
If you continually use ultra-tight stops, you risk being stopped out prematurely and continually. This slowly drains your account, like a death by a thousand cuts. Assuming that you are trading in line with the sentiment, then your position should be supported. Therefore, if you are trading intraday, anchor your stops above or below the previous day’s highs or lows. Put your stops in the place where you know that ’you are definitely wrong’. This is what is referred to as ‘anchoring your stops’ and it will help avoid being stopped out prematurely by market ‘noise’.