Matt, I really appreciate your step-by-step examples of stop
management.
Is the following an accurate summary of this approach?
Just trying to get it straight in my head how this works for
us who work another day job and can't be hovering around the
screen:
- In the
evening, set GTC Buy Stop Limit order just above
the breakout level with a Limit just above it (so it doesn't fill
if there's a gap). Use current day's 9 EMA as a potential
exit stop when you're calculating your trade size ( # Shares = Max
$ risk / (entry price - first exit price) )
- If it doesn't trigger and fill the next day, do nothing
- If it does fill the next day, take a look
mid-day(?)to see how it's doing:
a) If it's a solid up-candle (with small wicks), then sell 1/2
of position and move exit stop on remaining half up to somewhere
below the midpoint of the up-candle.
b) Otherwise, just leave it for now.
- Each
evening, consider moving up your exit stop to
whichever of the following is the
highest:
a) Today's 9 EMA
b) If today's low is lower than yesterday's low, then move exit
stop up to today's low
c) If today had a solid up-candle, then put in an order to
sell half (if you haven't already) and move exit stop on remaining
half up to somewhere below the midpoint of today's up-candle.
Lather-Rinse-Repeat each day.
Does this sound like an accurate description of your
approach?
Yes I typically set my orders either at night or in the morning
pre market as I can see if there's a gap or not. I always
check them pre market anyway to see if there is any big pre market
news. I mention setting them at night in case someone worked
a busy job and had to be at work early and couldn't check pre
market before work.
for long use GTC buy stop limit orders, unless it's a reversion
to mean bounce trade doji setup, for those I use only a day order
because those setups triggers are only good for one day, change
every day. The limit is in case it gaps, if you have clean
resistance at $20 and the stock is trading say at 19.9 previous
close, if it gaps to 21 you probably don't want to take it your
limit order will prevent you from filling.
Once I'm filled, I use a variety of things for initial stops,
such as just below the 9 EMA (NOT right at the 9 EMA because many
times it's tested and price rebounds and you will be stopped at at
the low, so I give some wiggle room below the 9 EMA. If the
trade triggered and closed with a solid candle then I'll use maybe
40 - 45% of that candle range for a tighter stop than the 9 EMA and
that candles low. Sometimes I use the candles low, or other
MA's or I try to draw a trendline that's relevant
Steve and I look at 1 and 5 min charts and other things, you
guys don't have to do that who are busy during the day, the best
two time frames to use are the daily chart and a 60 min chart.
I always look at a 60 min chart if I like the daily chart as
I'll see better trigger points or areas for stops etc.
Yes, typical stop areas I use are a tad below 9 EMA, 45% of
candle range, current candle lows, trendlines, etc. I also look for
higher lows, if a stock pulled back a few days then rallied again
and that was a logical higher low, I'll move the stop up to that.
I always peel some off some shares along the way as well so that
my stops are then on trailing share amounts and I have locked some
gains in.
In the newsletters, when you guys would say "trim and trail" or
"trail up your stops in accordance with your trade objectives" I
knew (in theory) what you meant, but didn't have a repeatable
concrete process for how to do it consistently.
I've needlessly given up a *lot* of gains via round-trips over
the years. This should really help.
for example on DATA it triggered yesterday, so instead of having
a stop just below the 9 EMA or the candle low, could have simply
set it near 50% of the candle range for a tighter stop. With
today's move you could either leave it or perhaps move it up to
your entry point so that you are protected against a loss. If you
are overweight with shares, peel some shares off, or do so on a
further move higher to lock in some gains
again be systematic and methodical and disciplined, as this will
make you a consistently profitable trader
John - honestly that's for you to decide based upon your trading
plan. You really need to establish a plan prior to trading.
With that said, you can employ proper stops as demonstrated
on several charts by Matt -OR- stops in accordance with your
trading style.
While we can provide some guidelines and objectivity - you
should tailor those concepts into a plan that coincides with your
style and objectives. The biggest mistake is to trade without
an approach in place. Give Matt a call to discuss after
hours as I speak with members almost every night.
rojoch- of course it's very reasonable for you to ask since
I'm the one who started this. I've been discussing this
because I will probably offer a service like this down the road.
Steve is right obviously, everyone needs to define their
trading plan, position sizing, and their risk tolerance in terms of
what they are comfortable with.
However as far as risk tolerance goes that all still applies
because while you might use my stops and targets, you would already
be adjusting your position size based on your risk tolerance.
Someone who had greater tolerance would buy more shares while
someone who had a very littler tolerance would buy fewer shares,
but the SAME stops would apply to both people.
Right now, excluding the SPY and AAPL systems, the website is
a resource, we give great analysis and trade ideas, and leave it up
to members to take that information and use it on their own, and
actually pull the trigger.
