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 Forums ›› Technically Speaking ›› Strategy (System) Design ›› tight stop really work?

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 ggoyal   Registered: Jan 2007 Posts: 628 12-06-08 08:42 PM yes they do. I dont take trades with stops bigger then 3 points. and if i do get stopped out, i have a small loss. Edit/Delete • Quote • Complain
 fearless9   Registered: Jul 2006 Posts: 2057 12-06-08 08:46 PM Quote from ML_QUANT: Stops are predetermined Losses! You must have an exit strategy that would signal the failure of your Entry strategy. A predetermined Loss does NOT serve that purpose! In all fairness, I need to read the words of explanation from ML Quant regards f9 Edit/Delete • Quote • Complain
 ML_QUANT   Registered: Jul 2008 Posts: 639 12-06-08 08:49 PM Quote from fearless9: You will need to expand this concept, otherwise I am lost regards f9 You must have an strategy to enter a trade right? If you do then that strategy is NOT correct unless you also know it's failure point, that point is you stop. Here's the most basic example which will only help you understand the concept and is NOT a real strategy. Let us assume you are entering a trade based on a 0.3% Zig. therefore you'd reverse or get stopped on an opposing Zag. Hence, while the Stop was totally Mechanical you actually practiced an entry and exit strategy. The ZZ examle above does not work and is ridiculous as an strategy but best describes the concept of having an exit strategy based on the failure of the entry strat. HTH Edit/Delete • Quote • Complain
 Constantine   Registered: Dec 2008 Posts: 27 12-06-08 08:57 PM Quote from ML_QUANT: You must have an strategy to enter a trade right? If you do then that strategy is NOT correct unless you also know it's failure point, that point is you stop. Here's the most basic example which will only help you understand the concept and is NOT a real strategy. Let us assume you are entering a trade based on a 0.3% Zig. therefore you'd reverse or get stopped on an opposing Zag. Hence, while the Stop was totally Mechanical you actually practiced an entry and exit strategy. The ZZ examle above does not work and is ridiculous as an strategy but best describes the concept of having an exit strategy based on the failure of the entry strat. HTH This strategy maximizes loses, or would only be acceptable is you are 100 percent correct on all trades. Edit/Delete • Quote • Complain
 fearless9   Registered: Jul 2006 Posts: 2057 12-06-08 08:57 PM Quote from ML_QUANT: You must have an strategy to enter a trade right? If you do then that strategy is NOT correct unless you also know it's failure point, that point is you stop. Here's the most basic example which will only help you understand the concept and is NOT a real strategy. Let us assume you are entering a trade based on a 0.3% Zig. therefore you'd reverse or get stopped on an opposing Zag. Hence, while the Stop was totally Mechanical you actually practiced an entry and exit strategy. The ZZ examle above does not work and is ridiculous as an strategy but best describes the concept of having an exit strategy based on the failure of the entry strat. HTH Sorry ML, I don't work with examples that don't work. Risk. Talk to me only in terms of risk. I only understand risk. Nothing else matters to me but risk. regards f9 Edit/Delete • Quote • Complain
 CONR   Registered: Sep 2005 Posts: 257 12-06-08 09:16 PM Quote from osorico: As you know F9, YM is my instrument of choice. Most folks who have seen me trade think I use tight stops (most of the time). 15 YM ticks or less for a stop is my "preference". Volatility has made my preference somewhat less attainable, but it didn't eliminate it! To compensate, I reduce size. Fortunately, my methods of trade selection are not affected by volatility. The volatility (actually it is the ranges, which is not the same as the volatility) however causes the prudent (thinking) man to be firmly in control. Osorico That's a pretty tight stop on the YM these days. How many ticks do you typically go for profit wise? Edit/Delete • Quote • Complain
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