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)

    example:

    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 http://stockcharts.com/h-sc/ui?s=LEH&p=D&yr=0&mn=4&dy=0&id=p21011395105

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

    cm
     
  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.