It's just
a logical trading level when it comes to measuring retracements, so most traders include it.
Not exact matches
Now based on your trick, I will backtest and then try this: limit entry at 50 % retracement (or other
logical level), and a wider stop (around like I would have if
traded on pinbar close).
When placing stops, we want to place our stop loss at a
logical level, that means a
level that will both tell us when our
trade signal is no longer valid and that makes sense in the context of the surrounding market structure.
Basically, when you are determining the best place to put your stop loss you want to think about the closest
logical level that the market would have to hit to prove your
trade signal wrong.
These stop placements are what I consider to be the «safest» for the setups being discussed, that means they gave the
trade the best chance of working out and that the market must move to a
logical level against your position before stopping you out.
I try to determine if there is some key
level that would make a
logical profit target, or if there is some key
level obstructing my
trade's path to making a decent profit.
Proper usage of position sizing not only means you will have more winning
trades, but it also means you will
trade more objectively, because you are placing your stop loss at
logical points above or below support or resistance
levels, instead of randomly placing it a set amount of pips away from entry.
However, if a position moves in your favour and the subsequent price action indicates a new
logical level consistent with the
trade premise, you may consider moving the order to the new
level.
If you're talking about
trading stocks, you would only need the stock to double if 1 % meant the stock went all the way to zero — in other words, you aren't using a stop loss set at 1 % under a
logical level.