Stops

[romik]

Quote from tortoise:

Does anyone have anything constructive to say on the subject at hand?

Turtoise, i haven't read all posts in this thread and maybe i'll repeat somebody, I apologize beforehand.

OK, based on my personal experience I can tell you that I have tried your approach of keeping stop orders at 10 points and more, but trust me that system simply did not work in the long run. What you have to remember is that you will risk more than you will gain, if you are ready to lose more than make out of a deal, you are gambling big time. Your stop WILL be triggered after 10 points down, but when will you know where to exit a profitable trade? That is a big issue for a lot of traders. Also you have to realize that capital preservation is more important than any formula out there promising rapid growth, but which entails high risk. I know it all sounds wishy washy and not what you probably want to hear. Unfortunately, you will have to discover your own way, unless you want to take advise from people you don't know whether they make good money from trading consistently. People that make healthy returns will ask for a very substantial sum of money to teach you how they do it. My advice to you.

1) Study your market for a while
2) Study all the TA tools and try them out in a simulated account
3) Preserve capital at all times
4) Learn to follow directional intraday volume patterns/behaviors
5) Train yourself out of eagerness to trade every single opportunity
6) If day trading, i would suggest, keeping you stops at minimum distance from entry, as you are never right - the market is and we can simply follow the direction its' heading
7) Get powerful (robust/quick) trading platform even if you have to pay monthly premium on it

There are more things I could have mentioned, but they are for you to discover. Perhaps one last thing I can mention, which I found after years of research is try to keep it as simple as possible.

All the best.

 

[cashmoney69]

i know this in the futures page, but i'll ask anyway since its on the topic of stops.

For swing traders, what do you do if your stock passes your stock in an uptrend?

1. do you stick to your original stop and sell? or

2. adjust your stop to a higher price, and if this is your method, what is your reasoning of comming to the next stop price level?

- nate

 

[porgie]

whitster..............always being late is good......depending on how late one is............ma's are beautiful and early is easy with ma's........i thought alwasy late also until i kept looking........i have a lot of lines on my intraday chart........they are doing very well.........the problem with most traders is they want to feel comfortable before they enter by waiting for this bar to set and this bar to see higher volume, etc.....and 3 or 4 different charts time frames........u r exactly correct.........about 1 market...........intensify the study on one market and preferably seetttle on one chart..........it is less painful and much less stressful trading as little information as on can once you get the thing under control............ trade only what u c in front of you on the monitor.........forget the news......mind bias will take you out quickly........get your mind out of trade is my theory.......as much as possible..........Emini intraday ..................after one has paid the dues........

 

[hcour]

the problem with most traders is they want to feel comfortable before they enter by waiting for this bar to set and this bar to see higher volume, etc....

I haven't read his book in a while, but as I recall Justin Mamis identifies 3 kinds of risk: Price, Information, and Time. I think for a technical trader the most immediate of these is Price Risk - In a downtrend the greatest risk is to buy on the low, this also has the greatest potential reward. To buy on the test of the low involves less risk and less reward. And so on...

The greater the price risk, the more trades, the closer to place the stop. There are whole strategies built on this concept and its variations: Take more positions for small losses at greater risk for the fewer greater wins. Or step it down, taking less price risk and greater information risk, buying on the test for a more secure entry and widen the stop accordingly on fewer trades.

I think Information Risk as put forth by Mamis is sometimes mis-interpreted, to usually mean News and Fundamentals, and that's certainly viable, but I also think it means chart/price information: If you buy on the low, the selling climax, you have less price info as to whether this is an actual climax, it may just be a lower-low; while if you buy on the test of the low, you have more price info, it is more likely that the potential climax was indeed a climax, but otoh everybody else also has that info. So Price is Information. The classic example of this is an uptrend that goes parabolic and climaxes as the public sees the strong uptrend and jumps in at just the wrong moment, as the price information is so obvious to all, w/only a few seeing the real underlying price behavior, that it is time to bail.

Harold

 

[murray t turtle]

Quote from cashmoney69:

i know this in the futures page, but i'll ask anyway since its on the topic of stops.

For swing traders, what do you do if your stock passes your stock in an uptrend?

1. do you stick to your original stop and sell? or

2. adjust your stop to a higher price, and if this is your method, what is your reasoning of comming to the next stop price level?

