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**Part V - Stop Losses** You can find Part IV here: \*\*NOTE\*\*: I will likely create a FAQ once this is all done. I’m getting some of the same questions over and over again. Please read the entirety of the post. I will often include details in the post itself that answers many of the questions I am getting. If I can spend the time writing this, you can spend the time reading it. PART VI will cover targets. Part VII will cover risk management. Part VII will tie everything together. After that I will even spend some time looking for real-time setups for all of you. This strategy will always use a hard stop loss. I have traded it without hard stops in the past for one reason: when 5pm EST hits and the spreads widen, it is incredibly annoying to get stopped out simply because of a widened spread. This doesn’t happen too often, thankfully. I am actually against using hard stops but for a strategy that has these mechanistic elements it makes sense. Let’s get right into it **Stop Losses** There are two ways to use stop losses for this strategy. You can either place stops using the Fibonacci Retracement levels OR you can simply place them beyond the low/high of the 2-candle formation that comprises the typical technical setup for this strategy. **Fibonacci stop losses:** You will primarily use the fibonacci levels for stop losses if you are comfortable sacrificing win rate for a higher risk to reward ratio. Here you have options. If you are taking 2 limit orders based on fibonacci levels then you can also graduate the stop losses OR you can place them at the same level. Here is where you would place them: ​ * For limit order off the 23.6% Retracement level: between the 50% and the 61.8% Retracement OR just beyond the 78.6% Retracement * For limit order off the 38.2% Retracement level: If you want a tighter stop you can place it just beyond the 61.8% level. For a more conservative stop just beyond the 78.6% Retracement level. I strongly recommend experimenting with these different combinations and seeing what feels best for you. I am deliberately talking about feelings a lot in this series. This qualitative aspect to trading is incredibly important. If all you cared about were statistics then why are you trading manually? Or why are you not scalping for every tick? Too many traders ignore feelings in their trading. What feels right to you vs what the stats suggest are better can make an enormous difference in your end results. There is no singular “right” way of trading. There are simply more and less efficient ways of trading. If you are the rare person that can combine a higher degree of efficiency with what feels right for you personally, then DM me with your results. I will do my best to open doors for you in this industry. **Stop losses based on the 2-candle formation:** This is a very simple stop loss procedure. Simply place your stop just beyond the lowest / highest point of the 2 candle formation. This is the “safest” stop loss but you WILL sacrifice profit factor vs the fibonacci method. **My preference:** My preference is to use the fibonacci stop losses. I am happy to give up some win rate for a higher profit factor. **Examples:** ​ * Notice how we traded gbp/usd on the way up and down in the first 2 examples ​ https://preview.redd.it/zy3lu4sen9651.png?width=2820&format=png&auto=webp&s=d62fcfcce5b232f6d56bf585baedc420e5f55bf2 ​ https://preview.redd.it/nvs399pfn9651.png?width=2820&format=png&auto=webp&s=f2e0d4a0c6950bdea6872e824b66e7d55df99029 ​ https://preview.redd.it/fekwsvegn9651.png?width=2820&format=png&auto=webp&s=f6ecbe3a1bd06345ec60967fe3bc9991cab94b5e