So doesn't using "tight stops" necessitate

Quote from IronFist:

... (almost) picking tops or bottoms?

Every time I use "tight stops" I get stopped out regardless of if I had the right direction or not.

I'm defining "tight stops" to be 3.25 points on the NQ (13 ticks).

I read a, um, "study" on here where where people did some research over a billion years of data and their result was that "...if price gets more than 7 ticks away from you, chances are it won't return."

So by that definition, 13 ticks would be more of a "loose" stop than a "tight" stop, amirite?

The only time I don't get stopped out is when I get lucky and pick a top or bottom (or come within 12 ticks of it)



(this is only for trend following. counter trend is entirely different, especially if you average down)
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Daytrading, specially with tight stops is a losing proposition.
Almost all fail.

Why not reverse your "approach" and set tight profit targets with loose stops?
 
Random.Capital


Registered: Jan 2005
Posts: 619


10-21-08 08:47 PM



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Quote from austinp:

It is most definitely the big one(s) that kill most traders.
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The "big one" can only kill you if you're over-leveraged. In which case it's not the "big one" that killed you - it's excessive use of margin.

With rational position sizing, stops are not only unnecessary, they're counter-productive.

>>>>>>>>>>>>>>>>>>>>>>> Random, you are not correct, leverage is not the boogyman. You are stating you are not prepared to be in such a risk taking game that "EMPLOYS" leverage as the very business of futures trading. Without the leverage why would anyone even consider trading futures? Without leverage for the speculators how would we all be enticed to play such a game? The point being simply this: as the words from the music man clearly states..........."You gotta know the territory" . Just trying to help you.
http://www.youtube.com/watch?v=JZ9U4Cbb4wg&feature=related

After the light bulb in your head enlightens you on what gane you are playing consider this for yourseld . It is about being kind to yourself. http://www.youtube.com/watch?v=RMP80_IMM_s&feature=related

PS: Stops are the same even in more wild mkts as long as your GOLDEN entry signals are the same and your risk management is also the same. Do not be afraid, just trade as always but be prepared for some absolutely fantastic winning days. Thats the real beauty of futures, it just gets better, you will amaze yourself and that is a wonderful goal. Be like Diana.
:D
 
Quote from ProfitTakgFool:

I do not aggressively average down into a trade until it turns around. That couldn't be farther from the truth.
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Funny, I recall the long involved debate we all had about this boiling down to the fact that you were willing to wait out trades that are going against you and add to the position if conditions warrant.

Must be getting senile.
 
I don't recall saying that I wait out trades that are going against me. I do stop out of trades but they are manual stops, not hard stops and the part of your earlier statement that I really took issue with was the word, "aggressively." I do scale into trades and I do add to trades that are showing me a loss but I certainly don't do it aggressively. Switch that word to conservatively and we are basically in agreement. AND, I also add to trades when they are heading in my direction, not just when they are going against me. Buy the dips, size up on the eventual turn. That's my gig.

Quote from traderNik:

Funny, I recall the long involved debate we all had about this boiling down to the fact that you were willing to wait out trades that are going against you and add to the position if conditions warrant.

Must be getting senile.
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Quote from coolweb:

I use a 4-5 tick stop on YM.

4 tick stop on ES

stops movd to brkeven like 20-30 seconds later.


pretty much trading on the move, if price isn't moving instantly to where you want it to go

its not a good trade.
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Yea same here, 10 YM points is my "stop" but usually manually closing the trade at 7 or 8. My stop is more to guard against a program sweeping the market against me.
I agree though that this is all depends on your strategy. Keep detailed metrics on your trades and figure out how much the average heat you take on winners and what your losers looked like after time X. If you can figure that out you should be able to see what the optimal stop is for YOUR strategy.
 
Quote from Stok:

Amen. I use just a MA of ATR of the chart I am trading to determine my stops and targets. I think it is one of the biggest keys out there. A fixed xStop will not work in all market conditions nor time frames. And, as always, if stops are bigger due to volatility, always risk same % per trade....which would me dialing down contracts with bigger stops (like in this market)
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I've been experimenting with constant range charts hoping that they would help with determining this. So say I'm using a 3 point constant range chart for the NQ. If my stop is set at 3.25 points, that gives me the range of one full bar to be wrong about but still have it reverse within that area and go in my direction and not lose money.
 
Quote from IronFist:

I've been experimenting with constant range charts hoping that they would help with determining this. So say I'm using a 3 point constant range chart for the NQ. If my stop is set at 3.25 points, that gives me the range of one full bar to be wrong about but still have it reverse within that area and go in my direction and not lose money.
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A three-point stop on a three-point range is asking to be stopped out. 150% of the range is safer, ie 4.5 pts.
 
Quote from TraderZones:

Against the trend needs larger stops than with the trend, because countertrend trading IS picking a top or bottom and the market usually continues to drift at least SOME with the prevailing trend.
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I'm talking WITH the trend in this thread. Even when I have the direction right, I still get stopped out on "noise" as soon as I enter...

...hence my thread title "do you have to pick tops and bottoms to not get stopped out?"

There is some wisdom in dumping your trades into a spreadsheet, and drawing a line where a stoploss would stop you out 20% of the time, and making that your stoploss.
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I've done that. The conclusion I came to was:

- you must never ever use a hard stop ever. The only way to exit a position is when the trend reverses. Using hard stops caused me to close out positions that would later go 20, 30, 50+ ticks in my favor, thus SEVERELY affecting my P/L (ie. a 30 tick gain replaced by a 20 tick loss = a difference of 50 ticks in your overall P/L. That's the difference between a profitable week and an unprofitable week).

But psychologically I don't like that conclusion, because there were also times where I took big losses. I feel that causes me to go into "buy and pray" mode.

But every time I used a hard stop I ended up not making money over the time for which I analyzed data (which was all done by hand and took forever).

There was also the fact that using hard target profits of 3, 5, 8, 10, and 12 ticks (ie. anything that wasn't "let it run until the trend changes) caused me to be unprofitable for the time period tested, but that's an entire other thread.
 
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