Logic place to exit and assess re-entry

Discussion in 'Trading' started by Aston01, Feb 26, 2012.

  1. Aston01

    Aston01

    I see A LOT of subjective opinions (i.e. ... I use a 5% stop, no stop or just whatever my gut tells me), but I haven't ever really seen the math done to determine the actual optimal cut off where you should just get out and consider reentry at the lower price if you decide to when a trade has turn against you?


    After thinking about it a bit, what if you used the following info to come up with a number.

    1. Exit Slippage (Could be pulled from live Bid/Ask numbers)
    2. Reentry Slippage
    3. Commissions Both Ways
    4. Even possibly a buffer amount or % to account for partial fills or a number of other things.

    Once you have past that amount you have blow right past the costs associated with getting out and getting back in. Maybe you still decide to use something else for your stop, but the calculation might make for an interesting indicator to keep an eye on for perspective.

    Any suggestions on what else might be taken into account?