prop firm that we have joined with. Called FX2Funding. We’re giving away two places on our full coaching course free of charge as part of their offer that they are running right now. To find out more, I’ll put a link on this video podcast for you to go to the FX2Funding site, register there and you can win lots of other goodies that they’re giving away.
And included in that giveaway are two full course to full course memberships to the Forex Trading Coach membership. So that’s a really valuable giveaway there that they’re doing.
Where to find a good broker
And lastly, brokers, if you’re out there looking for a good broker, I can highly recommend blueberry markets, their based over in Australia and the great bunch of people, great platform, incredible customer service.
Absolutely credible, top notch. You will not find better customer service out there. They have the MT4/MT5 platform. Lots of markets, instruments, forex and non-forex markets available to trade. So I’ll put a link to blueberry markets here. I’ll put a link to the FX2Funding website as well and make sure that you don’t risk X number of pips on your trade.
Learn to use your stop loss the right way. It will massively help you trading. This is Andrew Mitchem here at The Forex Trading Coach. I’ll see you this time next week bye for now.
Episode Title: #507: What’s Size Should Your Stop Loss Be?
Signup For my Forex Masterclass
Find out more about Blueberry Markets – Click Here
Find out more about my Online Video Forex Course
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