Small stops, large size VS. large stops, small size?

KCalhoun

KCalhoun

What's your preference?

I typically use small size, large stops, eg 50 shares with .60 stops for daytrading stocks and ETFs (doing up to several dozen trades daily)

An alternative would be for example 300 shares with .10 stops

Tradeoffs include being shaken out of trades more often with tight stops
 
Large stops large size, close trade before stop is hit, based on system criteria + price action.

OR

Purely system stop, medium/large size, close trade based on system breakdown.
 
Stops are an art.

Suggest entries near support/resistance with stop "just the other side".

Another play is to use a small stop.. can be almost arbitrary.... that way you can catch moves which immediately go in your favor, but will lose you little when the play goes against you. (You can afford to make many wrong plays for catching the few bigger ones which go immediately in your favor.)
 
@Scataphagos I'd agree with that, but it's much easier when you're certain your system will take the next trade.

For discretionary trade it can be hard to lose a small stop 20x to find the one big one.
It's more likely you'll lose faith in your system, and take the day off (from my experience).

I prefer to give the trade a bit more leeway to move, and then move to breakeven.

If I get stopped at breaken, it's time to re-evaluate the trade, understand if I'm really still correct, and then re-enter at the same (or better!) price.
 
Tavurth said:
@Scataphagos I'd agree with that, but it's much easier when you're certain your system will take the next trade.

For discretionary trade it can be hard to lose a small stop 20x to find the one big one.
It's more likely you'll lose faith in your system, and take the day off (from my experience).

I prefer to give the trade a bit more leeway to move, and then move to breakeven.

If I get stopped at breaken, it's time to re-evaluate the trade, understand if I'm really still correct, and then re-enter at the same (or better!) price.
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Like I said, stops are an art. Making money in the markets is much about "style".

If you're trading with the correct bias (like the long side in a bull market), you shouldn't need 20x small losers to catch one big winner. And like any aspect of trading, you'll learn more when you actually try it than just conceptualizing in your mind.
 
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KCalhoun said:
I typically use small size, large stops, eg 50 shares with .60 stops for daytrading stocks and ETFs (doing up to several dozen trades daily)
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It will make a difference as to why you are trading.

You are not trading to make money; you are trading to educate.

Teaching clients to take losses quickly is more than likely a good thing.

It must be almost impossible in a trading room to teach patience; after all the clients pay to watch you trade.
 
Scataphagos said:
Stops are an art.

Suggest entries near support/resistance with stop "just the other side".

Another play is to use a small stop.. can be almost arbitrary.... that way you can catch moves which immediately go in your favor, but will lose you little when the play goes against you. (You can afford to make many wrong plays for catching the few bigger ones which go immediately in your favor.)
More...


Agree, your points make sense. Example I bought UVXY near lod today for pivot win, sl set just under lod
 
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