You Have 5 Must Know Tips for Traders or Investors: They are? Why?

[Zaxon]

It is interesting to see people list as their top "must know tips", sometime points which are direct opposites of each other. It's one of the oddities about shares, that completely opposite systems do genuinely work.

 

[gartley]

Knowing when to sell.

Having pre determined initial profit objective I think helps, and at least gives you a statistically acheivable goal based on the testing of your system. Once that goal is reached taking partial profits of about 50% and moving initial stop loss to breakeven gives you a free trade. How long a trend can last in your favour is anyones guess, but if you can trail it sensibly and as mentioned earlier not cap your profits.

 

[tech/a]

Having pre determined initial profit objective I think helps, and at least gives you a statistically acheivable goal based on the testing of your system. Once that goal is reached taking partial profits of about 50% and moving initial stop loss to breakeven gives you a free trade. How long a trend can last in your favour is anyones guess, but if you can trail it sensibly and as mentioned earlier not cap your profits.

Certainly agree with this tip.
Although I take the lot.Then keep in
a watchlist looking for continuation signals
And there are many.
Trading between support and resistance levels can be
Very profitable and reliable!

 

[HelloU]

wrote a post in response to gartley an deleted it as it waffled ...
that selling thing is a real issue to me, i have been trying to mechanise a system for a while to not let profits evaporate too much before jumping out. It is more along the lines of the "whole lot" (like tech) but it always leaves a big hole in my heart ....and the fear of having jumped too quickly (my buy indicators will not trigger till 2 trade days have passed after a sell - more to give me emotional distance from the sell).

 

[Boggo]

1. Always have a stop loss in place
2. Always have a stop loss in place
3. Always have a stop loss in place
4. Always have a stop loss in place
5. Always have a stop loss in place

Agree.

(click to expand)

 

[HelloU]

it is where to have the stop that is tricky ....
for that stock 2 weeks earlier it stumbled, but if ur stop got hit 2 weeks ago then you missed out on the $1 of last week.

if your stop did not get hit at all (or did not execute thru limits or vol or whatevs) then you are now $2.50 off highs (but maybe still in $2.50 in profit).

for me, stops for pilots are easy for capital management, but stops (or when to sell) for runs are really tricky.

i know nothing of TNE

 

[Boggo]

it is where to have the stop that is tricky ....

(Sorry folks, going off topic just to answer this)

Backtesting is how you find it HelloU

 

[gartley]

it is where to have the stop that is tricky ....
for that stock 2 weeks earlier it stumbled, but if ur stop got hit 2 weeks ago then you missed out on the $1 of last week.

if your stop did not get hit at all (or did not execute thru limits or vol or whatevs) then you are now $2.50 off highs (but maybe still in $2.50 in profit).

for me, stops for pilots are easy for capital management, but stops (or when to sell) for runs are really tricky.

i know nothing of TNE

I think the timeframe you trade, size if your account and volatility of the market should dictate the size and placement of the stop.
Stop positiong is so important. Too close and you end up with nothing but a string of stopouts ( trade needs room to breathe), too far and you can endure excessive drawdown as well put a big hole in your account if stopped.
This may not be for everyone but it's what I do.
If trading the daily chart I look at the average movement (ATR ) of the last 14 days. The only exclusion to this if there was been a recent large spike up or down in which case I don't trade.
My initial TP is the ATR value when I entered the trade because I know that has a good chance of being achieved.
My ultimate SL is usually 1.5*ATR and is based on 1-2% of my account size.
This is worst case condition stop, there to protect the account in case something badly goes wrong.
My preferred SL price is dictated by the system exit indicator that is what usually exits the trade. This is dynamic and the order only goes in once the system triggers a sell.

 

[HelloU]

(Sorry folks, going off topic just to answer this)

Backtesting is how you find it HelloU

yeah, i get that, my whole previous post was about the trickiness of determining that jump-off point.

testing is extremely useful, but it is all history ..... so it is statistics ....... and never absolute. TNE traded from xmas onwards in such a way that historical data did not exist for it. It had not traded in that way for at least 3 years earlier .... so backtesting TNE data does not do much ...... so we backtest general ASX data, finger cross and hope we are ball-park, review what happens and tweak. and after all that we hope we have a profit.

the statement "have a stop loss" is great advice (same as advice to buy low and sell high), but the actual specifics or WHERE to place the stop is the part that remains impossible to say as an absolute. That is the trading part i find most tricky and is the point of what i posted - the part where you have to put actual numbers into the order sheet ....actual numbers like price, or percentages, or volumes etc. i was trying to stimulate a more specific conversation to expand on the points being made ......... but that is maybe off-topic?

