Two camps tend to appear in scalping circles.
Camp one uses a fixed stop in pips, such as 5 or 6 on every trade. The advantage is simplicity and consistent risk. The weakness is that the market does not care about a fixed number. Sometimes 5 pips sits inside normal noise, and sometimes it is far larger than needed.
Camp two places the stop beyond market structure, such as just past the last swing low. The advantage is that the stop sits where the idea is genuinely wrong. The weakness is that the distance varies, so position size has to flex to keep risk constant.
A third approach blends the two, using a stop sized by recent average true range, typically one-half to one times the 5 minute ATR.
Neither camp is correct in all conditions. What matters is that the choice was tested and not simply inherited.
Which camp does this forum lean toward, and has anyone switched sides after reviewing data?
A poll: stop loss in pips or stop loss in structure?
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Shadow Trader
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