Hi TradingwDavid, thanks for your post. How are you defining your stop loss?
TradingwDavid
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@PMpauper, I usually define the stop loss over the last spike. Below, like in this case (below the low that has retraced by the 88.6%), if the signal is bullish, above, if the signal is bearish. I hope I explained you pretty clearly how I decide my stop loss (initial because after, managing the position, asap I move the stop at break-even). However, I'm writing an e-Book (free) about this strategy, it's almost ready. If you want I can give it to you (in any way...)
PMpauper
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@TradingwDavid, Ok under the 88.6% retracement. After I posted my comment I expanded the time bar and also saw that around that level since Feb 2018 it has hit three times and bounced off. Taking that into consideration you could even drop it down a little lower in my opinion depending on the amount of risk you want to take. If you could share a website with me and the some information on the book I would definitely look into. Thanks!
TradingwDavid
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@PMpauper, beyond my strategy, there is an idea. If the price (in this case) drops below the last retracements (88.6%), it cancels not only the signal but the idea as well. Then, it's not wrong to see more expanded the chart for finding important support and resistance levels. About the risk, that's is irrelevant because you always have to open a position with a correct position size. You always have to decide BEFORE the money you are willing to lose in the case the price hit the stop loss. So, based on that and the distance from the entry price to the stop loss, you have to calculate the right position size. In this case, if you lower the stop loss, you will open a smaller position for maintaining unchanged the maximum loss.
Give me a couple of days, and I will send you a message about website and e-Book.