I think the trading system must be like this, that stop applied should be of least point and least probability of getting it hit. i my self try to keep the stop loss of 4-6 points on nifty. If the target is large then more of 6 -10 points. THe main motive of stoploss should be to protect from sudden volatility. Rest of the time it shouldnt b hit. We should prepare our entry and placing o stoploss according to the market volatility. Like these days market volatility of nifty is very much high. Placing a stoploss of 4 points is dangerous as it is hit without even showing on the screeen...


in the mean time here are some method of placing the stoploss: -


Monetary Stop: - This is the least effective method and used by most. This involves choosing an amount of money, pips, points or percentage of account value to determine a stop loss level. The problem is that stop losses should be based on technical indications not a monetary value. These are the type of stops that get stopped out most frequently and are based on emotions rather than technical analysis.

Bar Stop: - This is a form of trailing stop. E.g. as a stock moves in the intended direction, the stop will trail with it. The strategy involves placing your stop 10 points below the low of the two most recently closed candles. Remember the candles must be closed, do not use open candles. As the next candle closes move your stop loss accordingly. For example if you were long then determine the low of the two most recent candles. If the stock moves up reallocate the stop loss 10 points below the low of the previous two candles. As the stock increases, move the stop accordingly but NEVER lower the stop. If he stock moves down leave the stop where it is. If you were short you place your stop 10 points above the high of the two bar candle.

Candle Stop: - If you are entering a trade on a candlestick signal then you can use the open, high, low, close to determine your entry point and stop. If you are entering a long position after a hammer and confirmation, place your stop loss 5 points below the low of the hammer. Ask yourself at what level is my original analogy wrong. If it comes below the low of the hammer it is probably not a reversal and a good place to stop out.

Support and Resistance Stop: - As Market Makers are aware that people place stop losses just below and above support and resistance, you need to be one step ahead of the game when using this strategy. To prevent Market Maker manipulation adopt the following strategy when placing stop losses at support and resistance levels. Measure the range between the support and resistance. Place your stop loss 10% of the range either beneath support if long, or above resistance if short. If there is too much risk then reject the trade.

Parabolic SAR Method: - Parabolic SAR is not just an indicator; it is a complete trading system. It is an ‘always in’ system, meaning if you follow the method you are always long or short. It works best in trending markets. SAR stands for Stop And Reverse. When putting SAR into charting software, it gives you a stop loss level represented by a dot on the chart. As each candle closes, the stop is moved closer to the price. When the stop is hit, the trader reverses direction. When using SAR, remember the Market Maker diary, you do not want to use SAR unless there is a good trend. It is not very useful during the Market Makers lunch period where there is little volatility.

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Blog - Bull, Bear, Opportunist

Since not comfortable with exact price stops and discussed it in past here want to post one practical solution. Its our old favorite option thing again (dont know if i post it before) we get long on the future and place usual price based stoploss, calculate the hypothetical loss if stop gets heat, now write the call of apx. price equal to loss amount. Ex. Long NF 5500, stop 5480, now write call whos price is around 20rs. Say 5800strike has option price 20rs. Its just simple example you can tweak the method as per your comfort level, as i would write 4 lots per one futre contract(to cover total cost of stop loss as premium wont get vanish that much for single contract). Profit is limited but neverthles good for swing.

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