Ross Hooks (or other patterns) entries based off of stop loss distance

[trademan1]

I have been trading Ross Hooks for quite some time. I've been noticing that some of the trades are not worth it when the potential stop loss (by using the recent swing low or high) is too far from the entry.

Has anyone else noticed that? What is too far of a stop loss for you to want to take an entry into a position?

 

[speedo]

I have been trading Ross Hooks for quite some time. I've been noticing that some of the trades are not worth it when the potential stop loss (by using the recent swing low or high) is too far from the entry.

Has anyone else noticed that? What is too far of a stop loss for you to want to take an entry into a position?

I have a limit as to stop loss. If I can't stop enter into a trade within that limit, I will put a limit order once the signal triggers. It fills or it doesn't (i pull the order if it goes to my break even point without filling). If it happens a lot, you may want to look at a lower time frame.

 

[Xela]

I have been trading Ross Hooks for quite some time.

Haven't we all?

I've been noticing that some of the trades are not worth it when the potential stop loss (by using the recent swing low or high) is too far from the entry.

Has anyone else noticed that?

I have, and I agree with you.

There are some choices, for those situations, including but not limited to (a) skip the trade; (b) use a function of the current ATR instead; (c) count back a set number of bars and take a point a tick or two above/below the high/low of that bar as the stop-loss instead. (I'm not all that comfortable with options (b) and (c), myself, but that's my problem.)

What is too far of a stop loss for you to want to take an entry into a position?

It doesn't really matter: we all need to sort out our own answer to that question, which is in accordance with our pre-defined risk management parameters - and of course it's going to vary (perhaps hugely) according to our win-rates with that type of RH trade (mine vary according to a few different parameters - e.g. I do significantly better on entries following "Slaughterbeck bars"), time-frame, trend-strength, volatility and probably a few other things, too. Not trying to be evasive for the sake of it, but my feeling is that that specific question can't meaningfully be answered without also dragging in (and carefully defining) a large range of other considerations ... and with apologies I don't at the moment have time for that ...

 

[trademan1]

It doesn't really matter: we all need to sort out our own answer to that question, which is in accordance with our pre-defined risk management parameters - and of course it's going to vary (perhaps hugely) according to our win-rates with that type of RH trade (mine vary according to a few different parameters - e.g. I do significantly better on entries following "Slaughterbeck bars"), time-frame, trend-strength, volatility and probably a few other things, too. Not trying to be evasive for the sake of it, but my feeling is that that specific question can't meaningfully be answered without also dragging in (and carefully defining) a large range of other considerations ... and with apologies I don't at the moment have time for that ...

Interesting. Sorry for my naivete, what is a "slaughterbeck bar"?

I've tried looking that up, but not a lot of information on it. From what i see, and some slight confusion depending on what different people say, but for a downtrend Hook that would be the first bar following the Hook that has a higher close than its open. You would sell a break of that bar?

(Some people also suggesting something about must be within the following 3 bars after the hook?"

A little confused.

 

[Xela]

Interesting. Sorry for my naivete, what is a "slaughterbeck bar"?

I've tried looking that up, but not a lot of information on it. From what i see, and some slight confusion depending on what different people say, but for a downtrend Hook that would be the first bar following the Hook that has a higher close than its open. You would sell a break of that bar?

(Some people also suggesting something about must be within the following 3 bars after the hook?"

It's explained in a chapter near the end of the original Joe Ross book "Trading the Ross Hook" (one of the last chapters, where he mentions some variations - I can't give you a page or chapter number because my copy and I are in different countries at the moment!). I recommend the book, anyway (though saying that too openly, in this forum, is always risking being accused of being a "shill"!).

There's very little online and some of it's mistaken, too, I think; but your description above just about matches what I'm doing (if within 3 bars of the hook, as you mention). For what it's worth, they do work well, for me.

 

[trademan1]

There's very little online and some of it's mistaken, too, I think; but your description above just about matches what I'm doing (if within 3 bars of the hook, as you mention). For what it's worth, they do work well, for me.

Thanks, I will check this out. Do you exclusively trade "slaughterbeck bars"? Or also the hooks?

I like the idea behind this in that it gives earlier entries, but also a closer stop loss to the swing high/low. Regarding the profit target, would you take the distance from the swing high/low to the Ross Hook or to the "slaughterbeck bars" entry? That is a pretty good RR, if the stop loss is the slaughterbeck bars to the swing high/low and the profit is the distance of the swing high/low to the Ross Hook.

 

[Xela]

Do you exclusively trade "slaughterbeck bars"? Or also the hooks?

Both, but with slightly different position-sizes to reflect their different win-rates (from my own statistics).

I like the idea behind this in that it gives earlier entries, but also a closer stop loss to the swing high/low.

Indeed - exactly so.

Regarding the profit target, would you take the distance from the swing high/low to the Ross Hook or to the "slaughterbeck bars" entry?

With apologies, this one's too complicated for me to be able to offer a helpful reply, really, because I don't actually do either: I scale out, volatility-dependently.

(I should perhaps also mention, so as not to mislead, that I'm trading futures from constant-volume bars, not from a timed chart. The principles are the same, though.)

 

[trademan1]

With apologies, this one's too complicated for me to be able to offer a helpful reply, really, because I don't actually do either: I scale out, volatility-dependently.

No problem, interesting insight. (I'm guessing you are talking about a variation of ATR?)

What are your thought on the Trader Trick Entry? Seems like a very similar setup to "slaughterbeck bars"?

 

[Xela]

I'm guessing you are talking about a variation of ATR?

That's probably what I should be talking about, but to be honest I don't look at it very often: you get to know your own charts and get used to looking at volatility on its own ...

What are your thought on the Trader Trick Entry? Seems like a very similar setup to "slaughterbeck bars"?

Yes - Slaughterbeck entries are a special case of the TTE - and the only one I use, myself: for the rest, I wait for the hook itself to be taken out. I don't think there are (m)any "rights and wrongs" over these things: it's just "what works for you".

 

[trademan1]

As you also trade Ross Hooks:
At the opening of a new trading session it is typical that there is a gap up or down to start that session. Do you wait for an identifiable 1-2-3 pattern to determine direction before a trade, or do you determine direction based off of the gap up or down and possibly make a Ross Hook trade right away at opening of session.

Hopefully it makes sense to you what I wrote haha.