A Simple stop loss method

[L.C.]

A Simple Stop Loss Method

This post is on the subject of where to place a stop loss.

This is a conversation I have almost everyday in my chat room and I feel that the best way to really understand these concepts is to see them explained live or thru a video. If you would like to see the video I made explaining where I place my stop loss levels, please see the link below.

When I first started trading, I would read or hear the saying… “don’t place your stop loss where everyone else does”.

I wondered for a long time about what that meant exactly.
How could I possibly know where everyone ones stop loss levels are?

The question that started this conversation in my chat room was, “Why do I get stopped out only to see the price bounce at my stop loss and continue on the direction I was hoping for”?


I figured out over time that there are levels known as psychological levels.
These are (in order of importance)
The double zero… 3500, 3400, 3300 and so on
The 50 level… 3550, 3450, 3350
And then the 20 and 80 levels.

The important thing to remember is that price doesn’t have to hit one of these numbers on the number to work… these are just levels that you should be paying attention to.

Along with being aware of psychological levels… I also use Fibonacci retracement levels and pivot points to identify possible areas where price might bounce, and this area usually turns out to be where most people place their stop loss orders.

Something to remember about Fibonacci retracement levels… they can and do act as potential levels of support or resistance.

When all of these support or resistance areas line up together they can create great opportunity to enter in a trade and if you are already in a trade… being able to identify these areas will allow you to correctly identify where to place your stop loss orders.

If you would like to see the video I have explaining this concept, please click the link below.

L.C.