my stop method needs work

Discussion in 'Strategy Development' started by cashmoney69, Mar 16, 2007.

  1. All I need is to know 1) what price the stock is currently trading 2) Either a support or resistance zone. From these two things I create my stop loss. Resistance or support is my target price depending on the side of my trade.

    resistance - current price / 3 = the stop price (in an up move)


    stock price: 45.00
    Resistance: 58.00 (PT)

    PT: 13.00
    stop: 4.33

    Normally, this is not too much of a problem, and should be reasonably obtained with a longer holding period.

    on stocks that have bigger swings like RIMM, GS, GOOG, ICE... ect.. such a "small" stop could be easily taken out. Although I dont trade such powerful names.

    Come to think of it... a stop method like mine would probably work best on big swingers, because small movers would take FOREVER to reach a 13pt target...

    It looks like my stop method is best for intraday trading, however this is not my style.

    let me give a real life example of what I would do on a stock like LEH.

    It closed at 73.03 yesterday, and it looks like resistance is at 77.00, which is a difference of 3.97 (my pt), and my stop would be 1.32

    What do you guys think...would your stops be about 1.32 as well?

  2. On volatile stocks you may want to take a look at 3 times average true range.
  3. Focus more on prior highs and lows on an intra-day, daily and weekly basis.
  4. That more than any thing else helps me.