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Questions/Answers and Comments for 3% tutorial from tech/a

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From the replies on the main thread it appears that some have a rudimentary knowledge of the use of stops.

Before I post up a heap of charts and a fair amount of commentary is there anyone who would like to offer up their understanding of stop application and its effect on your/our trading as a start to discussion on the topic.

Many are aware that a stop will minimise loss but there is much more to stops and their placement than this------or is there?

tech
 
Thanks to all

Thanks Techa..

I'm looking forward to this thread running it's course and the input from some of the more seasoned investors here..

i realised that up untill now i've been 'guessing' with a lot of my share market choices and enjoy the threads in this forum.

Many thanks to all here..

REDWING
 
The reason you haven't relied on a fund or other bulk buying org is that you wish to have control over your investments/speculations
So why would you want to compromise your initiative by having auto close outs of your position
The fund that you chose not to invest in will take your units down fast and sure once the market dips/crashes
Only the players that have their finger on the pulse can hope to pull out of a poor position
An auto stop loss will simply reduce your capital in little bits, often with the share rebounding and costing you opportunity to embrace the profits you sought
There is a time to cut your losses, but do the cutting yourself and don't rely on a stop...unless you are going on holiday or incognito for a while....

happy days
 
Wayne.

US stocks.

Yes I do.Ill do some work on those and post here.
Any particular entry youd like me to look at?

Re return.
The comment is general there will be exceptions to every rule--------thats why we have rules so we can find exceptions to them!

Wayne You trade Support/resistance---what are your stop levels at both extremes.
At buy where do you say Im wrong.
At the Target sell where do you exit if the target is not reached? Close?

tech
 
Tech,

Last ditch stops are at my (arbitrary) support/resistance line...drawn pretty much as everybody draws them. But generally I'll set intraday support/resistance on a 15 min chart. I'm trading momentum so if its not getting on with it I'll generally exit.

It would want to be pretty convincing supp/res on the daily for me to let the trade go against me to that point.

If it doesn't reach target...I have a 34ema ploted on 15 min chart. If it's piercing the 34 i'm looking to exit before the target.

Also, if its flying as it hits target, why exit? I'll let it run, again using the 34 on the 15min as a guide.

This is not a hard trailing stop but if pierced I'm looking to exit on breach of intraday supp/res.

Divergence will get me out also if a nice target has been reached.

Once again, it mo I'm trading and mo I'm entering on. If the trade doesn't look convincing once I've entered...I'll be looking for something else.

Re initial stops on US stocks...Using tech trader entry, do you still find that 8% business is the same on US stocks as opposed to ASX? I would have thought the figure would be a greater % as a guess.

Cheers Wayne
 
Re initial stops on US stocks...Using tech trader entry, do you still find that 8% business is the same on US stocks as opposed to ASX? I would have thought the figure would be a greater % as a guess.
Click to expand...
Wayne,
From what I experienced on the NASDAQ I'd say the figure can be put slightly higher but I wouldn't think it's double that. I found that while stocks move much quicker within a much bigger price range, after the tech bubble went bust they take much longer to recover. I'd be very reluctant to put my stop losses any further than 10.5% if I was a daytrader. I found that it has become much harder for stocks to recover from beyond 10% within an acceptable time frame for daytrading. Then again, I'm not daytrading anymore so I may have a too conservative view of things. The 4 (!!) US stocks I'm holding at the moment are longterm and I didn't set a stop loss at all as I don't see the point for these particular cases due to lack of downside potential.

Happy trading

Stefan
 
>>I'd be very reluctant to put my stop losses any further than 10.5% if I was a daytrader. I found that it has become much harder for stocks to recover from beyond 10% within an acceptable time frame for daytrading.<<

Oh yes!!!!!!!!!!!!!!! My stops for day trading or swing trading are less than 1% of position size.

I was think more for medium/long term trend trades.

Cheers
 
Red your talking about % from buy.
Wayne your talking about % of parcel size.
Me I look at risk on capital when considering stop,funnily while I trade very long term (over 300 day average).
My risk on a single trade is never more than 1%.

Initial trading capital can play a large part in risk youll need to apply to each trade.

