bill -- I don't think its so valid to have an arbitrary 3-5%
limit for every stop order. To me it makes more sense to
decide how much of your trading capital you are prepared to risk on
each trade --1% or 2%, maybe 3%............and then adjust position
size according to where an objective stop falls for the trade you
are making, so that you are always risking an appropriate amount
(no profit without risk) but never more than is prudent for your
account size.
If you haven't read Tharp - Trade your way to Financial Freedom,
it will be the fastest profit from an expense to help you in this
market. I was unable to produce stable returns until I starting
using a spreadsheet for position size. Part of the exercise is you
can't enter the trade without knowing your stop. Tharp also has a
book on stops. Entries and exits from Dr. Alexander Elder is good
also if you have read his 'Come into my Trading room. Books for
thought. Wishing you some good trading success.
Posted by billrosen on 15th of May 2009 at 10:07 am
Michael agreed, if day trading, using trendlines as stops on a 3
or 5 minute chart would give a stop much tighter than 3-5%, I was
referring to a swing trade with those stops, point I never take a
loss more than 3-5% on any one position.
bill -- ok. If you're never giving a swing trade more than
3-5%, my question is, what is that based on? Where does 3-5%
come from? If its not arbitrary, then it has to be some
reflection of position size vs account size that gives you those
percentages, and then waiting only for setups that allow those
percentage stops. Which is a good discipline. I'm just
wondering where those percentages come from?
Posted by billrosen on 15th of May 2009 at 10:26 am
the max 5% loss rule is for me personally, if you lose 5% then
you have to make 10% to get back to get to even and in this market
the last number of year, techincal trading is a lot harder now and
often times sensible execution is not respected as we have seen
over and over again with this market. I am a longtime reader of IBD
and they have the 8% rule, same philospohy, I like to let my
winners run after I take half off after 10% gains and raise my stop
to entry, so I am OK getting stopped out maybe more than I should,
it is just what I do, certainly not saying it is right for
everyone.
Posted by fixdgear on 15th of May 2009 at 10:12 am
SO ON A 1.20 OPTION YOUR STOP IS 1.15?....thats doesnt seem
reasonable if you are trading options....it only seems reasonable
if you are trading $60 stocks.
every trade needs to have some room otherwise you continually
get stopped out and get whip sawed too easily.
have a good w/e
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stop loss size
Posted by Michael on 15th of May 2009 at 09:42 am
bill -- I don't think its so valid to have an arbitrary 3-5% limit for every stop order. To me it makes more sense to decide how much of your trading capital you are prepared to risk on each trade --1% or 2%, maybe 3%............and then adjust position size according to where an objective stop falls for the trade you are making, so that you are always risking an appropriate amount (no profit without risk) but never more than is prudent for your account size.
Where is your stop
Posted by schnellinvestor on 15th of May 2009 at 09:55 am
If you haven't read Tharp - Trade your way to Financial Freedom, it will be the fastest profit from an expense to help you in this market. I was unable to produce stable returns until I starting using a spreadsheet for position size. Part of the exercise is you can't enter the trade without knowing your stop. Tharp also has a book on stops. Entries and exits from Dr. Alexander Elder is good also if you have read his 'Come into my Trading room. Books for thought. Wishing you some good trading success.
or maybe much closer stops
Posted by Michael on 15th of May 2009 at 09:50 am
or maybe much closer stops on daytrades..............
Michael agreed, if day trading,
Posted by billrosen on 15th of May 2009 at 10:07 am
Michael agreed, if day trading, using trendlines as stops on a 3 or 5 minute chart would give a stop much tighter than 3-5%, I was referring to a swing trade with those stops, point I never take a loss more than 3-5% on any one position.
bill -- ok. If you're
Posted by Michael on 15th of May 2009 at 10:16 am
bill -- ok. If you're never giving a swing trade more than 3-5%, my question is, what is that based on? Where does 3-5% come from? If its not arbitrary, then it has to be some reflection of position size vs account size that gives you those percentages, and then waiting only for setups that allow those percentage stops. Which is a good discipline. I'm just wondering where those percentages come from?
the max 5% loss rule
Posted by billrosen on 15th of May 2009 at 10:26 am
the max 5% loss rule is for me personally, if you lose 5% then you have to make 10% to get back to get to even and in this market the last number of year, techincal trading is a lot harder now and often times sensible execution is not respected as we have seen over and over again with this market. I am a longtime reader of IBD and they have the 8% rule, same philospohy, I like to let my winners run after I take half off after 10% gains and raise my stop to entry, so I am OK getting stopped out maybe more than I should, it is just what I do, certainly not saying it is right for everyone.
ok, thanks Bill.
Posted by Michael on 15th of May 2009 at 10:32 am
ok, thanks Bill.
STOP
Posted by fixdgear on 15th of May 2009 at 10:12 am
SO ON A 1.20 OPTION YOUR STOP IS 1.15?....thats doesnt seem reasonable if you are trading options....it only seems reasonable if you are trading $60 stocks.
every trade needs to have some room otherwise you continually get stopped out and get whip sawed too easily.
have a good w/e