POLL: All else being equal, do you prefer looser protective stops or higher leverage?

Discussion in 'Trading' started by Gabfly1, Feb 10, 2010.

All else being equal, do you prefer looser protective stops or higher leverage?

  1. Looser protective stops

    10 vote(s)
  2. Higher leverage

    8 vote(s)
  1. Please vote. I realize your choice may well be method dependent. Even so, I'm curious.
  2. I think the higher leverage a person gets , he gets carried away to trade big size
    I also keep tight stop lossses It all depends on the kind of stock vs the s+p
  3. Big AAPL

    Big AAPL

    With the amount of leverage currently available to the average retail trader, looser stops should be a no brainer.
  4. LeeD


    Looser stops without a shadow of doubt.

    It doesn't mean I would actually use the full "looseness" available.... However,
    1) the stop shouldn't be dictated by where you hit the margin call, or the levelrage is too high;
    2) after a trade is stopped you still want to be able to continue trading in the same size. If the stop was dictated by the leverage, it may not be possible.
  5. I don't mean leverage as a matter of lacking discipline, but rather as a matter of strategy. And as I noted earlier, your response may be method dependent, which, as you noted, may in turn be instrument dependent. However, within the scope of the manner and instrument(s) in which you trade, do you favor looser stops or higher leverage?
  6. My question has nothing to do with margin calls. It only has to do with initial protective stop placement. Let me put it another way, even though this example may be misconstrued by some: would you rather trade one contract with a 2-point initial protective stop, or two contracts with a 1-point initial protective stop? Of course, making such a choice is not quite as arbitrary as that, but I hope you get the gist of the question. I am not talking about increasing the dollar amount of the initial risk. I am only referring to its composition.
  7. Big AAPL

    Big AAPL

    That changes the scope of the poll...
  8. Perhaps there was an initial misunderstanding. I did preface the question with the proviso all else being equal. Perhaps I should have specified equal dollar risk and method of trading. I thought it was implied but, apparently, it was not. Sorry. To the extent that we wish to limit our potential loss per trade to a small but fairly specific fraction of our trading account, the tradeoff usually comes down to fewer contracts with a larger stop of more contracts with a tighter stop. The deciding factor usually comes down to how good your timing is and how much room you want to give the market to "breathe" (down your neck) soon after entry.
  9. Just another reminder to kindly vote in this poll if you have not yet done so.

    Also, I'm curious to know who gave this thread a 1-star rating. Just asking.
  10. Yet another reminder to vote in this poll if youy have not yet done so. Thanks.
    #10     Feb 11, 2010