Exit the Market

How to place Stop Loss orders

Bill Williams gives his recommendations in relation to Stop Loss orders:

• If on the opening the market is trending, then it is better to close positions if the bar's closing price crosses the Alligator's teeth (the red line).
• If the market is volatile, use the Alligator's Lips (the green line) as the level to place a Stop Loss order. The market is characterised as volatile when the prices angle of inclination is more than that of the green line. In both the above cases, at the end of the current bar the Stop Loss is shifted to the level of the red or green line of the next bar.
• Once the fifth histogram bar occurs in the Green Zone (Red Zone) place the Stop Loss (refer to the "Trading in the Zone" page).
• Close all open positions if a signal in the opposite direction appears. Bullish divergence / bearish convergence between the Awesome Oscillator and the price signals that the trend is about to end:
  

  Divergence between the price and the Awesome Oscillator is the signal that the current trend is weak