Is this a good risk management strategy?

[Maverickz]

One.., of the handful of reasons price gets volatile in the first place - is to hunt trailing stops (and dumbassed placed stops in general)

QFT

It certainly seemed like that was true when I first started swing trading equities years ago. It seemed like I was always getting stopped out too soon. That is why I first started trading options. I would buy an equity and then buy a put where I wanted my stop to be. Prevented me from getting prematurely stopped out and also also served as gap insurance.

 

[Bry]

Never taking profits? Why would you do that? The only good reason would be that you are creating buy and hold positions, and for that you need no stop losses.

Loading up on blue chip high-dividend payers would make sense for this.

 

[Sure Chap]

Never taking profits? Why would you do that? The only good reason would be that you are creating buy and hold positions, and for that you need no stop losses.

Loading up on blue chip high-dividend payers would make sense for this.

Sorry about the confusion, I meant I'd only exit and take a profit if my stock was to rise and fall back down to my "trailing" stop loss. I want to let my winners run so to speak.

For example I enter a trade and place a 5% trailing stop, stock could either immediately go down and I exit with 5% loss or stock rises 15% then loses 5% on a downswing I profit 10% and exit the trade.

 

[prc117f]

When I enter a trade I immediately place a trailing stop at a certain percentage based on the volatility of the stock (higher volatility larger trailing stop). If it hits my stop I'm out, if my trade goes good I let my winners run. I never take a profit; I only exit my trade when the stock hits the stop loss.

Thats noob thinking,

If your plan is never to take your profit, but only exit on losses This means your account will go to zero eventually.

 

[Sure Chap]

Thats noob thinking,

If your plan is never to take your profit, but only exit on losses This means your account will go to zero eventually.

I am a noob, ...how does one know when to take his winnings or let it ride? Damn trading is hard...

 

[lawrence-lugar]

When I enter a trade I immediately place a trailing stop at a certain percentage based on the volatility of the stock (higher volatility larger trailing stop). If it hits my stop I'm out, if my trade goes good I let my winners run. I never take a profit; I only exit my trade when the stock hits the stop loss.

The short answer is try it.
There's so many ways and viewpoints and methodologies on trading...that one can't necessarily give a direct yes or no answer to any question.

Every trader has to eventually venture out on their own adventure -- learn and explore on your own, and develop your own conclusions.

 

[Sure Chap]

The short answer is try it.
There's so many ways and viewpoints and methodologies on trading...that one can't necessarily give a direct yes or no answer to any question.

Every trader has to eventually venture out on their own adventure -- learn and explore on your own, and develop your own conclusions.

I think you're right, there's lots of learning; trial and error in trading and I'm just realizing that now. To be honest, after all the input I don't think I can just use a one size fits all strategy. It needs to be based on the edge I have and I have to adjust my entry/exists and risk/reward based on the opportunities as they come. I appreciate all the input and keeping me honest...my laziness is getting the best of me.

 

[Mysteron]

When I enter a trade I immediately place a trailing stop at a certain percentage based on the volatility of the stock (higher volatility larger trailing stop). If it hits my stop I'm out, if my trade goes good I let my winners run. I never take a profit; I only exit my trade when the stock hits the stop loss.

Seems to me that you haven't expressed yourself well and some others have misinterpreted your meaning. You've said that you place a trailing stop, so therefore you do take profit if price moves in your favor and the trailing stop moves beyond your entry price. Are you attempting to automate yor trading using such a strategy?

 

[Xela]

Seems to me that you haven't expressed yourself well and some others have misinterpreted your meaning.

This.

Exactly this. People have been replying to the poor OP with all kinds of mistaken assumptions behind their suggestions and observations. Granted, he could have been a little clearer, but most of what he might try to learn from this thread emanates from people talking at cross-purposes to his original post.

(Sorry not to be more helpful, myself, but I don't trade individual stocks at all.)

 

[Sure Chap]

Seems to me that you haven't expressed yourself well and some others have misinterpreted your meaning. You've said that you place a trailing stop, so therefore you do take profit if price moves in your favor and the trailing stop moves beyond your entry price. Are you attempting to automate yor trading using such a strategy?