Stocks & Commodities V. 24:9 (42-44): Sidebar: Stop-Loss Methodology by Mircea Dologa, MD
• Breaking bar: As soon as you execute your entry, enter
at 1.5 ratio of the breaking bar plus a tick (4109.5). The
initial stop-loss is at -0.5 ratio of the breaking bar, minus a tick (4098.5). Observe the market closely to identify an optimal stop-loss rather than the typical stop-loss (-0.5 ratio).
• Break-even stop (first trailing stop): When price reaches a five-point running distance, place your first trailing stop. It should fall within the average of your ATR. You could exit here, but if you are willing to take more risk, this is when you add more units to your trade with the same stop-loss or even a tighter one .