Daytrading success: using a mix of both Hard & Trailing stops

Discussion in 'Trading' started by KCalhoun, Sep 14, 2021 at 4:44 PM.

  1. KCalhoun


    So I had another green day today doing 58 round trips mostly in TZA and UVXY.

    Here's what I found doing hundreds of trades this past couple weeks, I hope it helps.

    The most successful technique is to use a mixture of both trailing and hard stops. To give you as many chances to get things right as possible.

    It's really quite remarkable. I've been doing trades mostly between 100 and 400 shares, using a sequence of entries during price action moves up.

    I stagger the hard and trailing stop values, always tight, always re-entering after getting shaken out. The trick is to manually tighten up a trailing stop the further the position runs in your favor. This includes for example tightening up a $0.20 trailing stop to five or ten cents once price action is run up to just under resistance, or if it's been in play for at least 5 to 10 minutes.

    Yes it is a lot of work. But it's really starting to pay off.

    I always use OTO conditional orders to automate so that I can fire off many trades and have the entry and exit automatically taken care of, based on the price points that I set. I generally trade stocks and ETFs price between $5 and $40, that have high volume.

    I have no idea whether or not this would work with futures or Forex.

    For example a sequence of orders would look something like this...

    Buy 20.3 hard stop 20.1
    Buy 20.4 trailing stop .2
    Buy 20.6 hard stop 20.5
    Buy 20.8 trailing .15 stop
    etc with 6 to 8 trades

    There's a lot more to it, of course, including size to use with trailing or hard stop size. I'm thrilled with how it worked today, and look at uvxy chart it's a real b**** to trade but that worked using the strategy because it helps control for the jagged up and down price action moves.

    Basically it's throwing a lot of tight darts at whatever your trading and letting the law of large numbers make up the math. I'm looking forward to scaling up using this strategy.

    Another quick tip is to use buy stop-limit orders to avoid getting screwed by price action flashes, the tails the market maker works, order flow inside a 15 or $0.20 range. I like to use no more than two to five cents for the buy stop limit window.

    I 100% believe that most traders aren't successful because most educators are full of s*** and just talk about magic chart patterns instead of all the trade management professional entry and exit strategies that really takes to make it. Blind leading the blind is what trading education industry is all about and it needs to change. Chart patterns are maybe 20% at most of what's important. Directional volatility in the market and trading ranges are much more important.

    I will say it for the millionth time in 20 years, the math is so much more important than the chart patterns. Epiphany so many of my winning trades I was just using time and sales to figure out where to get in, tape reading like a boss without even bothering to look at the charts. Trade like an accountant.

    Last edited: Sep 14, 2021 at 5:10 PM
    R1234, tomorton and Axon like this.
  2. This method actually holds well if you trade in large sizes and do quick scalping and out like I do. I primarily do it at a prop firm and with leverage it does do wonders. Especially I also add a system stop to it wherein the system automatically stops me out If I am at times hesitant which makes it more efficient for me
    KCalhoun likes this.