Where do you place your stop loss? Many traders struggle with this wonder, but it doesn’t have to be so complicated. The answer to the question above depends on your system. Let’s see what is a “close point”, a “far point”, and how you can better determine the placement. First of all, it’s highly important to place a stop loss and not to move it. You can use backtesting to determine the point, as suggested here, or tweak the placement in your next trade. But if you’re moving your stops, stop it now! Close and Far Now you may ask, what is close and what is far? There can be various definitions. We’ll make it easy. Close: When your pair breaks above a resistance level, you can place your stop loss order a few pips below this resistance line. That’s the close point. Far: Another option is to place your stop loss order a few beneath the support level below that. This is the far point. If you’re going short, the close point is just above the breakout line, while the far point is above one resistance line. 4 Factors Bigger Picture: Enlarge the time frame. Where is the pair headed? If you’re trading with the trend, then you can feel safer to go for the far point. If you’re going against the trend, more caution is warranted, and the closest point could be a better choice. First Attempt: You may have experienced a false break more than once. It often happens that a pair makes an initial false break before making the real, big one. The really big one may never happen. If it’s the first attempt, perhaps you should consider the close point. If it’s the second move, there’s a higher chance, that the pair will eventually break through, even if pulling back for a while. A deeper stop loss (together with a bigger stop loss) has better chances than in the first attempt. Take Profit point: This highly depends on your system. If you are confident in placing your Take Profit point, you can calculate the stop loss point by using your risk-reward ratio. A healthy risk-reward ratio of 1:3 can be used as a guideline, but this certainly depends on your system. Predictable Pair?: How is your experience with trading this pair? Are the breakouts clear enough? Or is the pair choppy? You can feel relatively more safe with a more predictable pair and more cautious with a less predictable one. How do you determine your stop loss points in case of a breakout? Further reading: 5 Most Predictable Currency Pairs – Q1 2012 Yohay Elam Yohay Elam Yohay Elam: Founder, Writer and Editor I have been into forex trading for over 5 years, and I share the experience that I have and the knowledge that I've accumulated. After taking a short course about forex. Like many forex traders, I've earned a significant share of my knowledge the hard way. Macroeconomics, the impact of news on the ever-moving currency markets and trading psychology have always fascinated me. Before founding Forex Crunch, I've worked as a programmer in various hi-tech companies. I have a B. Sc. in Computer Science from Ben Gurion University. Given this background, forex software has a relatively bigger share in the posts. Yohay's Google Profile View All Post By Yohay Elam Basics & IndustryForex Basics share Read Next 4 Scenarios for the Fed Decision Yohay Elam 11 years Where do you place your stop loss? Many traders struggle with this wonder, but it doesn't have to be so complicated. The answer to the question above depends on your system. Let's see what is a "close point", a "far point", and how you can better determine the placement. First of all, it's highly important to place a stop loss and not to move it. You can use backtesting to determine the point, as suggested here, or tweak the placement in your next trade. But if you're moving your stops, stop it now! Close and Far Now you may ask,… Regulated Forex Brokers All Brokers Sponsored Brokers Broker Benefits Min Deposit Score Visit Broker 1 $100T&Cs Apply 0% Commission and No stamp DutyRegulated by US,UK & International StockCopy Successfull Traders 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.2 T&Cs Apply 9.8 Visit Site FreeBets Reviews$100Your capital is at risk.3 Recommended Broker $100T&Cs Apply No deposit or withdrawal feesTrade major forex pairs such as EUR/USD with leverage up to 30:1 and tight spreads of 0.9 pips Low $100 minimum deposit to open a trading account 9 Visit Site FreeBets ReviewsYour capital is at risk.4 T&Cs Apply Visit Site FreeBets ReviewsYour capital is at risk.5 Recommended Broker $0T&Cs Apply Trade gold, silver, and platinum directly against major currenciesUp to 1:500 leverage for forex trading24/5 customer service by phone and email 9 Visit Site FreeBets ReviewsYour capital is at risk.