1. Placing stops too dang tight.<\/h2>\n\n\n\n
![\"Stop](\"https:\/\/bpcdn.co\/images\/2016\/05\/senior-tight.png\")
The first common mistake is placing stops tighter than those leather pants that Big Pippin used to wear back in the retro days.<\/p>\n\n\n\n
They\u2019re so tight that there ain\u2019t no room to breathe!<\/p>\n\n\n\n
In placing ultra-tight stops on trades, there won\u2019t be enough \u201cbreathing room\u201d for the price to fluctuate before ultimately heading your way.<\/p>\n\n\n\n
Always remember to account for the pair\u2019s volatility<\/strong> and the fact that it could dilly-dally around your entry point<\/a> for a bit before continuing in a particular direction.<\/p>\n\n\n\n For example, let\u2019s say you went long GBP\/JPY at 145.00 with a stop at 144.90.<\/p>\n\n\n\n Even if you are right in predicting that the price would bounce from that area, it\u2019s a possibility that the price will still dip 10-15 pips lower than your entry price before popping higher, probably until 147.00.<\/p>\n\n\n\n But guess what?<\/p>\n\n\n\n You weren\u2019t able to rake in a 200-pip profit because you got stopped out in a jiffy. So don\u2019t forget:<\/p>\n\n\n\n So don\u2019t forget: Give your trade enough breathing room<\/strong> and take volatilidad<\/a> into account!<\/p>\n\n\n\n Using position size like \u201cX number of pips\u201d or \u201c$X amount\u201d instead of technical analysis to determine stops is a BAD idea.<\/p>\n\n\n\n We learned that from Newbie Ned<\/a>, remember?<\/p>\n\n\n\n Using tama\u00f1o de la posici\u00f3n<\/a> to calculate how far your stop should be has nothing<\/strong> to do with how the market is behaving!.<\/p>\n\n\n\n Since we\u2019re trading the market, it\u2019d make much more sense to set stops depending on how the market moves.<\/p>\n\n\n\n After all, you picked your entry point and targets based on technical analysis<\/a> so you should do the same for your stop.<\/p>\n\n\n\n We\u2019re not saying that you should forget about position size completely.<\/p>\n\n\n\n What we\u2019re recommending is that you should decide where to place your stops first BEFORE calculating your position size.<\/strong><\/p>\n\n\n\n Some traders make the mistake of setting stops way too far, crossing their fingers that price action will head their way sooner or later.<\/p>\n\n\n\n Well, what\u2019s the point of setting stops then?<\/p>\n\n\n\n What\u2019s the point of holding on to a trade that keeps losing and losing when you can use that money to enter a more profitable trade?<\/p>\n\n\n\n Setting stops too far increases the amount of pips your trade needs to move in your favor to make the trade worth the risk.<\/p>\n\n\n\n The general rule of thumb is to place stops m\u00e1s cerca<\/em> to entry than profit targets.<\/p>\n\n\n\n Of course, you\u2019d want to go for less risk and a bigger reward, right?<\/p>\n\n\n\n2. Using position size like \u201cX number of pips\u201d as a basis for stops.<\/h2>\n\n\n\n
![\"Position](\"https:\/\/bpcdn.co\/images\/2016\/05\/senior-setting-stops-mistakes.png\" "\\"Position")
<\/figure>\n\n\n\n3. Placing stops too far or too wide.<\/h2>\n\n\n\n