With proper position sizing you dont need fixed stops.
Does Technical Trading Really Work?
- Thread starter Lloyd W. Coutee
- Start date
Fixed or not a stop is a must. There is no optimal place on a price ladder to have a stop (fixed or not). A stop can sometimes make or brake a trade (correct analysis, but stop triggered). One of the main reasons short term trading is futile exercise for the vast majority is because intraday charts come with a lot of noise, so even if analysis is spot on you can get stopped out a multiple amount prior to banking a winner. Patience is key, the more often you trade, the more losing trades, apart from lucky streak days. Generally speaking support and resistance levels on big charts (monthly/weekly) will be defended a lot more than your intraday ones, which a lot of the time will be meaningless. Some traders will have stops way outside the daily noise, as if the predominant (macro) trend remains intact it is not likely for that stop to be hit, but there is a price to be paid, as generally these stops will be quite wide for most.
An example would be the following: SPX is an overall uptrend, if you go by widely accepted rule of thumb that a bull turns bear market whenever an index is reduced by 20% of it's ATH valuation, then in case of SPX 20% haircut would be 1707. So if you are an imaginary fund manager you are still buying dips. So next time you see a dip on daily chart (oversold condition) you buy with a stop below 1707.
An example would be the following: SPX is an overall uptrend, if you go by widely accepted rule of thumb that a bull turns bear market whenever an index is reduced by 20% of it's ATH valuation, then in case of SPX 20% haircut would be 1707. So if you are an imaginary fund manager you are still buying dips. So next time you see a dip on daily chart (oversold condition) you buy with a stop below 1707.
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If you are properly positioned sized, why is a stop needed at all? Proper position sizing and not being overleveraged enables the position to ride the gyrations of the market---
This whole, entire debate is basically Completely meaningless 
-- without knowing Every single detail of you and what you're trading and your style and personality, and logic and reasoning and etc misc stuff.
it's impossible to just make a vague blanket statement or stance.
successfully trading is kind of a Huge gray area.
-- without knowing Every single detail of you and what you're trading and your style and personality, and logic and reasoning and etc misc stuff.it's impossible to just make a vague blanket statement or stance.
successfully trading is kind of a Huge gray area.
When buying an index/commodity I would perhaps agree, but what if you are shorting a stock? My family member tried shorting AMZN based on its shit fundamentals during the .com, that did not work, good job he knew when to stop, puke more like. Secondly, the idea of having a stop not at 0 (fixed or not) is to enable us to maximise return vs risked capital.
I don't recall illustrating failed failures, though I once posted my trade blotter where I recouped back to back losses and made a nice profit by trading a failed failure (I traded the two failures of course, LOL!)
I would never post illustrations of how I trade chop/range. Too complicated to spend time sharing and anyone can do the work to figure it out.
Trading a well defined trend is best until you're really really experienced.
EXACTLY RIGHT
As I have said numerous times, the Marketsurfer/Debit Spread character is not a trader at all. Rather, this person is a longer term investor. ---Basically equivalent to a 401ker.---No, you don't need stops as an investor, since you are diversifying among many different instruments, but a trader does---and that's that.
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And that would even be 12.5 to 1 and your stop could only be 3 pts., so if that 3 points is not outside reaction low then ,no trade. Do you concur?
Similar to my experience. The information imparted is extremely noteworthy, yet hardly anyone sees it as such. Such is the plight of givers the likes of our own selves.