While that's great, it also limits the number of customers we
have. There's at least 10 - 100 times more potential customers out
there who want to learn, but they also have trouble pulling the
trigger, and want the trade given to them. Do your own thing
is not actionable advice for these customers who want more hand
holding in trades like “buy stock ABC here, place a stop here, take
some profits here, a trailing stop here.
Sort of like this cartoon graphic. Someone sent me that
a while back, said I want to learn but I also want to be spoon fed.
We do this now with the AAPL and SPY systems, we tell you
when it's buying and selling, so really it would just be more
expanded to the watchlist. It's a lot more work of course so
I'd have to figure out a way to automate some of the work or cut
back on other stuff.
Right now I see BPT as being more for engineers: the top % of
people out there who just need the ideas and analysis and can apply
the information on their own. But that's also a limited pool of
subscribers, we could probably grow BPT far beyond current levels
by providing more services to non-engineers and folks who’d like to
be just be told.
Posted by tradeit007 on 25th of May 2018 at 07:11 am
Although I am an experienced trader, I would not mind a bit of
hand holding from a trader like you that I trust. One comment that
I read suggested the hand holding would limit learning by those
having their hands held. I don't think so. Having good trader
sharing knowledge of how they think and trade can always be a
learning experience IMO. I wish I had that opportunity earlier!
If I may add . . . what I try to discern from your verbal cues
on recommended trades is which trades you favor from that day's
list. I can pick up cues from your verbal descriptions and that
helps me prioritize your recommended trades. I find value in these
details. So, my idea of valuable "hand holding" would be almost a
rank-ordering of the top 3 recommended trades, perhaps, more so
than where and when to pull the trigger on each trade. Just
sayin'.
Thank you for your interest and efforts in always adding to the
value of your service! We all benefit from you sharing your
knowledge.
I just want to clarify what I wanted to convey earlier as I
think you missed my point or I wasn't clear enough. I was referring
to the aspects of an added service by BPT whereby they would
post all entries/SL and exits/profit targets in a trade setup. It's
fine if they choose to do so, of course, but an aspect to
this new method would be that members who would solely follow that
wouldn't actually be trading or learning how to become independent
traders since they would basically become order placers instead of
traders. We are already being hand held today and getting tons of
feedback and examples on a daily basis, which I love and why I am a
member here. The education we're receiving here today is fantastic.
But personally, I don't think I would have learnt as much if I
would have been given every little single detail of what to do in a
trade on a silver platter. I've learnt a lot by fiddling around
with SL, Trailing SL, EMA SL's, profit targets etc etc thus
making me a better trader. Just wanted to bring up that angle
to the conversation.
If I can give my 2 cents on this topic, after thinking about it,
whether to offer a more extended service to your BPT clients in
which they get very specific entries/exits, basically hand holding
them through the trade process. I do understand why people would
like such a service, once upon a time I would have liked it myself.
But there are draw backs to this as I see it.
1) You will learn a lot less basically. The BPT team has
expressed many times that part of their mission is to help us
become better traders and with such a service it probably wouldn't
encourage many members to really study charts and figure, by trial
and error, things out by themselves and essentially becoming great
traders. The hard work is already done by Matt and Steve by finding
trade ideas, so entry and exit is not very complicated. There are
already quite a lot of tutorials and examples made by Matt/Steve
where they talk about this.
2) If the service changes on BPT and you have an influx of new
customers who want the easy set up and hand holding, there is a
risk that the quality of the trading community (forum) drops and
becomes a very noisy forum with too much drama and/or arguments.
I'm sure I'm not alone here to say that I really like the tight
knit community and clean forums. Imagine how the community forum
would look like with 10 - 100 times more potential customers like
Matt mentioned.
What I would do is to focus more on the Education section on the
website by creating studies regarding Entry / SL / Profit Taking
and suggest that all members study these. I'm sure you guys have
already though of all this; just wanted to share my 2 cents.
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Matt, I really appreciate your
NKE stop progression
Posted by rojoch on 24th of May 2018 at 12:51 pm
Matt, I really appreciate your step-by-step examples of stop management.
Is the following an accurate summary of this approach? Just trying to get it straight in my head how this works for us who work another day job and can't be hovering around the screen:
- In the evening, set GTC Buy Stop Limit order just above the breakout level with a Limit just above it (so it doesn't fill if there's a gap). Use current day's 9 EMA as a potential exit stop when you're calculating your trade size ( # Shares = Max $ risk / (entry price - first exit price) )
- If it doesn't trigger and fill the next day, do nothing
- If it does fill the next day, take a look mid-day(?)to see how it's doing:
a) If it's a solid up-candle (with small wicks), then sell 1/2 of position and move exit stop on remaining half up to somewhere below the midpoint of the up-candle.
b) Otherwise, just leave it for now.
