To avoid false signals/whipsaws we use some % of a scrip price, we are calling it filter.
"If price difference is more than 2.5% between entry and SL " can u explain that sir .
suppose we are entering a long/buying trade @ 100. days low is 97. While trading the gap rulles we use sl as days high or low +/- 0.5% filter.
Now if we enter this trade @ 100 rs, and after entering the trade if something goes wrong and hits the SL then our loss shall be (100-97-.5) = 3.5%
My point is whether we can accept a loss of 3.5% in a single trade in intraday?
No. Thats the reason, I said earlier (maximum) upto 2.5% SL is accepted for a trade.
PS: I am trading commodities right now. So could not concentrate in this post much. If anybody can describe in a better way, kindly do it for the betterment of newbies. Thanks.