It's Snake Pliskin said:Barney you are not lazy which is good.
The nature of the stock you intend to trade: daily ranges, noise, volume etc. They are all different and avoiding the manipulators taking your stops is important.
A small position with a wide stop can achieve a small loss if gone wrong. It doesn't have to be big positions, or small, with tight stops.
This part I liked:
Snake
It's Snake Pliskin said:Barney,
Take note of Tech's charts he has has posted.
Well said wavepicker, nicely illustrated to demonstrate the point.wavepicker said:Porper,
You wouldn't beleive how many times I have had to let good trades go because I have been stopped out. This was especially the case when I first started to trade.
I mean you do all the hard work planning your trade, expected entries, exits, and other contingencies etc. What does the market do? It does some fancy footwork first, takes out out all the obvious stops, only to move in your desired direction of speculation shortly after!! Now that can really piss you off!! I am sure that has happened to most of us here at some stage or another.
There has to be careful consideration to where stops are placed. Sometimes I get the impression, dealers love us to place stops and even push and advertise it. It's in their interests, the more trades they can get people to do the better.
Cheers
It's Snake Pliskin said:Barney,
Certainly not Dapto and not taking speed etc to drive long distances. Yes I teach conversational English as a part-time thing to maintain human contact and pay for bills etc.
Take note of Tech's charts he has posted - they say a lot.
tech/a said:Hopefully this will illustrate the entry question well.
This is a trade which is one which is public here on tech trader.
http://lightning.he.net/cgi-bin/suid/~reefcap/ultimatebb.cgi?ubb=get_topic;f=74;t=000029;p=3
Mag,Magdoran said:I would agree though that entering around a previous high (or low if looking to go short) has some risk because the underlying is nearing previous resistance (or support).
If Michael finds he is effective doing it this way fine. Me, I do trade near new highs sometimes based on the pattern (have done recently), but fully aware that there is quite some risk of a marginal high occurring, and being prepared to exit or even reverse the position.
Beginners say 2% risk - so little?It's Snake Plisken said:10 losses at 2% = $20,000
Barney,It's Snake Plisken said:A tight stop is not always the way to have a small loss - please think about it.
Magdoran said:Well said wavepicker, nicely illustrated to demonstrate the point.
Magdoran
After the position was taken, what stop/loss position did you take? And when it first reversed against your initial analysis, how did you react Phsycologically to the position?
MichaelD said:Mag,
I don't trade with an all time highest close entry. I was merely using it as an example of how simple a robust, profitable system can be and how unimportant the entry is in the overall outcome of a system.
The aim of all my systems is to smooth out the equity curve and minimize drawdown as much as possible to make them pleasant (relatively speaking) to trade. An all time highest close entry is quite a choppy system to trade, so not quite to my tastes.
My major trend following system tends to pick up either trends in progress or stocks about to breakout to a Weinstein Stage 2.
Beginners say 2% risk - so little?
Pros say 2% risk - so much?
I used 2% for the example since it's a commonly used risk %. I personally like to trade 0.5% and pyramid winners. It keeps the losses to a size where I can easily shrug them off.
Barney,
There's a lot contained within these few words.
1. A tight stop can easily be whipsawed out by random market action.
2. A tight stop may be suitable for trading a wild ride down like PMN. Whether you can consistently take this sort of wild countertrend ride is another matter. Who knows - maybe it's your niche. Not for me at the moment, thanks - too much excitement. After a spike up you see several possible different behaviours;
a. Another spike up - everyone's seen the spike and greed is dominant. Gimme gimme gimme at any price.
b. A day which opens and closes at about the same spot with a fairly wide range between the high and the low. Here many of the holders of the stock from way back have noticed the spike and have headed for the exit, locking in profits, but buyers are equally keen to get hold of the stock.
c. A modest pullback on low volume. Very common for this to occur and a few days later the stock breaks out again.
d. A big bearish day where old holders swamp the buyers to get out after the price spike.
Working out how to consistently profit from these behaviours is the hard part. For me, this is my current work-in-progress. Tech/A has started a thread on trading this sort of behaviour which promises to be extremely interesting.
3. You can also lose a little by trading a small parcel size with a wide stop. If a trade size is so small that you're thinking "why am I wasting my time even putting on this trade" then it's about right.
4. Based on my backtesting, an intraday stop leads to more drawdown than an end of day stop - the ride is wilder. There's a pattern of potential interest which I believe is called a Kangaroo Tail which seems to reflect all the intraday stops which have been placed at the same or similar price being hit and causing a deluge of sellers getting out at market - the price drops down quickly and then when the sellers are all out, the price rebounds, so you get this long tail on your chart.
