Forex Trading 2018- TA/FA- Setups and discussion, page-4755

Player, the simple answer is yes your stops are targets particularly when they are set at common levels that many traders use like highs or lows.

I trade mainly H12 bars which typically have a range of around 50 pips but they often break the previous high or low by only a few pips which takes out anyone who has a stop at those highs or lows. Take a look at the example below of that H12 black down close bar - followed by a white up close bar which first break the down close bar by only 0.1 pip - and then proceeds to break the high of the black bar and go on to further highs after having cleaned out "pools of liquidity" as Spec calls them.

While stops are targets I personally wouldn't trade FX without them - way too risky since in only minutes the market could move 10's or 100's of pips against you before you have the chance to close out a losing position manually.

They key(s) to setting stops imo are:

1. Don't set them too close - the further away the better
2. Set your position sizing based on your stop loss from entry - naturally the larger stop you use, the smaller the position will be
3. Do some stats on the frequency stop losses get hit versus position, i.e. for example at the bottom of a bar, 1 pip below, 2 pips below, etc. to work out where the best positioning is for your particular setup and risk appetite

Imo virtually any decision in trading involves trade-offs, one of those being are you happy with smaller positions with bigger stops that have a higher and more consistent win rate (but smaller wins) or are you keen to be a thrillseeker and set close stops, accepting a higher losing rate but fewer bigger wins. It all comes down to such trade-offs imo (except not using a stop - that is not a trade-off I would make).

Cheers, Sharks