Fixed Target/Fixed stop traders - How to adjust for volatility

Discussion in 'Risk Management' started by xburbx, Mar 25, 2009.

  1. xburbx


    I keep very good track of my DD, profit potential, stops etc on each trade. If you have a winning system with fixed target/loss that works in the current volatile market, how would you plan to adjust or know when to adjust for when the market settles?

    My target/stops are set as 2 points lost or 2 points gained in the ES.
  2. you use atr

    so both stops and targets are constent percenteges of the general volotilty

    but it is tricky because for this to work there neeeds to be a crtical thrashhold met in terms of points

    for the es no matter what the atr most mathods will require at least a 4 tick target or a 5 tick stop
    meaning if you r using atr as a gauge there is a a min you need for the trading to be viable
    hope this helps you figure out how to deal with the problem
  3. xburbx


    interesting. i was looking into VIX as a possible solution for when the market changes. my concern isnt for the immediate future but rather when the market dies down longterm and stabilizes. any suggestions on the 2 pt target / 2 pt stop in regards to reading and adjusting to ATR. Never used it before or know anything about it.
  4. You can use multiples of the ATR for your stops. Say stock is trading 40.38 with ATR of 24cents. You can set your stop at 3 times ATR or 72cents, so your stop is 39.66.
    Then you can use a multiple for your profit target of say 4 or 5 x ATR. So your profit target could be 41.34 or 41.58.
    Same can be applied to the ES, i'm sure, but with some modification.
  5. anjum55


    Ym is moving 10 point in the blink of an eye,
    So dangerous

  6. sogodo


    why $150 per 3 contracts is too dangerous? if 1 contract, it's just $50

    but I think a stop for YM has to be 30pts minimum, actually
  7. ronblack


    One of the best strategies. I use 2x ATR for stop and 3x for target.