Spydertrader's Jack Hershey Equities Journal II

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From the document, Jack's stops seem kind of far away, so sizing the position so that your max loss is 1 - 2% of capital would make for some rather small positions sizes.

This is basically a form of volatilty stop, isn't it?
 
Although BTUI had some difficulty around the resistance line late in the afternoon, I went ahead and held onto the shares overnight. The attached chart points out the various channels, resistance line and stop offset line (as I see them) with respect to the BTUI trade.

Chart Key:

1. Upward Short Term Channel (current trend)
2. Intermediate Term Down Channel
3. 'Day Glow' Green Resistance Line
4. Stop Offset Line

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=996854>
 

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Spydertrader,

How did you draw the Stop Offset Line? The offset looks too small. If I use daily bars I get about $2 offset, and if I use 30 minute bars I get about $0.55.
Quote from Spydertrader:

Although BTUI had some difficulty around the resistance line late in the afternoon, I went ahead and held onto the shares overnight. The attached chart points out the various channels, resistance line and stop offset line (as I see them) with respect to the BTUI trade.

Chart Key:

1. Upward Short Term Channel (current trend)
2. Intermediate Term Down Channel
3. 'Day Glow' Green Resistance Line
4. Stop Offset Line

- Spydertrader
http://www.elitetrader.com/vb/attachment.php?s=&postid=996854
More...
 
Quote from cnms2:

Spydertrader,

How did you draw the Stop Offset Line? The offset looks too small. If I use daily bars I get about $2 offset, and if I use 30 minute bars I get about $0.55.
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Although it is difficult to see from the screen shot, I drew the stop offset line from 2% below the low of yesterday. I don't know if this is the best location, but thought I would try it it out on this trade.

- Spydertrader
 
looking at ARD for tomorrow

using stop losses as a money managment tool (a la the majority) is highly inefficient. You get taken out on the adverse spikes too easily.

stops should be placed on the specific market's 'spikiness' within trends and at the end of trends.

why? because that's (whatever the value is) how much the price 'pokes' out while still maintaining the 1/2 up cycle integrity.

doing the above for a while and you see why it is that the majority of people complain "I KNOW they can SEE my stops!!!" or something like that.


If your stop offset is "more than 8-10% below the prior day's close" it is TOO wide. (quote taken from 'the big post' document)
so that does give you a calibration value

note, this is a general post, not specifically directed to anyone
 
We may have different definitions of terms. Mine are:
-stop loss = the price at witch I get out of the trade no matter what
-money management = position sizing

Before entering any trade I decide my stop loss using the above definition (the price at witch I'll get out of the trade no matter what). The difference between it and the entry price is the per contract / share maximum $ loss. By dividing it into the maximum $ loss per position (as a percentage of my trading account value) I calculate the size of my position. Immediately after opening my trade I place a stop loss market order. I adjust periodically my stop loss, but only in the direction of minimizing my possible loss.

I guess you're using these terms with different meanings ...
Quote from Dantheman:

looking at ARD for tomorrow

using stop losses as a money managment tool (a la the majority) is highly inefficient. You get taken out on the adverse spikes too easily.

stops should be placed on the specific market's 'spikiness' within trends and at the end of trends.

why? because that's (whatever the value is) how much the price 'pokes' out while still maintaining the 1/2 up cycle integrity.

doing the above for a while and you see why it is that the majority of people complain "I KNOW they can SEE my stops!!!" or something like that.


If your stop offset is "more than 8-10% below the prior day's close" it is TOO wide. (quote taken from 'the big post' document)
so that does give you a calibration value

note, this is a general post, not specifically directed to anyone
More...
 
Quote from Dantheman:

Looking at ARD for tomorrow.
More...

I like these charts for tomorrow. Some of the equities find themselves in Dry Up, and some do not.

CKCM DXPE GMXR GROW IIJI NGAS SFCC

- Spydertrader
 
Quote from cnms2:

We may have different definitions of terms. Mine are:
-stop loss = the price at witch I get out of the trade no matter what
-money management = position sizing

Before entering any trade I decide my stop loss using the above definition (the price at witch I'll get out of the trade no matter what). The difference between it and the entry price is the per contract / share maximum $ loss. By dividing it into the maximum $ loss per position (as a percentage of my trading account value) I calculate the size of my position. Immediately after opening my trade I place a stop loss market order. I adjust periodically my stop loss, but only in the direction of minimizing my possible loss.

I guess you're using these terms with different meanings ...
More...

i think it's interesting that in all of Jack's writings (as far as i've read), he doesn't discuss the above. It may be that it's simply not relevant to need to think in those terms anymore when you're dealing with
1. high quality universe
2. repeating stocks
3. knowledge of the PV cycle

I see the stop loss as a way to avoid adverse news events that affect the market. (think earnings events as an example...not that we hold during earnings.)

my only point is, the stop ought to be offset from where spiky volatility during an up-trend cycle exists. that's all.
obviously if that offset has you placing a stop 6 dollars from current price, then your percent of equity position sizing will dictate a relatively small position. You see the limitations here.

jack often doesn't talk about entry prices, there may be a connection to be made.

Our security is not our stop, it is the 1-3 listed above. Those are knowledge things of course, we do still need to obtain some skill and ability.
 
Quote from Spydertrader:

I like these charts for tomorrow. Some of the equities find themselves in Dry Up, and some do not.

CKCM DXPE GMXR GROW IIJI NGAS SFCC

- Spydertrader
More...

I like the looks of GMXR too!!

Be advised that SFCC reports earnings after market close today.
 
I purchased a few shares of GROW this morning at a basis of $15.10 USD. Slightly underwater at the moment, it appears volume really slowed down right after I entered into the long position. We'll see how this turns out. I still hold all shares of BTUI from yesterday.

- Spydertrader

<img src=http://www.elitetrader.com/vb/attachment.php?s=&postid=997511>
 

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