Are stops a complete joke ?

Discussion in 'Risk Management' started by zanek, Dec 10, 2010.

  1. zanek


    What the hell ! I know people tend to cluster their stops around s/r and lowest lows, but it seems whenever I set a stop well below these points (~2%), I get stopped out with the price dipping below my stop by a couple of cents and then shooting up. I've been correct almost every time but stops are killing me. I'm doing swing trading mostly now.

    Example: Bought BAC at $11.15 on Nov 30 and set my stop to $10.94. You know what happens next, right before the market closes, BAC dips down to $10.91, I get stopped out and now BAC is at $12.80. I lost out on $15,000 because my stop was off by 3 cents. WTF !

    Example 2. Bought GM at $33.80 last night and set my stop at $33.57. This morning, it dips down to $33.53 and then shoots back up. I bet it goes to $34.70 in a day or two

    Anyone have any tips to avoid this ? This is like the 20th time this has happened and is highly annoying and costly. Are stops a lame way to take out relative newbies like myself ???

    Ugh. No bueno :-(
  2. trade smaller size so you can take the heat.
  3. I am sorry to say that but you don't know how to trade. These were levels to buy more stock, not to put a stop.

    Your BAC stop was just 2.9% below entry price.

    Your GM stop was a mere 0.7% (!!...!) below stop price.

    What do you expect when these stops are well within volatility?

    Change your trading style. Your entries were very good. Your hands are weak it seems. You are trying to protect capital and you lose because of that. Market rewards risk, not protection.

    Good luck.
  4. that's what algos are built to do..........rapid drop in price without much volume instantaneously hitting out all the stop orders and snatching up your shares at lower price............with your size, you had to be aware of this.
  5. Where to place stops is both a guess and an art.
  6. emg


    stops a complete joke when day trading Emini S&P 500 futures. To become a successful ES traders, must add to average down/up when the market goes against you.

    In order to do that, a minimum $100K account and begin trading 1 contract. That is the key to successful day trading es.

    Those who use stops or has less than $50K account are doomed and are part of 97% of beginners/amateur traders lose day trading in the futures market.

    I know that 99% of the people disagreed with me because they don't have enough money to day trade.

    Like what the CFTC said in the disclaimer: Futures Trading is not for everybody and risk capital must be used.

    Unfortunately, 97% of the traders DO NO UNDERSTAND THAT.

    that said!!!
  7. You obviously haven't seen the famous picture of Paul Tudor Jones in his office... where on the wall behind his desk is placard which says "Losers average losers".
  8. That said, he probably doesn't punt with 2 pt stops.
  9. lindq


    The stops you listed are more appropriate for a day trade, not for holding overnight. An overnight move in the overall market itself can easily take out tight stops.

    So you will need to losen them up. And if you can't stand the heat...then remove thyself from the kitchen.
  10. emg


    This is your Paul Tudor Jones:

    In 1990, Jones pleaded guilty to illegally filling protected wetlands on his estate, and paid a $2 million settlement
    #10     Dec 10, 2010