 

[HelloU]

I think the timeframe you trade, size if your account and volatility of the market should dictate the size and placement of the stop.
Stop positiong is so important. Too close and you end up with nothing but a string of stopouts ( trade needs room to breathe), too far and you can endure excessive drawdown as well put a big hole in your account if stopped.
This may not be for everyone but it's what I do.
If trading the daily chart I look at the average movement (ATR ) of the last 14 days. The only exclusion to this if there was been a recent large spike up or down in which case I don't trade.
My initial TP is the ATR value when I entered the trade because I know that has a good chance of being achieved.
My ultimate SL is usually 1.5*ATR and is based on 1-2% of my account size.
This is worst case condition stop, there to protect the account in case something badly goes wrong.
My preferred SL price is dictated by the system exit indicator that is what usually exits the trade. This is dynamic and the order only goes in once the system triggers a sell.

thanks (was doing my above rant when u posted)
not everything suits all, but we often benefit from some specifics of others to test our own thoughts on things or give us ideas (many i do not understand particularly in those options threads but i read them anyway)

 

[willoneau]

Hi HelloU,
I think the way you trade play's a part in the type of stop you use, being a swing or trend trader for example. Also how much of your paper profits are you willing to risk before you close the position?
having a re-entry signal in your system if your stopped out can help if you trail close too.

 

[HelloU]

I think the timeframe you trade, size if your account and volatility of the market should dictate the size and placement of the stop.
Stop positiong is so important. Too close and you end up with nothing but a string of stopouts ( trade needs room to breathe), too far and you can endure excessive drawdown as well put a big hole in your account if stopped.
This may not be for everyone but it's what I do.
If trading the daily chart I look at the average movement (ATR ) of the last 14 days. The only exclusion to this if there was been a recent large spike up or down in which case I don't trade.
My initial TP is the ATR value when I entered the trade because I know that has a good chance of being achieved.
My ultimate SL is usually 1.5*ATR and is based on 1-2% of my account size.
This is worst case condition stop, there to protect the account in case something badly goes wrong.
My preferred SL price is dictated by the system exit indicator that is what usually exits the trade. This is dynamic and the order only goes in once the system triggers a sell.

thanks
you showed me yours, i will show u mine

this is ONLY for stocks exceeding pre-set profit levels. (not iSL or moving to BE and beyond in early positions)
i have automated stops at levels down where i am crying ...... for the situation like chart above. they expire after 3 months if not executed so do not create too much effort to maintain. (IOOF was the last one to trigger from memory). my broker tells me when they expire (broker cancelled pre-trigger).

every day my system tells me if a price has dropped 5% from the most recent high ...basically flashes at me to have a look to see if it needs to go to preserve profits. i then use a series of chart tools mixed with groin scratching to decide what to do. if something gets to 10% off its highs my system screams that i am a dckhead and failing to heed its prior warnings - so i prolly should get on with the sell. time consuming, requires chart analysis and often emotive, but works for me.

what else, as i get older i am slowly shifting capital inside my portfolio and altering the type of holdings i have, and who they are held with ...mainly in preparation for death (not imminent but who knows) so if i die the portfolio can be picked-up/liquidated by others without lots of complicated surprises - and hold securities that give them some breathing time to decide on actions. That is important to me to help with their stress at that time.

 

[willoneau]

A trend following system with a 5% trailing stop is too close ,imho.

 

[HelloU]

A trend following system with a 5% trailing stop is too close ,imho.

(with fear of a derail)
yes, agree completely, thankyou

what u wrote adds to the understanding for peeps of how they might use stops (and they should). A 5% on a good profit is crazy stupid close for lots of reasons (eg ex dates, intra day moves, stop hunters on illiquids etc) and is VERY dangerous to have automated.

for clarity: i do not have a automated stop at SP being high 5% down but an alert for a manual look/analysis for profit retention reasons. my automated stops are way way down for those one-off bad things because i spend many hours each week to avoid getting near the automated stop (either it is going up or i have jumped off already on my own terms to retain profits) if my automated stop is hit something out of left field happened. My automated stop means i have kissed goodbye most of the profit - but there for the same reasons we have seatbelts in cars.

 

[willoneau]

I wasn't implying that you were trend trading and I noticed you said was a warning to start looking more closely. I agree having an automated stop away from market is good insurance.

 

[HelloU]

I wasn't implying that you were trend trading and I noticed you said was a warning to start looking more closely. I agree having an automated stop away from market is good insurance.

but i am trend trading ....... so all good (not sure what is going on there but i assumed u meant i was using a trend system - which i am)
my buy signals initially trigger on downtrend gradient changes to neutral (or up), and my sells trigger on + gradients changing to neutral (or down). I then use other criteria to try and guess the goodness of the trade (and groin scratching of course).

and as i get older i trend trade more and more sectors and similar on much longer time frames than i used to (rather than individual companies) just in case i die.

(perhaps my posts do not read as easy as i think they do??) dunno

 

[willoneau]

I thought you were but didn't want to assume.

 

[HelloU]

I thought you were but didn't want to assume.

all good, pretty sure that me and redoraob both love assumptions ....... most things that me do involves ass .... only one bit missing ...... any idea what that is will?

lol

 

[willoneau]

You lost me at the groin scratching system.

 

[HelloU]

I thought you were but didn't want to assume.

which is sorta why i was trying stimulate a more detailed discussion ..... like when peeps say "let ur profits run".... great advice but what does that really mean? at some point u have to make a decision to sell. you either sell on impulse or u can pre-determine that decision with some sort of process that can be done again. (i got tired of watching profits go into the pot as i hid behind the label of investor saying "it'll come back")

on the other, be right over to set u straight (is straight the correct term there?) it is the best part of trading i reckon.

see ya