There are also many kinds of stops...stop loss, trailing, conditional, etc. and deciding how to balance risk against potential reward can be a daunting task for even the most experienced trader.
I am an advocate for using pivot points as stops for the large caps and indices. Low volume issues and those with limited option chains tend NOT to conform to pivot behavior, but once you start monitoring price action on a daily basis with a pivot overlay (available on almost every trading platform) you'll quickly see the almost eerie reliability of pivot as support/resistance ,,,and stop....levels. Most of that behavior is a holdover from the days when floor traders dominated the exchanges and they needed a relatively simple way to calculate lines in the sand to determine buy and sell thresholds. They still work brilliantly today and are easy to calculate.
All you have to do is enter the appropriate values from your platform into the calcs panel at the end of the day and the pivot values are displayed for the next day.
The beauty of the pivots is that you can see what many of the pros are looking at for support and resistance and place stops accordingly. For M3 we use a slight variation of S1 as a fixed stop.
