Are stops a complete joke ?
- Thread starter zanek
- Start date
One way to view this is as balancing exposure vs. account equity rather than as taking losses on individual trades.
It makes no difference to your equity if you lose 3 times small or one time 3X the size so long as the forward expectation during the duration of each trade is the same. To a large degree these questions are psychological.
In other words, If the edge is still with your position, your current trade is the same thing as your next trade. It makes no difference. Why stop out in this situation?
You might have a hard stop or dollar risk amount on your equity over a certain period, say over 1 day, 1 week, 1 month, etc. Beyond that try to trade in a way that maximizes the edge.
At times all have to exit without grace, but why make a habit or tradition of it? It will only hurt your performance, especially as you grow your account and stops lose their effectiveness.
It makes no difference to your equity if you lose 3 times small or one time 3X the size so long as the forward expectation during the duration of each trade is the same. To a large degree these questions are psychological.
In other words, If the edge is still with your position, your current trade is the same thing as your next trade. It makes no difference. Why stop out in this situation?
You might have a hard stop or dollar risk amount on your equity over a certain period, say over 1 day, 1 week, 1 month, etc. Beyond that try to trade in a way that maximizes the edge.
At times all have to exit without grace, but why make a habit or tradition of it? It will only hurt your performance, especially as you grow your account and stops lose their effectiveness.
The only reason I have my banner configured as described was to piss off the trolls.
Healthy discourse about price action analysis and interpretation will be debated until the end of time - I have no final say on the topic. What's more, there are many, many legitimate means and methodologies currently employed which certainly merit legitimate claim to be profitable for trading markets - I do not possess exclusivity in that regard. And for that reason, I never took exception to Mr. Hershey's comments and insights as they related to breaking down and interpreting price action. There are members here on ET who know alot more about topics like ATS than I ever will.
It is the volatility relative to your timeframe of interest and specifically for your market of interest that determines your position size, stop-loss level, and profit target.
Some itteration or interpretation of Jack Hershey's post may get there - he may go with some sort of fractal or derivative of time and volume in space to equate to volatility; who the hell knows. I was abrupt, and rude, and adamant because my feeling was that taken on face value (with or without the obligatory 2000 word subsequent response post) the statement was dangerous and potentially costly if taken literally.
I am a nuclear engineer by training with several international patents to my credit, and I certainly know how to submit, read, and interpret technical white papers. Jack Hershey is clearly flying 20,000 feet over my head - and as such I have not in the past, and I will not in the future, make it my life's work to bash Mr. Hershey. It was just this particular post in question I found to be dangerous in terms of capital management.
I trade in the live markets. I have over 40 ET members as clients. I have had in the past, and continue to service, funds and private equity groups as clients. My perspective will always be about performance in live markets.
Healthy discourse about price action analysis and interpretation will be debated until the end of time - I have no final say on the topic. What's more, there are many, many legitimate means and methodologies currently employed which certainly merit legitimate claim to be profitable for trading markets - I do not possess exclusivity in that regard. And for that reason, I never took exception to Mr. Hershey's comments and insights as they related to breaking down and interpreting price action. There are members here on ET who know alot more about topics like ATS than I ever will.
It is the volatility relative to your timeframe of interest and specifically for your market of interest that determines your position size, stop-loss level, and profit target.
Some itteration or interpretation of Jack Hershey's post may get there - he may go with some sort of fractal or derivative of time and volume in space to equate to volatility; who the hell knows. I was abrupt, and rude, and adamant because my feeling was that taken on face value (with or without the obligatory 2000 word subsequent response post) the statement was dangerous and potentially costly if taken literally.
I am a nuclear engineer by training with several international patents to my credit, and I certainly know how to submit, read, and interpret technical white papers. Jack Hershey is clearly flying 20,000 feet over my head - and as such I have not in the past, and I will not in the future, make it my life's work to bash Mr. Hershey. It was just this particular post in question I found to be dangerous in terms of capital management.
I trade in the live markets. I have over 40 ET members as clients. I have had in the past, and continue to service, funds and private equity groups as clients. My perspective will always be about performance in live markets.
If your statistics actually show you've been correct about the direction at a high percentage (you said almost every time)...
* Delay your entry and get a better price at/near where you would normally place your stop/loss
* Develop a re-entry method that uses information from the recent trade that was stopped out.
Mark
You ought to conduct yourself in a civilized manner rather than resorting to this name calling - very unbecoming. I shall address your errors, to your benefit and that of the readers.
Let us first agree on the definition of "averaging down". This means increasing exposure to a market by making additional commitments at more favourable prices when compared with prior fills. This also means increasing exposure when the existing position is showing an unrealised loss.
Engaging in this behaviour is not foolish in itself, nor is advocating it as part of a successful methodology. If you put your attention on the matter closely you will realise why the very best traders "average down".
This is a matter concerning position sizing and execution only. It does not speak to the efficacy of the strategy employed, nor the success of the operator. It is a tool to be employed in certain circumstances, in certain conditions, and for certain reasons.
Let us see if anyone would like to venture to explain what these are. If another member does not pin it, I shall explain.
No, this is not correct. That is to say that the attitude you express is not one of having a professional view. I can see immediately that you have neither dealt in size or had exposure to anyone who does (either as a broker, clerk, employee in an institution, etc).
>>>>>> Let us see if anyone would like to venture to explain what these are. If another member does not pin it, I shall explain.
>>>>>>
OK boss, I'll try ....
assume we are in an uptrend .....
most likely the practitioner will have some inkling or idea or basis for naming or numbering the waves developing - if he believes Price is in wave 3 up, then the logical STOP placement would be right under wave 2. Why? Because what he is looking for is the wave 4 correction when it happens so that he can move the stop up to below it as wave 5 starts and takes off.
Then he progressively moves the STOP up to under wave 2 of 5 and then under 4 of 5 and then and only then goes into intraday to get the final 4th of 5th under which he has placed the final stop for the uptrend.
When that final 4th of 5th intraday is taken out, he goes heavily short as the trend has reversed.
ever so humbly submitted
Shall you explain? I am all ears here
Stops control risk is the name of the trading game and our stop risk is one of the few things that we can exercise control over.
If you feel that pro stops are stopping you out of good trades, then isn't your placement and timing of stops the real issue.
You may find that by eliminating protective stops you are solving a problem with another problem and so you now have two problems to solve.
If you feel that pro stops are stopping you out of good trades, then isn't your placement and timing of stops the real issue.
You may find that by eliminating protective stops you are solving a problem with another problem and so you now have two problems to solve.
let me do the explaining.
The minimum to trade with no stop is $100K and begin trading 1 contract. the reason to start 1 contract to is have enough ammunition if the market continues to go against you like the big trend day. And also prepare for days like May 6th. If u begin 1 contract with $100K account, u should be safe for days like May 6th.
Your big question is where to add. Never ever add if u plan on moving your average price 1-4 ticks. U add to move the average price close to the market price and not 1-4 ticks. That is how most people lose when averaging and this is how most people lose when they ran out of ammo.
That said
The minimum to trade with no stop is $100K and begin trading 1 contract. the reason to start 1 contract to is have enough ammunition if the market continues to go against you like the big trend day. And also prepare for days like May 6th. If u begin 1 contract with $100K account, u should be safe for days like May 6th.
Your big question is where to add. Never ever add if u plan on moving your average price 1-4 ticks. U add to move the average price close to the market price and not 1-4 ticks. That is how most people lose when averaging and this is how most people lose when they ran out of ammo.
That said