Setting "Proper" stops in trend strategy?

ATR is backwards looking ... Have you guys thought of using the options implied move? If MMs are the smart money, and they got it wrong, you probably shouldn't be in the trade anyway. One can probably write a program (or just set alerts) to monitor ATM straddle for unexpected expansion as a warning. Sounds to me like the best volatility stop one can use. Opinions?

 

Never thought of that, how would you apply it? May not always have ATM straddle without creating it synthetically.

 

I guess it's not much different from using HV stop (which is kind of what ATR is), except I would monitor for implied volatility expansion as a heads up to either close position or increase the stop. For example, if you are holding through earnings with 10% stop, but implied move is 20% ... there's a decision to be made. It's basically checking to see if "smart" money pricing in something you are not aware of.

 

i am surprise nobody has mentioned using a trailing stop yet - it adjusts as you go

 

Thanks for posting ... Nice video. You have the stack of stop order tickets in your hands ... Lol.

 

This would be very hard for me to implement, but in theory, it sounds interesting.

 

Yes, but based on what do you adjust it?

It's a bit funny that OP specifically said "trend" strategy ... So the answer definitively is ... Drum roll ... When the trend changes of course

 

Best line: "I work very hard for them to go to zero"

 

pardon my ignorance, maybe it's early in the morning, so

I think that is a separate discussion.

 

This is for initial stops only. Such as where do you place your stop as soon as you enter the trade. Once in the money or as the trade progresses, maybe things can be handled differently or in other ways