I prefer to keep my stops on my charts and not in the market for my style of trading for this reason.
Having said all of this, all of this discussion should not lose sight of the fact that;
Barney is now trading with a stop.
Barney has now given himself a shot at surviving. All the rest is finesse.
nizar said:i used to think that the only reason traders would sell is if a stock hit their stop. ie. they wanna keep hold of a winning position as long as the trend allows, and consequently the stop should be placed in a position which would indicate that
Tech/A has started a thread on trading this sort of behaviour which promises to be extremely interesting.
tech/a said:The system has a 10% of purchase price stop which when you hold 10 positions and you have equal $$ value of stock held equates to 1% of total equity.In this case it was 79c off the purchase price.
How did I feel.---I had no attachment to it,it would do one of 3 things like ALL my trades. Be a winner,be a loser or bugger about in no mans land.
A 1% loss doesnt concern me.
However during discretionary trading a 10-20% drawdown does concern me.
This has happened more than once and when it does I STOP trading completely and re visit WHY.
WITHOUT exception its been letting my losses run longer than I should AND in doing so causing my profit on exit to be less than the loss would bear--IE the Reward Risk ratio was out of skew.
Last time that happened was 4 yrs ago.
Ive become an expert in selling stops.
My R/R aim is 7:1 or more in realisty that gives me 3+---as I cant test how I trade in a discretionary manner I guard this R/R like Fort Knox.
Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.
As Ive said before my stop is 2-3 ticks on momentum discretionary trades.
A vast difference to the 10% longterm stop placement.
Ive been waiting for someone to pull me up on TIMEFRAME---there you go did it myself!!
Moggie.
You open up topics that will have us involved for hrs!!---Bugger I have other things to do!!
Nizar the stop is still in its original spot---quite useless now!! the exit is the 180 day EMA of the low ---the red line! as you can see its chased it all the way up.What seemed like a crazy wide stop aint that crazy now!!
It's Snake Pliskin said:Setting stops is guesswork at best.
No need to apologise. When you get the time.tech/a said:These can be traded very well and you guys just get me involved in other threads which take so long to answer I havent devoted the time to such a great topic.
Actually I'm looking forward to the flack from the "Experts" from the Fundamental lounge,who have been trading outliers like they are a longterm trend.MOX and PHM threads make a good read.
I will get to it I'll have to do it in small chunks.
My apologies.
tech/a said:The system has a 10% of purchase price stop which when you hold 10 positions and you have equal $$ value of stock held equates to 1% of total equity.In this case it was 79c off the purchase price.
How did I feel.---I had no attachment to it,it would do one of 3 things like ALL my trades. Be a winner,be a loser or bugger about in no mans land.
A 1% loss doesnt concern me.
However during discretionary trading a 10-20% drawdown does concern me.
This has happened more than once and when it does I STOP trading completely and re visit WHY.
WITHOUT exception its been letting my losses run longer than I should AND in doing so causing my profit on exit to be less than the loss would bear--IE the Reward Risk ratio was out of skew.
Last time that happened was 4 yrs ago.
Ive become an expert in selling stops.
My R/R aim is 7:1 or more in realisty that gives me 3+---as I cant test how I trade in a discretionary manner I guard this R/R like Fort Knox.
Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.
As Ive said before my stop is 2-3 ticks on momentum discretionary trades.
A vast difference to the 10% longterm stop placement.
Ive been waiting for someone to pull me up on TIMEFRAME---there you go did it myself!!
Moggie.
You open up topics that will have us involved for hrs!!---Bugger I have other things to do!!
Nizar the stop is still in its original spot---quite useless now!! the exit is the 180 day EMA of the low ---the red line! as you can see its chased it all the way up.What seemed like a crazy wide stop aint that crazy now!!
tech/a said:Actually I'm looking forward to the flack from the "Experts" from the Fundamental lounge,who have been trading outliers like they are a longterm trend.MOX and PHM threads make a good read.
I will get to it I'll have to do it in small chunks.
My apologies.
Agree with ignoring them.wayneL said:Tech,
It's a bit like the Catholics and the Protestants in Nth Ireland, innit.
In reality we know they're the apostates. We should just treat them with ignore and get on with our own ideas.... instead of fighting.
Hmmmmmmmmmm. Maybe I should follow my own advise
Cheers
Its the outlier wins that make the $$s thats for sure.Ive had more than a few that return 200:1 R/R.
tech/a said:No its part of risk management if you trade that way.
IE you trade the numbers.
I gave you the test results for various width stops.
All they do is preserve capital so that when you do get a runner YOU HAVE THE CAPITAL ON IT!
Barny its NO PROBLEM
Thats my humour
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