Swing Trader Stops

R

retire45

Having serious trouble with stops.. I trade volatile names and the previous day stop is robbing me of gains.. Ideally I should hold until MACD contracts... or?? I am considering a 3 or 4 day low as a stop.. anyone tried something like it?

See JASO attached.. I was long from mid 16's and got kicked out on April 1st on that dip to 18. Of course with all that overhead (amazing how overhead can disappear as sentiment changes) I didn't bother to re-buy. Meanwhile MACD never did anything to recommend selling..

I've got to mechanize this better than prior day low..
 

Attachments

On a swing trade your stop should be just below the PRIOR swing low. On the chart you linked, what date and price did you get in at?
 
Maverickz...

I see what you mean.. problem is what percentage is acceptable from the recent high to the swing low.. after this is established, if the stock decides to go past it all profits could be gone..
 
Here is how I would have traded this:
You got in at a good spot, between the 2 entry arrows I added. These arrows represent the aggressive entry (bottom arrow) and a more conservative entry (upper arrow). The current swing low is about $14.30ish made by the tail of the hammer like candle. However the stop loss needs to be just under the PRIOR swing low which is about $13.30ish where I placed the stop loss line.

I should also note that I would NOT have actually placed this trade. The reason is at the time you would have needed to enter the trade there was LESS than average volume. I like to see volume coming into a stock at my point of entry.

<img src="http://www.fantasydaytraders.com/eqpics/JASO-1.jpg">
 
Ok I re-read everything you posted and it seems you are using trailing stops and not a straight stop loss. In this trade that should about a $3 to $3.30 trailing stop (16.50 entry point - 13.50ish initial stop) . So on the candle where it opened around $19 and had the dipped down to $18 your stop would have been roughly at $16 and you would have stayed in the market.

The highest the stock traded has been about $23.20 so your trailing stop would now be at about $20.20 and you would have about $3.70 of locked in profit.
 
Quote from retire45:

Maverickz...

I see what you mean.. problem is what percentage is acceptable from the recent high to the swing low.. after this is established, if the stock decides to go past it all profits could be gone..
More...

First you want to look at the sell off from the last high. The last sell off high was $20.88. You are getting in at $16.50 so your estimated profit potential is $4.38.

Next you find your initial stop loss point. in this case is was just below the tail of the candle 5 days before your entry which should put it between $13.30 and $13.50 (hard to tell for sure on that chart). We will assume you set it at $13.30. So your max loss is $3.20 ($16.50 - $13.30).

So the question is do you want to risk $3.20 to make $4.38? That is 100% up to you. I personally try to get at least a 2-1 ratio. So with a $3.20 risk I am looking for $6.40 profit potential. That combined with the lack of volume means I would not have taken this trade but it would have turned out to be a nice one.
 
2 things... I tend to take breaks of the 16.5 level JASO type trades routinely, regardless of volume.. Since I am usually taking the trade early in the day, not easy to extrapolate what volume may be at day day's end.. Also with one like JASO the trade becomes riskier VERY quickly.. So this affects the Risk/reward

Second.. I have also always taken the Breakout point.. 16.4 for JASO as the first defended area as it was resistance for quite a while.. Getting in at 15 could mean a wasted trade as the Breakout may never come.

Sound like the ideal trade would have been buying a pullback to 16.5 from, say 17's.. which never came.. See Attached MTH chart -- entry at 18. Problem is it difficult to scan for these.. Less risk trade but may not happen..
 

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Quote from retire45:

2 things... I tend to take breaks of the 16.5 level JASO type trades routinely, regardless of volume.. Since I am usually taking the trade early in the day, not easy to extrapolate what volume may be at day day's end.. Also with one like JASO the trade becomes riskier VERY quickly.. So this affects the Risk/reward

Second.. I have also always taken the Breakout point.. 16.4 for JASO as the first defended area as it was resistance for quite a while.. Getting in at 15 could mean a wasted trade as the Breakout may never come.

Sound like the ideal trade would have been buying a pullback to 16.5 from, say 17's.. which never came.. See Attached MTH chart -- entry at 18. Problem is it difficult to scan for these.. Less risk trade but may not happen..
More...

Yeah I understand where you are coming from. I usually put in my orders at night, so I already know what todays volume was. Then again if you are looking for setups on daily charts then trying to time entries on intra-day charts, that might be part of the problem. Try placing your order the night before using stop limit entries. Say todays close was at 16.25 and you are looking for it to go up but you want confirmation to make sure place the stop limit order the night before with a stop of 16.50 and a limit of 16.55. Using a One Triggers Other order type, set your trailing stop as appropriate. Now you can sleep in and see what happened when you wake up.

Another way that some people use to figure a trailing stop is some number slightly larger than the ATR/ADR (Average True Range or Daily Range). I never really used this method but you might give it a shot and see if that improves your stops.
 
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