Tips for Taking Smaller Stops -- What works?

[spect8or]

Quote from ArchAngel:

Seems like a lot of effort (sounds like you're trying to basically run six scalps simultaneously) for a net of less than 1 point.

Why not just focus all that attention and effort on taking points out of the ES, NQ, or YM?

Well, take that measely 1 point and multiply it by 1000 shares and all of a sudden you're talking DayTraders' Promised Land. (Which me thinks was perhaps ole Kenny Boy's real point to this thread.)

As for your second point, I'm amazed that someone of your obvious intellect could say something so utterly ridiculous.

 

[Ken_DTU]

Interesting to see all the different trading styles -- that's what makes for such a diverse market .... eg stop management for different styles is a good topic too. .. the key is, to maintain discipline for stops that are appropriate for each strategy.. eg not mixing stop/risk mgmt styles in the same trading account...


other ideas, re how to make a fast, volatile trading style w/tiny stops easier to use w/tight stops, especially for newer traders?


thanks -

ken

 

[axeman]

Use tight targets.

Again...depends on the trading system.... but typically, if you have
real tight stops, and your targets are too large, your gonna end
up with a HORRIBLE %win.

So you gotta draw in your targets to raise the %win rate.
You end up with many smaller trades, and thus, smooth
your equity curve out.


Taking lots of tiny bites, instead of fewer BIG bites, it easier
to handle overall. In other words.... mixing up small wins with
small losses is psychologically easier for new traders.

peace

axeman

Quote from Ken_DTU:

Interesting to see all the different trading styles -- that's what makes for such a diverse market .... eg stop management for different styles is a good topic too. .. the key is, to maintain discipline for stops that are appropriate for each strategy.. eg not mixing stop/risk mgmt styles in the same trading account...


other ideas, re how to make a fast, volatile trading style w/tiny stops easier to use w/tight stops, especially for newer traders?


thanks -

ken

 

[Ken_DTU]

yeah, that sounds about right, eg set 1/2 point wins as a target, with .20 type stops... so people aren't swinging for the fences... keeping it all smaller ... good point re easier to take ...

ken

 

[omniscient]

Quote from axeman:

Taking lots of tiny bites, instead of fewer BIG bites, it easier
to handle overall. In other words.... mixing up small wins with
small losses is psychologically easier for new traders.

i agree. i trade the ES and keep my stops between .5pts and 1pt. i don't mind being wrong, but i want to get it over with as soon as possible and with minimal damage. if my entry is on target, my stop is a non-issue. however, if i have entered too late into the move, i'm happy to let my stop jerk me out of a worse trade.

i may not be hitting home runs every at bat, but i'm not striking out on a single pitch either.

so to answer the original thread question: i make stronger entries so that i can keep tighter stops and cut costs.

take care and trade well!

omni

 

[lilboy716]

look at the losers you have taken so far, and see what's the worst that could've happen. then you will know what to do next time around.

http://www.elitetrader.com/vb/showthread.php?s=&postid=506617#post506617

 

[Ken_DTU]

Right -- how about trading several positions near-simultaneously? Is that approach uncomfortable or difficult for many traders, or do many of you do that, in your daytrading?

Example, during a hot/volatile breakout 10-20 minute timeframe in the market, it makes sense to be in a handful of positions, entered near the same timeframe... any insights into how you personally became more comfortable with that? or, just not something you want to do etc?

practice, yes -- but any specific techniques that have helped, eg using IB/cyber interface, or others?

appreciate it --


ken

 

[murray t turtle]

Quote from MackieMesser:

I've done a LOT of computerized testing on stops. These tests have been done on equity trading systems, EOD data.

Given those parameters, tight stops are system killers. I don't care what all the experts say, my testing has convinced me that with all the EOD systems I tested, tight stops are a terrible idea.

I realize a lot of people will contest this and that's fine. They can take their anecdotal evidence to the poor house with them.

I'm not the only one who has done testing to confirm this.

Now...intraday systems, scalping systems, and others may work with tight stops...dunno about that.

m

%%%%%%%%%%%%%%%%%%%%%%%%%%%%%%
MackM;

Excellant points so to speak, like Harrytrader's right edge time frame;
most of the trading old timers in my library dont use small stops;
except the small time frames like daytrades.

Prefer to keep stops;
much more than keeping stops small.

Continual testing/research is a good reminder;
even in a bull market,no selling plan could eventually ruin.

The plans of the diligent tend only to advantage.
Solomom trader king

 

[Kerry]

Quote from illiquid:

Have you ever considered decreasing your position size while widening the stop?

If you'd like a stop wide enough to allow your position to work yet are worried about the size of the loss if it fails, then perhaps you are just trading too large for your account.

Well put illiquid... it really all starts from money management and knowing what size you are comfortable with.

 

[ArchAngel]

Quote from spect8or:
Well, take that measely 1 point and multiply it by 1000 shares and all of a sudden you're talking DayTraders' Promised Land. (Which me thinks was perhaps ole Kenny Boy's real point to this thread.)

As for your second point, I'm amazed that someone of your obvious intellect could say something so utterly ridiculous.

1. Take that 1 point and multiply it by 20 ES contracts and you've got the same risk/reward ratio.

2. Why do you think a trader focusing all their attention at trading only one or two futures contracts extremely well is such a bad idea compared to trying to simultaneously enter and manage 6+ stock positions? For most traders, the complexity of trading increases exponentially with the number of simultaneous positions they have to deal with.