There are two main methods for the placement of stop-loss orders and profit limit orders: “Static,” using a fixed distance, and “Adaptive,” using a non-fixed amount, in this case at a technical stop/target placement setting stop and target orders to various technical levels on the chart.
You can trade with a loose approach or a tighter approach when using exits to control risk/stop loss and profit points. Trading with closer targets provides a higher win ratio, and a far target approach will result in a smaller win ratio but a greater risk-reward average. By using multiple targets, it is possible to scale out and implement sophisticated trade management techniques to take profit and lock in profit with stop-loss trails as well as run for trend breakout days. A tighter stop-loss will cause a lower win ratio but a larger risk-reward; however, if it’s too tight, your system expectancy will be negative. What we aim to do is keep trading frequency lower—1 to 3 trades per session is a good amount if required—the first might be the only one you need. So we have a wide stop-loss and let the system breathe and run—this actually increases the risk but also increases the win ratio and probability of the system.
Much of that choice is down to the preference of the trader; however, the usage can be governed by inside and outside gap days and range/trend price cycles and market structure and order flow on the day, to decide to have a nearer tighter game or a more loose game or use a hybrid combination good in all weather to take profit off the table as soon as possible and still allow a good run to capture as much as possible as 100% of the daily move.
For proven and advanced traders, a quick note about variable position sizing based on high probability conditional trade setup versus a more arbitrary entry, etc. In addition to target and stop-loss arrangement, you can also consider half clip and full clip trades. For example, you might want to trade with 8 lots on a micro futures, but if you are not sure on a trade but you might miss a runner if you stay out, then you can go half clip with 4 lots, and when the market is clearer, less mixed, more directional across all indices and the conditional setup pattern and time, you might go full clip with 8 lots, which would need to be within your max % per trade. Up to 1% is way enough for a beginner—you could conceivably add to a half clip position also in a pullback, for example, but this is not recommended for beginners as it can lead to doubling down and a random off-the-hip trading style, abandoning the systematic approach and ultimate failure.
Static ATM Defined Stop-Loss and Profit Target Orders
Pending the AFT8 Easy Trader/NinjaBuddy GUI, you can use the NinjaTrader Chart Trader and ATM to automatically place exit stop-loss and profit targets and interact with them on a chart in real-time.
- NinjaTrader 8 Help Guide/Video Training
- Related Essential Training with NinjaTrader 8
- Charts
- Workspaces
- Visit the NinjaTrader 8 video library
The following can easily be created in the NinjaTrader ATM. Additionally, you can add break-even stop-loss strategies, such as at T1 move to breakeven or move in by 50% of the risk, for example.
- Static Stop-loss and Targets examples for educational use
- ES/MES
- Stop Loss: 28 ticks
- Target 1: 10 ticks
- Target 2: 16 ticks
- Target 3: 100 ticks
- NQ/MNQ
- Stop Loss: 35 ticks
- Target 1: 20 ticks
- Target 2: 30 ticks
- Target 3: 100 ticks
- ES/MES
Technical Stop-Loss and Targets Using the Fib Grid Levels
Stop-loss and profit targets are placed at Fib Grid Levels and are therefore adaptive advanced intelligent trade management, which can be applied to any market/instrument.
I prefer this method always. Imagine that I have to sometimes test and elect to trade on a universe of some 65 futures markets. Trying to find out what static ticks would be best would take up thousands of hours of ongoing testing to re-optimize and guide as the market phases and ranges change, making life unbearably hard work. So, in fact, that’s not required at all or best. Instead, simply use my Fib grid levels to adapt to the market and range as it changes and save all that brain ache. Of course, with the correct pending AFT8 technology, you can couple that with a volatility-adjusted stop-loss fixed fractional position size and add in scaling out, and now you have a professional setup. Meantime, with manual adjustment, as long as your stop-loss risk is within acceptable parameters and a sensible price, you are good to go.
Loose Setup – Low Win Ratio High Risk Reward
- Stop Loss Technical position is behind the No Trade Zone (NTZ) yellow rectangle
- Target 1 – 2 lots at the 50% regions on the grid
- Target 2 – 1 lot at the 76% region
- Target 3 is a runner or 100% grid line
Technical Stop-Loss Trail
Example Stepping Fib Grid Trail: When price moves and closes above the 50% blue line, move the stop-loss to the far side of the Fib grid price grid line -25% grid trail, or alternatively follow the USAR…look for the trailing triangles.
So how did that trade pan out?
T1 and T2 acquired – 3rd bracket was trailed down and taken out at -f61%
Tighter Setup High Win Ratio & Medium Risk Reward
- Stop Loss Technical position is behind the No Trade Zone (NTZ) yellow rectangle
- Target 1 – 2 lots at the 23% regions on the grid (could also be 33%)
- Target 2 – 1 lot at the 50% region
- Target 3 is a runner or 100% grid line
ATM Automatic Stop-Loss and Target Placement with Manual Adjustment
You can configure and use the ATM to place the stops and targets and then simply use the mouse on the chart to move the orders to the various Fib grid positions. Please visit the AFT help guides also for articles on day trading futures stop loss and targets.
Please note this article is for educational use only. This is not investment or trading advice—you need to test out and make your own decision based on statistical evidence.