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The stop loss for the kangaroo tail is placed on the other side of the tail, just a few pips beyond the tail (see Figure 8.17). This emergency stop loss is the maximum stop loss for the trade. The emergency stop loss is the maximum loss for a kangaroo tail trade. Ideally, the naked trader will close out a kangaroo tail trade if the trade is in a drawdown and moves 75 percent toward the stop loss. Closing the trade before the stop loss is hit will reduce the average losing trade, a very desirable outcome for the naked trader.
FIGURE 8.17 The stop loss is placed a few pips beyond the tail of the kangaroo tail. For this bullish kangaroo tail on the weekly NZD/USD chart, the stop loss is placed a few pips below the low of the bullish kangaroo tail at 0.5480.
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FIGURE 8.17 The stop loss is placed a few pips beyond the tail of the kangaroo tail. For this bullish kangaroo tail on the weekly NZD/USD chart, the stop loss is placed a few pips below the low of the bullish kangaroo tail at 0.5480.
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