tight stop really work?

[fearless9]

Quote from ML_QUANT:

You must have an strategy to enter a trade right? If you do then that strategy is NOT correct unless you also know it's failure point, that point is you stop.
Here's the most basic example which will only help you understand the concept and is NOT a real strategy.
Let us assume you are entering a trade based on a 0.3% Zig. therefore you'd reverse or get stopped on an opposing Zag. Hence, while the Stop was totally Mechanical you actually practiced an entry and exit strategy.
The ZZ examle above does not work and is ridiculous as an strategy but best describes the concept of having an exit strategy based on the failure of the entry strat.

HTH

Sorry ML, I don't work with examples that don't work.

Risk.
Talk to me only in terms of risk.
I only understand risk.
Nothing else matters to me but risk.

regards
f9

 

[CONR]

Quote from osorico:

As you know F9, YM is my instrument of choice. Most folks who have seen me trade think I use tight stops (most of the time). 15 YM ticks or less for a stop is my "preference". Volatility has made my preference somewhat less attainable, but it didn't eliminate it! To compensate, I reduce size.

Fortunately, my methods of trade selection are not affected by volatility. The volatility (actually it is the ranges, which is not the same as the volatility) however causes the prudent (thinking) man to be firmly in control.

Osorico

That's a pretty tight stop on the YM these days. How many ticks do you typically go for profit wise?

 

[osorico]

Quote from CONR:

That's a pretty tight stop on the YM these days. How many ticks do you typically go for profit wise?

Thats what most seem to think... to me it's $75 (preferably less) per contract.

When I do use specific targets, which is only 50% of the time, they are generally 25-50 YM ticks. Although, if the wind is blowing at exactly 16 mph and everything is alignment on my charts for an intraday- swing reversal a specific target may be several hundred ticks, with expectation to be filled same day.

When there is no specific target, my stop is used to allow me to enter without need to pick an exact top/bottom (in context), and most important to prevent big loss. I adjust quickly to breakeven net followed by incremental profit levels when/if the trade works as expected. This technique, in my usage, tends to produce many small(ish) profitable trades, the downside if there is one, it leaves much on the table, usually generating another trade. Occasionally, the trade will turn into a home run despite stop adjusts.

Osorico

 

[BSAM]

Quote from Thunderdog:

Depends on where and when you place them.

Good answer. Good answer. Besides, what if they are hit?

The real question is: Do you have a plan to stay out or get back in?

 

[BSAM]

Quote from 1 in 100:

in many ways it would be so much easier to just ignore the great unwashed

but I won't, OP you registered in 2002

for you to ask such a elemental and stupid question speaks VOLUMES about you

PFFFT.....You are assuming quite a lot, are you not?

 

[ML_QUANT]

Quote from fearless9:

Sorry ML, I don't work with examples that don't work.

Risk.
Talk to me only in terms of risk.
I only understand risk.
Nothing else matters to me but risk.

regards
f9

The biggest risk is letting your losses run and cutting your gains and worst entering a trade without a strategy.
A predetermine loss robs you of letting your winners run and cause over trading. Stops at strategy failure may have larger losses than 3 ticks but your gains if using a sound strategy will easily cover for that and more.
Now, if you are trading without a viable strategy that defines your entry and exit, then you should not be trading at all and that is your biggest risk right there! If you have an strategy then you should know at which point it has failed and 3 ticks is a random number that does not determine that.

 

[fearless9]

Quote from BSAM:

Good answer. Good answer. Besides, what if they are hit?

The real question is: Do you have a plan to stay out or get back in?

Well that is the name of the game.
Stop out and re- enter is smarter than wider stops.
But each punter will come to their own conclusions.

regards
f9

 

[ML_QUANT]

Quote from Constantine:

This strategy maximizes loses, or would only be acceptable is you are 100 percent correct on all trades.

Your statement is NOT true! You may be even less than 50% successful but still profitable. Your strategy should cut your losses short(otherwise it is a bad and losing strat) and letting your winners run!

 

[fearless9]

Quote from ML_QUANT:

The biggest risk is letting your losses run and cutting your gains and worst entering a trade without a strategy.
A predetermine loss robs you of letting your winners run and cause over trading. Stops at strategy failure may have larger losses than 3 ticks but your gains if using a sound strategy will easily cover for that and more.
Now, if you are trading without a viable strategy that defines your entry and exit, then you should not be trading at all and that is your biggest risk right there! If you have an strategy then you should know at which point it has failed and 3 ticks is a random number that does not determine that.

Best to drop this conversation.

You seem to have covered everything in theory but left trading behind.
It is only about risk.

regards
f9

 

[Lucrum]

http://www.dacharts.com/articles/_MythTStops.htm

One opinion on tight stops.