- Each evening, consider moving up your exit stop to whichever of the following is the highest:
a) Today's 9 EMA
b) If today's low is lower than yesterday's low, then move exit stop up to today's low
c) If today had a solid up-candle, then put in an order to sell half (if you haven't already) and move exit stop on remaining half up to somewhere below the midpoint of today's up-candle.
Lather-Rinse-Repeat each day.
Does this sound like an accurate description of your approach?
Appreciate your patience.
.../john in Victoria, BC
Yes I typically set my
Posted by matt on 24th of May 2018 at 01:03 pm
Yes I typically set my orders either at night or in the morning pre market as I can see if there's a gap or not. I always check them pre market anyway to see if there is any big pre market news. I mention setting them at night in case someone worked a busy job and had to be at work early and couldn't check pre market before work.
for long use GTC buy stop limit orders, unless it's a reversion to mean bounce trade doji setup, for those I use only a day order because those setups triggers are only good for one day, change every day. The limit is in case it gaps, if you have clean resistance at $20 and the stock is trading say at 19.9 previous close, if it gaps to 21 you probably don't want to take it your limit order will prevent you from filling.
Once I'm filled, I use a variety of things for initial stops, such as just below the 9 EMA (NOT right at the 9 EMA because many times it's tested and price rebounds and you will be stopped at at the low, so I give some wiggle room below the 9 EMA. If the trade triggered and closed with a solid candle then I'll use maybe 40 - 45% of that candle range for a tighter stop than the 9 EMA and that candles low. Sometimes I use the candles low, or other MA's or I try to draw a trendline that's relevant
Steve and I look at 1 and 5 min charts and other things, you guys don't have to do that who are busy during the day, the best two time frames to use are the daily chart and a 60 min chart. I always look at a 60 min chart if I like the daily chart as I'll see better trigger points or areas for stops etc.
Yes, typical stop areas I use are a tad below 9 EMA, 45% of candle range, current candle lows, trendlines, etc. I also look for higher lows, if a stock pulled back a few days then rallied again and that was a logical higher low, I'll move the stop up to that.
I always peel some off some shares along the way as well so that my stops are then on trailing share amounts and I have locked some gains in.
thanks and happy that this all helps you guys!.
Yes, this is a huge
Posted by rojoch on 24th of May 2018 at 01:18 pm
Yes, this is a huge help.
In the newsletters, when you guys would say "trim and trail" or "trail up your stops in accordance with your trade objectives" I knew (in theory) what you meant, but didn't have a repeatable concrete process for how to do it consistently.
I've needlessly given up a *lot* of gains via round-trips over the years. This should really help.
p.s. Enjoy Disney!
.../john in Victoria, BC
for example on DATA it
Posted by matt on 24th of May 2018 at 01:13 pm
for example on DATA it triggered yesterday, so instead of having a stop just below the 9 EMA or the candle low, could have simply set it near 50% of the candle range for a tighter stop. With today's move you could either leave it or perhaps move it up to your entry point so that you are protected against a loss. If you are overweight with shares, peel some shares off, or do so on a further move higher to lock in some gains
again be systematic and methodical and disciplined, as this will make you a consistently profitable trader
Now that summer is upon
Posted by rojoch on 24th of May 2018 at 01:37 pm
Now that summer is upon us, for someone (like yourself) who is going on holiday, do you:
- exit all your positions before you go so you won't get blindsided?
- set a trailing $stop on all your positions and let them run? If so, how would you come up with a $trailing amount? Some multiple of ATR?
- switch to a weekly timeframe, using 9-week EMA and weekly candles (and update your stops only once/week on the weekends)?
- something else?
Thanks!
.../john in Victoria, BC
John - honestly that's for
Posted by steve on 24th of May 2018 at 01:51 pm
John - honestly that's for you to decide based upon your trading plan. You really need to establish a plan prior to trading. With that said, you can employ proper stops as demonstrated on several charts by Matt -OR- stops in accordance with your trading style.
While we can provide some guidelines and objectivity - you should tailor those concepts into a plan that coincides with your style and objectives. The biggest mistake is to trade without an approach in place. Give Matt a call to discuss after hours as I speak with members almost every night.
I agree, but it helps
Posted by rojoch on 24th of May 2018 at 02:08 pm
I agree, but it helps to see what has been working for others as you develop your own trading plan.
Since we were already on the topic of Matt's own trading style, I figured this was a reasonable scenario to ask him how he handles it himself.
