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George C

Is this a good stop loss?

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So here's a trade I did on IBM on Jun 19. I saw the stock reversing so I went short at 149.68 and put my stop loss at the 9-EMA above it, which at the time was around 149.90, so my risk was 22c. My question is, would you say that is a good stop, or do you think it's too tight?

 

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Thanks in advance!

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A good stop loss is "if it goes against me this far, I may have been wrong about the direction".

Personally, I would have put it higher. There could have easily been another pull back and stopped you out, before breaking down through VWAP.

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Look at your 5 minute chart. If it would have made a new 5 minute high, it would be safe to say that it's probably not going to go in your direction. Therefore, I would have put it closer to the high of the previous 5 minute candlestick (around 150.30 area). However, having your stop loss that high may change your risk to reward.

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