A: The way to go is to reduce your position size; that way you are able to place your stops further away from your entry levels at a good support level without suffering heavy losses if the stock runs through your stop and does not recover - placing very tight stop loss orders is not the solution to limit your risk as you are likely to get stopped out of good positions too early.
So try to find good potential profit targets. An example would be where the price meets resistance on the upside (where the price might hit resistance as it goes up). In this case you would only enter the trade if the potential profit target is at least twice as far from up your entry point as your stop is down from your entry point. Remember that it is psychologically easier to place stops farther out when you are risking much less.
A: You need to identify key support levels. If support comes across as more of a zone (which I notice is more common with forex), then you need to allow your stops more space. A common strategy is to make your stop loss levels a certain percentage of the Average True Range (I use this myself quite often). For instance, you can place a moving average over your ATR graph, then choose a stop position that is 2 ATR away from your entry point. This will keep your stop fairly close, but still sufficiently far away to keep you from getting stopped out due to what is called market noise.
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