How do you use time-stops when trading stocks?

Discussion in 'Risk Management' started by helpme_please, May 4, 2019.

  1. Time-stops mean if the stock doesn't move up upon purchase after some time, you exit. Very few people practise it. The stock is exited even if it is profitable. The trader doesn't let the stock run because it is not running up and standing still.

    In fact, almost all books that I read don't talk about time-stops. Stops are about prices, not time.

    Do the elitetraders use time-stops when trading stocks? If yes, what are some things to note when you use time-stops?
    Last edited: May 4, 2019
    murray t turtle likes this.
  2. dozu888


    on long term basis, I cut stuff based on the following:

    - across different asset classes, if yields don't make sense no more, I cut.. years ago gradually cut off LQD JNK stuff because the yields got worse;

    - in the same asset class this is easy... if on the chart the index goes up in a 45 degree angle, anything going up less than 35 degree angle gets cut lol.
    murray t turtle likes this.
  3. Thanks. So, is the index doesn't move up fast enough, you cut even if the index has moved up. Interesting. Wouldn't you end up cutting a lot of trades which happen to stop moving for a while, then suddenly move up a lot?
  4. dozu888


    Of course nothing is 100% fool proof. But you want keep the winners. This basically what qqq is doing as it’s market cap weighted so the winners get bigger in the portfolio
    helpme_please likes this.
  5. fan27


    Yep...I use them along with traditional stop and limit orders. I am fully automated and my research has shown they yield a positive result for how I trade. Test and you will see for yourself.
  6. Handle123


    I use Time Stops whether long term or scalping, price must get to breakeven price in so many bars, or protective stop is raised to breakeven stop, if in negative territory, target set to breakeven plus fees. And am automated as well. My back testing shows staying in too long will often become losing trade.
  7. Use Time-Stops on All Stock Positions. A time-stop is the point in time when you will sell the stock if it does not rise or decline as expected. Most long-term investors have only a fuzzy or general idea of what they expect a stock to do.
  8. sillyw10


    why would you use a time stop if your exit price is not many people have drowned by jumping ship..and then the ship does not sink!!

    it's a numbers can only win by playing the numbers correctly!!!
  9. What you said makes sense. What Handle123 said also makes sense. Both are contradictory but hard to argue one is right and the other is wrong.

    Time is also money. I can argue that traders don't jump ship with the intention to drown. They jump ship with the intention of hopping onto a faster ship. Problem is ... the former happens sometimes.
  10. themickey


    This part has me beat. What is 45 degrees.....?
    Gann talks about this.
    If X = time and Y = price there is an apples and oranges scenario, so how do you get an angle of 45 degrees?
    Time might be a 1 hr chart, then you turn it into a daily chart, Y price axis remains constant, X time axis varies....
    Truely a mystery to me.
    Please explain.
    #10     May 4, 2019