.../john in Victoria, BC
Comments
Posted by matt on 24th of May 2018 at 04:02 pm
rojoch- of course it's very reasonable for you to ask since I'm the one who started this. I've been discussing this because I will probably offer a service like this down the road.
Steve is right obviously, everyone needs to define their trading plan, position sizing, and their risk tolerance in terms of what they are comfortable with.
However as far as risk tolerance goes that all still applies because while you might use my stops and targets, you would already be adjusting your position size based on your risk tolerance. Someone who had greater tolerance would buy more shares while someone who had a very littler tolerance would buy fewer shares, but the SAME stops would apply to both people.
Right now, excluding the SPY and AAPL systems, the website is a resource, we give great analysis and trade ideas, and leave it up to members to take that information and use it on their own, and actually pull the trigger.
While that's great, it also limits the number of customers we have. There's at least 10 - 100 times more potential customers out there who want to learn, but they also have trouble pulling the trigger, and want the trade given to them. Do your own thing is not actionable advice for these customers who want more hand holding in trades like “buy stock ABC here, place a stop here, take some profits here, a trailing stop here.
Sort of like this cartoon graphic. Someone sent me that a while back, said I want to learn but I also want to be spoon fed.
We do this now with the AAPL and SPY systems, we tell you when it's buying and selling, so really it would just be more expanded to the watchlist. It's a lot more work of course so I'd have to figure out a way to automate some of the work or cut back on other stuff.
Right now I see BPT as being more for engineers: the top % of people out there who just need the ideas and analysis and can apply the information on their own. But that's also a limited pool of subscribers, we could probably grow BPT far beyond current levels by providing more services to non-engineers and folks who’d like to be just be told.
Although I am an experienced
Posted by tradeit007 on 25th of May 2018 at 07:11 am
Although I am an experienced trader, I would not mind a bit of hand holding from a trader like you that I trust. One comment that I read suggested the hand holding would limit learning by those having their hands held. I don't think so. Having good trader sharing knowledge of how they think and trade can always be a learning experience IMO. I wish I had that opportunity earlier!
If I may add . . . what I try to discern from your verbal cues on recommended trades is which trades you favor from that day's list. I can pick up cues from your verbal descriptions and that helps me prioritize your recommended trades. I find value in these details. So, my idea of valuable "hand holding" would be almost a rank-ordering of the top 3 recommended trades, perhaps, more so than where and when to pull the trigger on each trade. Just sayin'.
Thank you for your interest and efforts in always adding to the value of your service! We all benefit from you sharing your knowledge.
@tradeit007 I just want to clarify
Posted by larken on 25th of May 2018 at 08:43 am
@tradeit007
I just want to clarify what I wanted to convey earlier as I think you missed my point or I wasn't clear enough. I was referring to the aspects of an added service by BPT whereby they would post all entries/SL and exits/profit targets in a trade setup. It's fine if they choose to do so, of course, but an aspect to this new method would be that members who would solely follow that wouldn't actually be trading or learning how to become independent traders since they would basically become order placers instead of traders. We are already being hand held today and getting tons of feedback and examples on a daily basis, which I love and why I am a member here. The education we're receiving here today is fantastic. But personally, I don't think I would have learnt as much if I would have been given every little single detail of what to do in a trade on a silver platter. I've learnt a lot by fiddling around with SL, Trailing SL, EMA SL's, profit targets etc etc thus making me a better trader. Just wanted to bring up that angle to the conversation.
Happy trading!
If I can give my
Posted by larken on 25th of May 2018 at 01:20 am
If I can give my 2 cents on this topic, after thinking about it, whether to offer a more extended service to your BPT clients in which they get very specific entries/exits, basically hand holding them through the trade process. I do understand why people would like such a service, once upon a time I would have liked it myself. But there are draw backs to this as I see it.
1) You will learn a lot less basically. The BPT team has expressed many times that part of their mission is to help us become better traders and with such a service it probably wouldn't encourage many members to really study charts and figure, by trial and error, things out by themselves and essentially becoming great traders. The hard work is already done by Matt and Steve by finding trade ideas, so entry and exit is not very complicated. There are already quite a lot of tutorials and examples made by Matt/Steve where they talk about this.
2) If the service changes on BPT and you have an influx of new customers who want the easy set up and hand holding, there is a risk that the quality of the trading community (forum) drops and becomes a very noisy forum with too much drama and/or arguments. I'm sure I'm not alone here to say that I really like the tight knit community and clean forums. Imagine how the community forum would look like with 10 - 100 times more potential customers like Matt mentioned.
What I would do is to focus more on the Education section on the website by creating studies regarding Entry / SL / Profit Taking and suggest that all members study these. I'm sure you guys have already though of all this; just wanted to share my 2 cents.