Small Stops

[FreakofNature]

I think the key to moving forward in this odyssey we call trading is the ability to enter a trade using small stops. This allows the trader to use leverage while keeping risk at bay and letting winners run.

Naturally, easier said than done, therefore, I'd like to discuss small stop entry techniques.

Here is one i use frequently.

Uptrending market, draw the down trendlines. When the downtrendline breaks, enter via a buy stop with a stop at the low of the last swing low.

FoN

 

[bigsnack]

Quote from FreakofNature:

I think the key to moving forward in this odyssey we call trading is the ability to enter a trade using small stops. This allows the trader to use leverage while keeping risk at bay and letting winners run.

Naturally, easier said than done, therefore, I'd like to discuss small stop entry techniques.

Here is one i use frequently.

Uptrending market, draw the down trendlines. When the downtrendline breaks, enter via a buy stop with a stop at the low of the last swing low.

FoN

I have found that the method described above, as well as buying the first 50% pullback after a trend break, to be the easiest way to enter a trade with a small stop.

 

[FreakofNature]

Quote from bigsnack:

I have found that the method described above, as well as buying the first 50% pullback after a trend break, to be the easiest way to enter a trade with a small stop.

Interesting mention about the 50% pullback.

Do you let it break, then mark the swing high, then do the 50% of break to high like that?

FoN

 

[total_keops]

Most important is the profit/risk ratio. So you can have a large stop but only with a large profit target or a system that wins often.

 

[anglagard]

Quote from total_keops:

Most important is the profit/risk ratio. So you can have a large stop but only with a large profit target or a system that wins often.

Disagree, large stop forces me to use crap size in relation to the norm.

Joe

 

[Feeman]

Between noise, volatility, and randomness, small stops will eat your account faster than a million termites on dry balsa wood.

Thinking about stops first is putting the cart before the horse, the horse being your edge. If you don't know your edge, then don't trade.

 

[crazyAtrader]

Quote from Feeman:

Between noise, volatility, and randomness, small stops will eat your account faster than a million termites on dry balsa wood.

You must not know how to enter with micro stops. What you said it's what is typically said, unless you learn.

There are ways, it just takes, well, years of price study.

Crazy A

 

[Redneck]

Quote from Feeman:

Between noise, volatility, and randomness, small stops will eat your account faster than a million termites on dry balsa wood.

Thinking about stops first is putting the cart before the horse, the horse being your edge. If you don't know your edge, then don't trade.

Some members here ain’t got the sense God gave a piss ant



RN

 

[dom993]

Quote from anglagard:

Disagree, large stop forces me to use crap size in relation to the norm.

Joe

I think your analysis is misleading you ... there should be no direct relation between your stop size & your trading size. Your trading size should be a function of the maximum drawdown ($$$ or %) you are willing to go through while trading your methodology. You need to assess what that maximum drawdown could be when trading 1 contract (I mean, after the worst losing streak), from there you can deduct the number of contracts you are willing to trade.

 

[anglagard]

Quote from dom993:

I think your analysis is misleading you ... there should be no direct relation between your stop size & your trading size. Your trading size should be a function of the maximum drawdown ($$$ or %) you are willing to go through while trading your methodology. You need to assess what that maximum drawdown could be when trading 1 contract (I mean, after the worst losing streak), from there you can deduct the number of contracts you are willing to trade.

It's just my daytrading plan. I like daytrading because it allows me keep risk under total control while providing leverage for free. To exploit those two responsibly I must initiate trades only by using a small stop based on price action.

Joe