No offense dude but you don't know enough to know that you don't know what you are talking about. A stop loss guarantees a closed trade, not a price. So pre-trade, you still have an undefined loss. Think about an active equity mutual fund or a hedge fund with a position in a stock. If the fund size is $1B and they hold, on average, 50 positions, you're talking about an average of $20MM per name. That can represent more than 5-10% of the average daily $ volume of the stock. Exiting on a stop loss would create a huge loss for the fund -- because they would not be able to fill at a reasonable price (it would create a shock, which would push the price much further down -- especially with HFTs and short momo trading kicking in).
I'd be interested in learning about these strategies. #1 priority is to protect capital. #2 priority is to take advantage of opportunities the stock market presents every so often. I'm a retail trader with a margin account. Rarely leverage the account. Trade only stocks and only long. Risk on any one trade is limited to 1% or less of account value. The question I ask with any strategy is what is the worst case scenario? How much can I lose? My worst case would be a total market melt down where every position would gap past its stop. This happened with the flash crash a few years ago. My stops are not hard stops in the market but alerts that warn me when price is getting close to my stop. So a black swan event like that didn't bother me. 2008 and 2020 gave enough warning to exit before the market took its dive.
Depends on the price action. If a stock keeps trending I'll stay in the trade. I cut losses quickly, at times the same day if the trade moves against me. Typically if I pick the right stock at the right time I hold for months if not years.
%% OP asked a tricky question, putting ETFs + funds in the same question. On ETFs, we dont have to scale in or out like funds do. But it many times makes sense to. The idea a broker or market maker may hit a posted limit order can be good profit thing/ETFs. I wonder if even accidently selling 10% av day volume would get one a telephone call from Stock Watch??
So you’re trading momentum with a regime-based exit. You should evaluate what drawdowns look like and then model your stop price against that, using a tiered approach. E.g. when position moves down, reduce size. When position moves up, increase size. As long as stock remains a momentum candidate hold, if momentum regime switches, exit. You can use a stop loss order on the tiers because you’re size probably won’t clog up liquidity.
No offense taken ... because I know a closed trade is a closed trade. You talk of a stop market order as if it never gets closed. Thanks for letting us all know the obvious, a market order, of whatever kind is at the whim, of the market. Duh!
You didn't seem to get that in your previous post. Glad it makes sense now. If you think you have a system that gets you out at x%, and it is based upon having a stop loss order, I can guarantee you that your realized loss will be greater than x%. Additionally, the mechanism of a stop loss order makes it inefficient for larger traders. Hence, prudent risk management is a looooot more than having an exit price pre-determined.
I'm not sure what a regime based exit is. I exit when the trend breaks. I assume that evaluate and model means to take an educated guess. What are the chances I guess wrong? When a position moves down (the trend changes) I don't reduce size, I exit. Trades done and I look for another opportunity. I don't see any downside to this. The stocks I trades are fairly liquid and I have never had a problem exiting a trade.
%% OP noted a ''stop for crying out loud'' Best king of stop is a profit target stop/ sure they will see it/ but they are mainly concerned with bid ask. But i would not clog up thier books with frequent stop loss orders/LOL, even if you could, with a good trending ETF . Never wear out a welcome..............................................................