Best Practice for Stop Loss on 1% x 3 Daily P&F Chart
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Hi everyone,
I’m new to Point & Figure charts and currently using a 1% x 3 chart on a daily time frame. I’m a bit confused about the best way to handle stop losses in this setup.
Since the chart updates only after the end of the day, I’m not sure whether I should wait for the EOD confirmation of a reversal (like a double bottom sell) before taking action, or react earlier during the day.
My concern is that if I wait until the chart updates at the end of the day, the price might fall much more during the day and increase my loss.
But if I act based on intraday price movement, the price might reverse later and the double bottom sell pattern may not even appear on the daily chart by EOD.Would appreciate any advice or best practices on how others handle stop losses in this kind of setup.
Thanks!
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When your stop-loss is based on the end of the day , you should exit only at the EOD close. Some trades may give bigger losses than the actual sell signal because you wait till the EOD exit, but the reverse is also true some stop-losses may trigger during the day but won’t trigger on an EOD basis. If you follow the EOD stop-loss rule for a longer period, both situations will balance out and should work in your favor overall.
Easier said than done, it takes a lot of discipline and self-control. Another option is to trade using 75-minute charts with a larger box size, like 1.5%, which allows you to exit during the day. You can try that and see if it suits you, but I’d still suggest sticking to the EOD closing stop-loss.
