How do you handle price being halfway between your buy signal and stop loss.

[Drawdown Addict]

One way to deal with this is to open the position with several small buys, to take advantage of the retracements inside the range.

"Buying the dip", famous last words...

 

[MarkBrown]

"Buying the dip", famous last words...

yea works great till it doesn't lol

so many things people think will work in fact don't that's why my testing is my boss. it tells me what is real and what's just guessing.

reminds me of take a losing system and turn it upside down lol

 

[schizo]

As you know, we do not trade one stock alone. So sometimes while browsing you may chance upon a stock with a buy signal but price has already retraced halfway towards your potential stop loss (it could be 1/3 or 3/4 or anything arbitrary).

Let's say your strategy that has an edge is a 1 to 1 risk to reward. But since the price had retrace halfway and you enter it now it's actually in between your buy signal and stop loss so RR becomes 1 to 3 which obviously skews the probability.

Based on common sense it is still probably a trade with an edge but how would you handle it? Trade it 1 to 3 RR? Or 1 to 1 RR?

Or maybe you don't enter trades like this and always wait for fresh signals?

If your ENTRY rule states that you can only enter a trade when it's at x, and not somewhere between x and y, that's what you need to do. Forget 1:1 RR crap and stick to the rule. Otherwise, you'll always remain a noob.

 

[Peter8519]

Entry can be more difficult then exit. A multiple targets would make missing out less stressful.
Entry into a long position would be easier with this.
https://finviz.com/published_idea.ashx?t=WELL&f=091324&i=WELLd032505830i
This one is more challenging as it is more volatile.
https://finviz.com/published_idea.ashx?t=TSLA&f=091324&i=TSLAd033031092i

 

[taowave]

I'm guessing you are trading off daily bars,and you get a buy signal off the closing price.Next day,stock opens down x percent,halfway between original "signal price" and stop.

If you are thorough in your research and have run simulations,I'm fairly confident you had several trades similar to the scenario you mentioned.
In that case,trust your system and trade accordingly with the same risk reward parameters off the "new" (lower)purchase price..

You could also run simulations with an entry rule that restricts entry price vs buy signal price.

 

[Wide Tailz]

reminds me of take a losing system and turn it upside down lol

Message received. I'll keep my mouth shut from now on when it comes to these types of thingz

 

[MarkBrown]

Message received. I'll keep my mouth shut from now on when it comes to these types of thingz

promise i was not talking about you - lol

 

[wxytrader]

As you know, we do not trade one stock alone.

Says you.

First of all the amount of traders around here who think they have created an edge simply by how they manage trades is hilarious.

IMO using targets based on the % of profits you are getting or risk ratios is counter-productive AND counter-intuitive. Stocks have expected moves, so if you don't take advantage of that and try to maximize profits then you have zero edge. YOU might as well take profits as soon as you hit 50% because if you don't then 50% of the time, price will drop again and stop you out, and 50% it will move to your 100% profit target. With any luck, over time you might break even.

I use price levels that I expect to take profits at, and I don't care how price gets there or how long it takes. It requires no management, and yields better results.

 

[Wide Tailz]

"Buying the dip", famous last words...

I should clarify. Swing trading and putting on a position over several candles instead of one price plop mitigates the risk of a full stop hit with all the slippage. Target is the same (unlimited, since the strat is basically trend following stocks).

Imagine you're running a few billions and want 20% of your portfolio in some stock. Do you just go and put a limit order on support? Or do you test the market for a while to make sure you're not jumping into a trap?

Perish the thought you might just sell what you want to buy, to see if anyone else buys it first.

I traded penny stox in preparation for slinging Gulfstreams some day. Thin markets are like thin ice!

 

[Drawdown Addict]

I should clarify. Swing trading and putting on a position over several candles instead of one price plop mitigates the risk of a full stop hit with all the slippage. Target is the same (unlimited, since the strat is basically trend following stocks).

Imagine you're running a few billions and want 20% of your portfolio in some stock. Do you just go and put a limit order on support? Or do you test the market for a while to make sure you're not jumping into a trap?

Perish the thought you might just sell what you want to buy, to see if anyone else buys it first.

I traded penny stox in preparation for slinging Gulfstreams some day. Thin markets are like thin ice!

If you are running a few billions portfolio you have market makers clearing the market for you. You don't have to worry about testing anything, they will do it for you.