stop loss determination
- Thread starter Buy1Sell2
- Start date
Yep, I meant as a percentage of whole portfolio. I never overtook -3% for the moment. But as I said it, touching such a threshold would mean there is a technical problem more than a trading problem.
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a] Probably most traders, especially @ first, think 1-3% max risk of total equity sounds too extremly low. Its about right ,1% or so.
However related to that, swing position trading say one loss, 2 losses for sure in a row usually means my med trend has changed;
so TREND [or 1 loss/any size] of equity can send you a valuable message, cut back much less than 1%. Or simply stop shorting GM now[ swingtrade recently, thank God only about 1% risked/GM] short. Medium trend did change on GM
z]Prices trend, gains trend ,losses tend to trend,thus cutting back valuable hint.And stop/ entry /exit is determned by trend lines/ma also.....
Big trends Price Headly had 2 interesting long only profitable system this am,hit rate less than 50%, so 1 or 2 losses in a row may not automaticaly send a valuable message.
Murray , that seems to suggest a trader may want to pass on the trades that don't fit both the charts and the total drawdown. Probably good advice I would say. Now that being said, a trader could look at a daily chart and determine that almost any market might not be in budget, but then look at intraday charts and see that there would be opportunity. What would be your opinion with regard to that, recognizing the conventional wisdom is for a trader to first be a good position trader before looking at day trades? Would the answer be more funding or is there any merit to the "postion trading first" idea.
Yes, it is possible to be wrong more often and still make money..your system just has to allow for your winners to run far and cut your winners short. Getting that to work with enough of an advantage, so you can be significantly wrong more than you can be right, is probably as hard as figuring out how to be right more often
But it makes me think of that quote I always see from George Soros:<i>"It's not whether you're right or wrong that's important, but how much money you make when you're right and how much you lose when you're wrong."</i> -- George Soros
I've done lots of tests on stops. On the tests for stops with a loss I found little difference in overall profits based on where a stop was placed. With tighter stops the percent of winners dropped but the winners made way more money than the losers. With looser stops the percent of winners went up but the total win/loss ratio decreased so the overall profits were the same. I've found it much more profitable to spend my time on the stops for profit and I think it's a big difference between ok and better traders.
One area of research you might want to check is entry size. If you don't do all in at once it can have a big difference in your trading.
I found if I go in partially initially, and then after a fixed period adding more if the position is profitable, the overall profits went up, the time between equity highs went down, the drawdown increased, and the sharpe ratio went down. If I did partial entry at first and then adding if the stop hasn't been hit, but the position is underwater then adding to the position gave lower overall profits, higher time between equity highs, lower drawdowns, and increased sharpe ratio.
Just something to consider
43yotrader
One area of research you might want to check is entry size. If you don't do all in at once it can have a big difference in your trading.
I found if I go in partially initially, and then after a fixed period adding more if the position is profitable, the overall profits went up, the time between equity highs went down, the drawdown increased, and the sharpe ratio went down. If I did partial entry at first and then adding if the stop hasn't been hit, but the position is underwater then adding to the position gave lower overall profits, higher time between equity highs, lower drawdowns, and increased sharpe ratio.
Just something to consider
43yotrader
THERUDEBOY
Guest
I love it when people quote old Georgie Soros. I mean, this guy was making 4K a minute, nevermind the odd billion he made here and there shorting the pound.
Yeh, Soros is one of the greats....but,
He was on the top of this game.
Stops take on a different concept when your wife wants to know where the holiday money has gone and you are struggling for a six pack.
Next time you are out for a walk with the dog, think about the pot you've got to p**s in?
Now....., tell me about Georgies stops?
Yeh, Soros is one of the greats....but,
He was on the top of this game.
Stops take on a different concept when your wife wants to know where the holiday money has gone and you are struggling for a six pack.
Next time you are out for a walk with the dog, think about the pot you've got to p**s in?
Now....., tell me about Georgies stops?