- nate

========
Swing stocks, especially uptrend /bull market like we have been in for years;
usually dont set profit targets, trail stops like moving average.

Never widen stops ,
& if you are a turtle or rabbit type trader always have stop before entering a busy roadway.
Can/do tighten/narrow them over time in trade like ,
PSAR principal [parabolic stop & reverse]

The very best occasional stock trends,stops can be tightened more so than on ES,YM ,
derivative trend days /ES,YM can be suprisingly smooth some;
stops can be tightned better then .


And something a moving average can do before a trade is entered;
identify /avoid some , but not all sloppy choppy derivative personality or choppy sloppy stocks personality

 

[murray t turtle]

Quote from hcour:

I haven't read his book in a while, but as I recall Justin Mamis identifies 3 kinds of risk: Price, Information, and Time. I think for a technical trader the most immediate of these is Price Risk - In a downtrend the greatest risk is to buy on the low, this also has the greatest potential reward. To buy on the test of the low involves less risk and less reward. And so on...

The greater the price risk, the more trades, the closer to place the stop. There are whole strategies built on this concept and its variations: Take more positions for small losses at greater risk for the fewer greater wins. Or step it down, taking less price risk and greater information risk, buying on the test for a more secure entry and widen the stop accordingly on fewer trades.

Harold

=========
Helpful book of his;
When to sell.


Also interesting that former specialist,Mamis prefers longer ma than 50 day moving average for stocks.Called a 50 dma too choppy if i remember. Could be less choppy if remember his warning.

50 dma or longer probably more useful for stocks;
less useful on derivatives perhaps.

 

[Bernard111]

Quote from hcour:

I haven't read his book in a while, but as I recall Justin Mamis identifies 3 kinds of risk: Price, Information, and Time.
Harold

hcour,
Can you please elaborate more about the Time risk factor?

 

[hcour]

Bernard,

It's been a loooong time since I read the book so I don't want to mis-interpret Mamis. I'd suggest either buying the book, it's cheap enough, and it's a great one, most unusual, or ask dbphoenix about it, he's an authority on Mamis. He doesn't post here any longer but I believe he hangs out on the forums at -

http://www.trade2win.com/

Do a search there on Mamis or just ask db.

Good luck,
H

 

[tortoise]

Quote from romik:

Turtoise, i haven't read all posts in this thread and maybe i'll repeat somebody, I apologize beforehand.

OK, based on my personal experience I can tell you that I have tried your approach of keeping stop orders at 10 points and more, but trust me that system simply did not work in the long run. What you have to remember is that you will risk more than you will gain, if you are ready to lose more than make out of a deal, you are gambling big time. Your stop WILL be triggered after 10 points down, but when will you know where to exit a profitable trade? That is a big issue for a lot of traders. Also you have to realize that capital preservation is more important than any formula out there promising rapid growth, but which entails high risk. I know it all sounds wishy washy and not what you probably want to hear. Unfortunately, you will have to discover your own way, unless you want to take advise from people you don't know whether they make good money from trading consistently. People that make healthy returns will ask for a very substantial sum of money to teach you how they do it. My advice to you.

1) Study your market for a while
2) Study all the TA tools and try them out in a simulated account
3) Preserve capital at all times
4) Learn to follow directional intraday volume patterns/behaviors
5) Train yourself out of eagerness to trade every single opportunity
6) If day trading, i would suggest, keeping you stops at minimum distance from entry, as you are never right - the market is and we can simply follow the direction its' heading
7) Get powerful (robust/quick) trading platform even if you have to pay monthly premium on it

There are more things I could have mentioned, but they are for you to discover. Perhaps one last thing I can mention, which I found after years of research is try to keep it as simple as possible.

All the best.

What fun checking out this thread from way-back-when.

Point #5, above, is absolute gold.

 

[syswizard]

Quote from tortoise:

But this "savings" was more than compensated for by the death-by-one-thousand cuts effect of small losses incurred by the use of stops.
Thoughts, anyone?

That's the price you pay for reduced risk in the markets. I witnessed this with trading Russell 2000 futures a while back.....boy, all of the losses can make you crazy ! I think in a 3 month period of time, I only had 25% winners. That being said, I still broke even.

Good luck with going stop-less. It might work if you've got the instincts to know when to get out. I knew a trader who had done pretty well for a year or so....then he went stop-less, and lost his entire account in 2 days. Of course he used this stupid "double-down" strategy then.