This is a topic on its own and Ill bring it up again as we go further along.

tech
 
>>Red your talking about % from buy.
Wayne your talking about % of parcel size.<<

Same thing isn't it?

>>Me I look at risk on capital <<

Yes agree! When trading a portfolio of trend/long term trades, this is the only way.

I use % of parcel size when swing trading as % of capital is negligable...way < 0.5%.
 
Yes could be.
If trading singular entities.
However if your trading a portfolio or a group of correlated futures marketd then the overall result on your capital can vary greatly.

Wayne I understand your use of very small parcel sizes to limit risk even 1% of 500K is $5000 so .5% is $2500.
Now working at 3.4 x average win to average loss that gives a win of possibly
7 pips on 2 contracts given your figures.
Presume your trading Nasdaq at $250/pip.Feel it would be un workable on anything less / pip.

Anyway youve got 99% of your $$s doing nothing!!
Its a personal thing but I like all of mine at work.
Ill protect it with risk management rules meaning its all at work and only 1% risked on every trade giving a max of 10% if all tanked at once.

Each to their own.
 
tsk tsk...

You mustn't make assumption tech.

Anyway the sun rays are peeping over the horizon, and I must rush back to the crypt to get some sleep.

Later....
 
Ok.

Lets say its an observation on the known facts I have at my disposal.

tech
 
wayneL said:
Anyway the sun rays are peeping over the horizon, and I must rush back to the crypt to get some sleep.
Later....
Click to expand...

Happy snoozing 'Count'! Sounds very odd sleeping when everyone else is awake, just my opinion but if it pays must be worth it.
 
RichKid said:
Happy snoozing 'Count'! Sounds very odd sleeping when everyone else is awake, just my opinion but if it pays must be worth it.
Click to expand...

I wake up around lunchtime...I just where very dark sunglasses when I go outside :)

It's surprisingly quite a good lifestyle once you get used to it.

Cheers

PS. As I live in Perth, the time frame is a bit better than for you easterners.
 
>>Wayne I understand your use of very small parcel sizes to limit risk even 1% of 500K is $5000 so .5% is $2500.
Now working at 3.4 x average win to average loss that gives a win of possibly
7 pips on 2 contracts given your figures.
Presume your trading Nasdaq at $250/pip.Feel it would be un workable on anything less / pip.<<

Not so much small parcel sizes, as low risk entries as described above. My parcel sizes as a % of capital is probably not disimilar to yours.

Just that the risk is lower. The reward is also correspondingly lower. Where it pays off is in the frequency of trades.

I don't trade Nasdaq.

I trade liquid stocks, er2 (russel 2000 midcap index), oil,euro futures and gold...sometimes bonds, sometimes S&P500.

And just to clear up some points on futures.

Its ticks! Pips are for forex. Even currency futures are ticks as opposed to forex.

Nasdaq emini $10/tick $20/point
Dow emini $5/tick/point
S&P500 emini $12.50/tick $50/point
russel emini (er2) $10/tick $100 point
oil emini $10/tick $400 point ($1)
euro futures $12.50/tick $1250/point ($0.01)
Gold $10/tick $100/point ($1)

I may have several open positions at any one time across futures and different sectors of the stockmarket, up to 20...taking care to minimise correlation as much as possible.

So one hell of a lot more of my capital at work than you assumed.

However......

>>Anyway youve got 99% of your $$s doing nothing!!
Its a personal thing but I like all of mine at work.<<

Due to the leveraged nature of futures and %75 LVR on ANY US stock I care to trade, I have masses of spare capacity, which really should be put to work...hence my interest in doing some medium term, trend trading.

Cheers
 
%75 LVR on ANY US stock I care to trade

Wayne can you elaborate more on this.

Simulations with the 2 methods I trade show US stocks much more profitable than ASX.

Who do you go through and how much round trip.

tech
 
I hope TechA hasn't done a runner after that spat on the December Stock Tipping Comp Entry thread???

It's just forums after all and I for one did like following his posts (not that I understood it all but that's another story). Oh well, maybe he'll be back after a bit of cooling off (or after seeing posts like this- I know he likes to be pleaded to). He sure put in a lot of effort in his posts.
 

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