Hi,

Was unable to find a NQ trading forum, so I am posting my question here. I am wondering what you guys set your stop losses on the NQ? Do you use a ratio? Percent? Fixed amount?

I trade the NQ about 80% of the time. I've been using a 15pt hard stop. My primary trading method is day trading tick charts with a 2 minute opened so I can watch volume. I am typically putting on a trade when price returns to some level, whether VWAP, EMA, weekly pivot, volume profile level etc. Lots of different things influence when I put on a trade. I think there has to be a better stop loss strategy than what I am doing. I would really like to see a NQ stop loss study if anybody knows where to find one.

Your input will be greatly appreciated.

edit: I know that sounds like a big stop but I have a convoluted way of managing it. For example I take risk out with one contract at 4 to 5pts move to even stop and have risk markers that if a candle close violates it and I determine this trade's probability of failure is pretty high, I will look for some sort of retracement and try to bail with a less than 5 pt loss. Doesn't always work. But the disaster stop doesn't get hit often, but when it does, I cringe.. There has to be a better way.
T

optionwhisperer 

Hi, Was unable to find a NQ trading forum, so I am posting my question here. I am wondering what you guys set your stop losses on the NQ? Do you use a ratio? Percent? Fixed amount? I trade the NQ about 80% of the time. I've been using a 15pt hard stop. My primary trading method is day trading tick charts with a 2 minute opened so I can watch volume. I am typically putting on a trade when price returns to some level, whether VWAP, EMA, weekly pivot, volume profile level etc. Lots of different things influence when I put on a trade. I think there has to be a better stop loss strategy than what I am doing. I would really like to see a NQ stop loss study if anybody knows where to find one. Your input will be greatly appreciated. edit: I know that sounds like a big stop but I have a convoluted way of managing it. For example I take risk out with one contract at 4 to 5pts move to even stop and have risk markers that if a candle close violates it and I determine this trade's probability of failure is pretty high, I will look for some sort of retracement and try to bail with a less than 5 pt loss. Doesn't always work. But the disaster stop doesn't get hit often, but when it does, I cringe.. There has to be a better way. T

NQ as u have seen is more volatile than ES. Thinner instruments will always be more volatile....as stops will be less simple. i personally feel from a discretionary standpoint.....using a strict stop loss will take u out....and if u let fear get you....u can miss a move.
Having said that... a mental stop loss is always prudent...unless one wishes to take bigger losses. But when market is volatile....i mean...like es has fallen bad during ovn...u will be more than likely be taken out in nq. u may need a reason to hold your trade.....if u can spot massive buys or big hidden orders coming in. But for that u also need to be able to spot that in order flow.
above is not advice...but a 5 pt in nq is nothing. u may have seen it move 10-15pts in few secs?....this is a a very personal question ...one only u can answer with your risk tolerance.

I have ridden a trade down 60-70 pts or more , more than once and it turned around and let me out even or a small profit. Often the return was a fairly good move above the entry point, but having to hold a trade through that kind of move mentally taxes me to the point that when I was at or near even, I wanted out! The problem I have run into, is that one trade that doesn't turn around, can wipe out a week or even a month's profits. This has happened to me more than once...

Thanks for your reply...

With good entry points, you can have a trailing stop from 25 to 38 points and make great profits. Average about 6 trades a day and hold over night. Program it and let it go, that way its easier on the nerves and you will no try to outsmart a proven strategy.

Find trades with a 33% or higher win rate and at least 2.5 to 1 ratio. Upwards of 4 to 1 and 5 to 1 do exist.

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Hi, I am not trading the NQ that often but one thing that helps me to trade it is to establish some "volatility criteria".
Nasdaq by itself is a very volatile market and there are times (for instance from 8,30 to 9,30) that are traditionally very volatile for every instrument. These times are 10 times more volatile (and dangerous) in NQ.

So one idea to trade NQ is to avoid volatile hours, and wait until the volatility really subsides....then the candles will be smaller and smaller and you can put on a trade with a tighter stop. Remember that markets always go from high volatility to low volatility and viceversa.
I think 15 points is a good stop, but if you are trading very volatile hours you might get stopped out again and again even with that stop.

So you have two ways of dealing with that
1) you don't use a fixed stop, but you adopt it to volatility
2) you use a fixed stop but you make sure to avoid the highly volatile hours.

I hope that helps.