Blown stops

F

flea

Today I was lucky, I made money despite blowing stops and even averaging a loosing position (incidentally it's this position that pulled me out of the fire. Another bad habit positively reinforced). I had to fall back on my kneeling before the screen with my hands clasped together trading strategy

The reason I blow these stops I think, is because I'm not totally convinced I have the stops in the right place, or the price spikes on low volume and i'm unable to determine whether the move is genuine, either way once a stop is blown I'm at sea not knowing what to do if the position deteriorates even further, It seems futile putting on another stop in this case, as I will probably only go through the same process all over again.

I don't think it's taking a financial loss i'm afraid of more that I'm reluctant to take a loss just before the position goes my way, of course sometimes it does and that just reinforces the bad habit

Now I know this is a difficult one, with no right or wrong answer but has anyone any good ideas as to how to overcome this problem? Or maybe you could let me know how you handle stops within your trading plan.

My style of trading is to swing intraday with overnights rarely held.

Regards
 
flea,

stops should be based on the statistical behavior of the stock you trade. Often we put stops e.g. 5 cents under a recent low. These tend to be taken out. How about just using 3*ATR(10) off of the low of the entry bar for longs. That's likely a good point where you don't get shaken out due to random noise.
 
Today I was lucky, I made money despite blowing stops and even averaging a loosing position (incidentally it's this position that pulled me out of the fire. Another bad habit positively reinforced). I had to fall back on my kneeling before the screen with my hands clasped together trading strategy

The reason I blow these stops I think, is because I'm not totally convinced I have the stops in the right place, or the price spikes on low volume and i'm unable to determine whether the move is genuine, either way once a stop is blown I'm at sea not knowing what to do if the position deteriorates even further, It seems futile putting on another stop in this case, as I will probably only go through the same process all over again.

I don't think it's taking a financial loss i'm afraid of more that I'm reluctant to take a loss just before the position goes my way, of course sometimes it does and that just reinforces the bad habit

Now I know this is a difficult one, with no right or wrong answer but has anyone any good ideas as to how to overcome this problem? Or maybe you could let me know how you handle stops within your trading plan.

My style of trading is to swing intraday with overnights rarely held.
More...

flea,

I have never seen more warning signs of immenent doom in one post than this one:

1) ...despite blowing stops ...
2) ...averaging a loosing position...
3) ...I had to fall back on my kneeling before the screen with my hands clasped together...
4) ...not totally convinced I have the stops in the right place...
5) ...I don't think it's taking a financial loss i'm afraid of ...
6) ...reluctant to take a loss ...

flea, I am not bashing you, please understand that.

_YOU_NEED_TO_GET_SOME_PROFESSIONAL_TRAINING_

Go to either Bright or Echo. It will save you a lot of money.

nitro
 
words of advice


Think as each trade as a guaranteed loser. There are so many forces working against you. Your stop is a way of protecting your capital. The market has to prove your "edge" was right.

Taking this attitude in your trades is better than thinking you are always right and the stop will prove you wrong.



Discipline is your greatest Asset

Robert
 
Hi Vikana,

Do you know where I can get ATR data from.

Nitro,

Kneeling in front of the screen was meant tongue in cheek but I agree I need some help with stops and maybe averaging although this is something I do rarely.

rtharp,

Thanks for the advice. A great point you make, I think my biggest problem is deciding where the stop should be placed. I think If I was convinced of the wisdom behind the placing of the stop at a given level I'd be more likely to keep them. Rather than the wisdom of having a stop in the first place of which I think I already understand.
 
Originally posted by flea
Hi Vikana,
Do you know where I can get ATR data from.
More...

depending on what software you use, it's called ATR, "average true range", "true range" or something like that. Worst case you can do a moving average of (high-low) over the last 10 bars, since that's pretty close too.

ATR is just a moving average of the high minus low of the bar with gaps taken into account. Here are more details:
http://www.equis.com/free/taaz/avertrurang.html
 
Originally posted by flea
rtharp,

Thanks for the advice. A great point you make, I think my biggest problem is deciding where the stop should be placed. I think If I was convinced of the wisdom behind the placing of the stop at a given level I'd be more likely to keep them. Rather than the wisdom of having a stop in the first place of which I think I already understand.
More...

There is no magic level to place a stop.
What works today will soon have a lot of others to start using that area when enough people use the same level it will no longer work.


Robert Tharp
 
What helps me to keep stops is to know that I can always get back in. To get out and back in only costs 5-$20. It's like cheap insurance, it doesn't cost much but it gives you peace of mind. It also allows the position to be re-established at a lower price without averaging down (if you still feel good about the trade).
 
Quote from flea:

Today I was lucky, I made money despite blowing stops and even averaging a losing position (incidentally it's this position that pulled me out of the fire. Another bad habit positively reinforced).
More...

This was luck and nothing else. You were very fortunate. The trader that loses least, wins, so hopefully you have seen the light.:)
 
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