It's up to you to define what constitutes a breakout. You can do this based on a visual cue from a chart or simply using a fixed value. Whatever floats your boat really, but I prefer the latter. You can get cute with that, but once the trade is initiated, the trail stop increments, or horizontal levels really, should be symmetrical, and stops should trail at each level (not tick) to allow for price variances. None of this last bar low, doji, shooting star crap, which is asymmetrical. That's child's play, and you can't play in the big leagues without measurability.
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Thanks bone,
I have noticed this in my trading as well and mentally I start seeing how to get back in the trade and then here comes the shoulda coulda woulda thought process. lol
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Thanks fractalize for the response.
I think I understand your comments. I use to have a trail stop exit strategy that states "if short, ..every 20ticks of price moves in my favor, adjust stop loss downward by 20 ticks" Well this work fine until high price volatility kept stopping me out.
I will consider evaluating price at levels for trail stops. After some thought, it is more logical to trail a winner this way rather than a fixed tick increment movement. Back in January I had one of those 100 tick trailing stop winners, it sure did set a good tone for me, until I returned to profit target stuff. lol
You just never know when that big winner is coming. Best to keep trying.
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Yes, that’s exactly the right logic, but it’s only a starting point, and needs some tweaking to make it more adaptive and complete.
Determine a definite criteria for the entry signal. To get a handle on the volatility and determine the stop levels, use a percentage of daily ATR, starting with a typical (30 is common) look back period. Test on minimal contract (1) or share (100) position size until you reach positive expectancy. Once live, you determine size based on account value and desired equity swings. Some good testing software with automation capability wouldn’t hurt once your prototype is developed.
yes, thank you.
Yes the ATR (i.e., atr (5), the last 5 bars since I day trading) is something I have thought of replace the fixed trail by tick increment size. this way the trail stop loss strategy is more adaptive to to changing market conditions at the time of entry. Oh yes, I am definetly staying at one contract for awhile.
I guess what thing I am learning is this process will require some ongoing tweaking to suit my liking until reaching positive expectancy.
It’s no easy task, and takes a lot of diligence and passion. I can only offer you general advice based on what you’ve stated in this thread. Your success will be heavily dependent on the amount of time you can commit to research and and live trading.
Thanks fractalize,
Oh yess, for sure. this takes time, its not a sprint. I added something above in your comments.
I do have on going trading education I study as well to keep me improving mental and skill wise. But it is good to chat with other traders as well to gain different perspective and views on trading.
IMO you’re much better off scaling profits instead of using a trailing stop if you can.