How do You set your Stops? Got favorite ideas?

[Tradex]

Swing trading is a subjective term

Not really.

If you are not scalping, day-trading or a long term investor then you are swing trading.

You trade many individual stocks at a time, so that is more of a challenge, to follow each one and figure stops for each stock

Mr Calhoun's ability to follow so many stocks and other financial instruments at the same time (on a daily basis and in real time) is truly outstanding, I can never do that, my head will literally explode !

 

[Arnie]

Stops almost always degrade overall performance. Maybe look into Maximum Adverse Excursion

 

[DevBru]

I have tried using both and found that trailing stops usually shake me out of a position earlier than is good.

I agree, i used to use trailing stops or move the stop to BE manually, but when i took a look at my past trades it turned out that i left a lot of money on the table by setting my stop to BE or by using trailing stops.

The few times the BE/trailing stops prevented a loss did not outweigh the potential profit i was missing out on due to being stopped out to early, so now i just use hard stops.

 

[Scataphagos]

Stops almost always degrade overall performance. Maybe look into Maximum Adverse Excursion

Disagree. Exercising/not exercising stops is a "style" thing. You make money (even survive) with your style and discipline.

 

[Arnie]

ON IGNORE!!




j/k

 

[Tradex]

Stops almost always degrade overall performance

??

Trading with no stop means you are willing to lose 100% of your capital.

Maybe look into Maximum Adverse Excursion

But MAE implies that an optimal stop exists for any given trading system!
(Please refrain from posting a copyrighted book in a public forum, unless you have the author's consent).

 

[taowave]

And how does the WFA look on the "optimized/ curvefitted" stop??

No they are not, if you backtest any trading system (assuming the trading rules are clearly defined) then you will find that there is only one (1) optimal stop (and/or trailing stop).

In other words, any other stop will produce inferior results and a bigger drawdown.

 

[Tradex]

And how does the WFA look on the "optimized/ curvefitted" stop??

WFA?

 

[longandshort]

You can't know the optimal stop ex-ante. The best way to establish a stop is by having two catalysts: a budget stop and a thesis stop.

• budget stop should be how much you are willing to risk on any trade x confidence
• thesis stop is when your thesis changes

If you are trading momentum or reversals ("swing trading") then you really have no thesis, and therefore, your risk budget should be tighter. It is the equivalent of betting on a high card in a game of poker preflop.

 

[GuerrillaTrading]

Stops can be a real pain in the butt to figure out, but they're absolutely essential.

For sure... all I know is that getting stopped out is a realized loss and no one wants to get stopped out. I like to use hard stops strategically placed ie below support if long, if it lines up with my capital risk otherwise I end up trailing or move to BE.