once you get your screen setup, ib makes it very easy to use time stops. I trade forex and most of the action starts at midnight et. But for US traders that's just about the time Miss Circadia shows up and it's easy to shut down and lay with her for a few hours only to wake up with a huge loss. That's why we use stops. Then you look at the chart and find out you got stopped out on some unreasonable over reaction. I'm experimenting in my paper account and finding many advantages to using time stops as opposed to fixed stops. just thought I would start another discussion
for instance, my paper account always has 6 forex positions on and each one of them has a fixed profit target limit and trades with no stops. The problem is, after you take all your small quick profits, you are left with nothing but losers. What to do? 1. Close everything out when your whole account hits a new high profit target. That will get rid of those old nagging large losses and additionally 2. Close all large losses out on a time stop, like today on Friday afternoon you either made money or lost money for the week 90% is money management 10% is reading the market. This has nothing to do with guessing right. There are millions of books and posts and article about how to guess right. And in the end, to make money you need to guess right. But while all that is going on, you need some kind of money management framework to keep you solvent during long extended periods of guessing wrong, otherwise known as "drawdown." and I'm experimenting with time stops
I'm already at max size. In my real account I use a tight stop and let profits run. I was in a drawdown and just for the hell of it set up my paper account exactly opposite. It works fine most of the time but that one large loss will get you. How large a loss? Well the exact price I never know. It's not a large loss if you have many and more small profits. But a loser just takes up margin money with little chance of turning profitable. I know for me getting flat at the close is not doable. But like I said, a time stop, say once a week on Friday and go into the weekends with nothing but winners. then I just got to thinking about time.
I ran a long/short equity portfolio for a while, and cutting the losers and adding to the winners (shorts) at fixed time intervals helped my performance. I added to shorts, as I couldn't add to longs, because of my max position sizing of 2% per stock limitations
I hear ya, making the transition from price to time can open up a new world possibilities to contemplate. For instance in stocks, you may just simply want to avoid the earnings report reaction. It can also be used to pace out amount of trades per day and reduce commissions. Not to mention there just may be times of day when you like to trade based on spread or volatility. like I said, I'm only experimenting with play money and observing. Cutting losses short at any price for any reason and letting winners run has served me well. But during drawdown it's easy to get that wandering eye, and go over to the paper account and just see how it would go if all those small losses were small profits. I know from experience if you let a profit ride it will make you more money than you ever dreamed of. And I'm sure if you just let a loss go on and on forever it could wipe you out. So, a time stop could be a possible solution.
well, the time stops are working like a charm. I quickly gave up my childish small profit scalp scam in my paper account for the loser it is, but the time stops solved a lot of problems. I'm applying it to my trend strategy, and the early results are quite astounding. There's a lot of shit that goes on that you don't see when you use a fixed money stop.