STOP: real life example of a stop that nobody will EVER blow or find. SPY Shorts daily timeframe: STOP = 294.78
Thanks for all the replies, everyone. I just woke up, it is not quite 0500 where I am right now, 14 hours ahead of NYSE time. Got a half hour to have my cappuccino and get ready for work. I definitely will start out "cherry picking" with only one trade generally, on any trading day, since I will be playing with well under the PDT limit. If the setup doesn't look REALLY good, I cant use up one of my allotment of day trades, until later in the year when I am fully capitalized. No grazing for a while. So yeah I can try to shoot for a high win ratio. Maybe since I will be trading smaller lots, I can look for stocks with not so great liquidity, that the big players might find awkward to trade? But yeah it makes sense to not go with the herd on the stop, unless the apparent risk/reward ratio is low. I will be mostly looking for strong reversals, morning gappers, or momentum bull flag situations that look really good. First few days I will probably concentrate on reversals. I will also be watching for medical/pharm fundamental catalysts in the news, and be ready to pounce on strong openers. Just going through old data, I see a lot of crazy action in low priced pharmaceuticals at market opening. A lot of apparently irresistable gainers that have new FDA approvals or test results in the news. I can even afford to go several days between trades during this stage of my trading journey. I will be trading rather small positions, too. One thing I have learned in my 60 years of life is the perfect setup is sometimes actually perfect for the OTHER guy and a sucker play for me, so even cherry picking I will be concerned with my stop, whether it is a stop order, or I mentally set a point where I place the order myself to exit a surprise loser. That was a big surprise for me, that stop orders go to the exchange as visible stop orders. I had assumed that the order stayed with the brokerage until the stop point was reached and the order triggered. This is the kind of stuff they don't put in the books.
So nice of you to confuse the daylights out of everyone and flush Ed Sekota, Paul Tudor Jones, Bruce Kovner, Prof. Charles Bassetti, author of TA of stock trends (edwards/magee) down the tubes. Not to mention Dr Hank Pruden, head of Finance who with Charles did the definitive work of the century on STOPS. Title: STAIR STOPS Its a work of ART bone. Study it bone. Report back to me when you are done. I will test you on it. . . Learn bone learn, learn before its too late. God told me to forgive my enemies,, to hug and kiss them, but in your case may I recommend a gift? http://www.edwards-magee.com/ggu/2stairstopsk.pdf
I use the liquidity indicator for where to put my stops. I take to consider the size of the stop and if it is one that is to big for me I don't enter the position. As the chart shows, I'll put the stop after a big red line.
I've just automated my Stop, 1 less thing to forget, enforces good Stop useage and reduces the odds massively on big losses ( death by 1000nd cuts still possible ) Time to get cracking soon, damn work hassles
I thought about that. I think if I automated my stop I would set my own auto stop fairly loose, though. In light of what others have said and after looking at a bunch of charts, it is obvious that there is a lot of stop running out there in the wild. Too many reversals that re-reverse for a tick or two and then carry on with the original reversal. Too many strings of bull or of bear candles interrupted by a single small contrary candle halfway up or down, to be statistically probable. I would probably manually tighten it up on less certain setups, maybe, but set my auto stop loose enough to eliminate maybe half of the stop runs. I know sometimes the big boys will win at my expense. I am okay with the things I can't change. I just want to win more dollars than I lose, each week or month of trading. I am also okay with watching a sub minute chart and manually initiating an exit if it is looking bad. Stuff happens though, so some stop of some kind is in order, for me anyway, I think, What about trailing stops? Looks like a no brainer at first glance. A wonderful idea, to a newb just starting to read up on day trading stocks. So it seems. Now it is looking like something I would rather do without. Thinking now that instead of a trailing stop, I would just move my initial stop up to break even or a bit better, after two or three good candles, and manually exit if the trade starts looking like a possible loser. Bottom line is I think I always want some sort of stop in case of internet issues, etc. so no loser becomes a catastrophic loser.