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Originally Posted by FOREXFORKAREN
1) How far away do you set your stops?
2) How many lots do you trade?
3) How often do you check the charts?
I am curious to know these answers from those who trade using the monthly charts. Thanks. EJ  |
I set my initial stop at a technical level which, if breached, indicates that my trade has gone wrong. Where that level is will depend on what your basis is for entering trades in the first place.
"Cut your losses and let your winners run". That said, I do always have targets that my trades should reach. This can be either price level or the level of some indicator. Once it reaches that level I either close the trade (usually) or, if in doubt, I set a fairly tight stop (which would typically protect around two thirds - three quarters of my profit).
How many lots to trade? This should be a function of your account size (the actual balance of your account), how much funds you have elesewhere that you can afford to risk and where your stop is set.
My opinion is that you should not risk more than 2% of your capital on any one trade. So, if your balance is $10,000 then your position size should be such that you losses don't exceed $200 at the most. Yes, this is smaller than you were probably thinking.
I set the STOP FIRST and use the maximum possible loss to determine how many lots to trade.
Charts. I don't trade to any strict timeframe but in general my trades run between a few days and a few months. Except during a final "blow off" phase I generally check twice a day. Around turning points I will often leave the chart running and make a point of staying on the computer doing other things and regularly checking the chart and adjusting stops etc. But that's only in the last couple of hours of a multi day or week trade.
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