Are stop losses impossible to fully adhere to?
- Thread starter jpvil123
- Start date
what to do you have to decide on your own
i would just recommend to abandon assumption that somebody playing the crowd (especially if we talking about very liquid instruments)
Take a min of 300 winning trades, then check how far they went against the position, usually there is an area between reasonable stops and extreme, run test without stops, you be able to see what type of risk between extreme and reasonable. Another test to run is length of time, often times you get into a trade and takes off immediately in right direction, you don't want to get married to the trade as that often ends up with a loss. I normally use 3 bars, whether they are minute or weekly, if trade is not positive at end of the 3 bars, thereafter new target is plus one tick to pay for fees I can always wait for another signal once I am out. Also, I hedge all my trades, I don't keep the hedge on cept for 1-5 days, they are a little bit of insurance for me.
Good luck.
Good luck.
What TF do you use and what instrument you trade?
MattZ
Sponsor
recent blog post we did addresses this. I hope you guys find it useful:
http://www.optimusfutures.com/tradeblog/archives/stop-loss-orders-based-market-context/
http://www.optimusfutures.com/tradeblog/archives/stop-loss-orders-based-market-context/
Why not to use Trailing stops then?It keeps the profit but if you catched a trend you can ride it to get a very good reward. I use Trailing Stops when I enter somewhere near daily or monthly lows it allows me to catch 500+pips in one trade..
This is false.
I am glad that works for you, but when you start doing back testing over 35 years plus on weekly and daily data, I am seeking 75% of the nine year ranges for long term Commodities, I would be shorting myself of lost profits. As far as day trading, I am a Scalper, so anything under 60 minutes I am going for ticks. I just completed Live Cattle trade Friday, granted took approx. 22 months and rollovers, but the last trade near highs shorted 169.90 and reversed 102.35, got stopped out yesterday on Longs and program got long first thing in morning. I hedge everything and anything than is over 59 minute timeframes now and 100% automated as far as underlying. ALL my backtesting way I trade shows trailing stops hurt my bottom line once I get to breakeven plus fees. Although 500 plus pips is attractive, currency trades for me lasts years for Long Term, I do Scalp them and have 60 minute timeframe trades but never trail stops, I have targets where I just changed quantity from 50% to 33% as only targets and rest can continue as a add-on to long term position, but typical "Swing" trades last 3 days to 3 weeks. Now if the market presents topping or Bottoming chart patterns to reverse in some markets, I will not exit but I will hedge open profits, I won't make 100% of retracements but due to how much I hedge it is in middle and when program sees possible resumption of trend, it will continue and exit hedges. Often times where many put in stops for trailing, if deep enough retracement, I am getting in. Long term, almost always I am against prevailing trends. I pay more games of risk, understanding risk than caring much about profits, I figure if you concentrate on what it takes to overall seldom lose, profits will be there and if patient enough, can make homerun trades.