ES Journal Archive (2006 - 2008)
- Thread starter Buy1Sell2
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This is the second excellent quote of the day and the day has hardly begun.
An intraday ES trader using soft stops is either yet to trade live, or is living on borrowed time.
It seems to me that people are merging the buy zone/ sell zone setup and the actual entry into one blurred decision.
This merging encourages deeper stops and therefore soft stops in some cases where the Trader cannot accept the magnitude of the stop but desires the trade anyway.
regards
f9
I don't think he misses the point at all in terms of his statements about "soft stops", better known as "mental stops". Perhaps you could explain exactly what you look at as the trade moves against you, in that moments where the price action moves into your "soft stop" area. Especially in your time frame.
What your "soft stop" technique ultimately becomes is a moment of uncertainty, where you hope the ES turns around. In that moment it is clearly possible that it blows right past your area, leaving you to decide whether to take an even larger loss.
OldTrader
Because a soft stop will not work well when a program goes off. That one point stop loss can easily become 4, 5, or more depending on how big of buy or sell it is at market. Crazy to even attempt using a soft stop ahead of an eco number. How well does a soft stop work on an emergency rate cut if you are short and es jumps 30 handles in seconds ?
The real question is why is one afraid of setting a hard stop ? That alones says they lack discipline. Like I said, it call comes down to discipline. If I ever lost 10 points on any trading day I would really question my discipline. I stick to a strict rule of 3 points max loss for the day. It's not about getting the money back the day you lose it, it is about clearing your mind and living again to trade another day by avoiding self sabotage.
I belive JSSPMK is talking about the YM contract and you are talking about the ES contract, fwiw.
Other than that, I pretty much agree with what you're saying here. Especially about the strong movements that markets can make, and the "kill rule" isn't bad either, but I personally wouldn't limit it to 3 pts ES or equivalent.
I think we are talking about several different kinds of stops here.
disaster stops -
An absolute stop out point that you are not willing to lose even 1 cent more than that on a per trade basis.
It is recommended by most system traders that this stop be put in as soon as a position is put on because of possible sudden events.
actual stops -
The price point you think your original conjecture in entering a position is no longer valid.
It may or may not be a price level - it can be the price action, the time delay, etc. that changes the scenario completely.
e.g. a divergence short in 5-min failed to materialize in 30 mins
For discretionary traders who trade divergence, the 2 kinds of stops can be very different.
For trend following setups the 2 kinds of stops can be the same, though not necessary.
disaster stops -
An absolute stop out point that you are not willing to lose even 1 cent more than that on a per trade basis.
It is recommended by most system traders that this stop be put in as soon as a position is put on because of possible sudden events.
actual stops -
The price point you think your original conjecture in entering a position is no longer valid.
It may or may not be a price level - it can be the price action, the time delay, etc. that changes the scenario completely.
e.g. a divergence short in 5-min failed to materialize in 30 mins
For discretionary traders who trade divergence, the 2 kinds of stops can be very different.
For trend following setups the 2 kinds of stops can be the same, though not necessary.
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