Setting "Proper" stops in trend strategy?

Discussion in 'Strategy Building' started by Carneros8, Feb 4, 2019.

  1. tomorton

    tomorton


    To comply strictly with the use of volatility to give you your stop-loss, the stop should be adjusted as ATR rises or falls.
     
    #51     Feb 11, 2019
    tommcginnis likes this.
  2. tomorton

    tomorton


    BUT - I would still exit the position for a partial loss if the TA deteriorated badly even if price wasn't hitting my stop. Its never too early to close a losing trade. Just don't take your eye off the trend.
     
    #52     Feb 11, 2019
    schweiz and comagnum like this.
  3. This is an interesting guide
     
    #53     Feb 12, 2019
  4. schweiz

    schweiz

    There is at least one huge mistake in it.

    He wrote:" Exits are important because your exit strategy will determine:
    • size of your profits
    • size of your losses
    • etc..."
    The first sentence should be:" Entries and exits are important because your entry and exit strategy will determine:
    ..."

    All results are the difference between the entry and the exit price. With only an exit price you can calculate nothing.
    If you have a horrible entry your chances to have a profit are very limited, because the entry was bad, no matter where you exit.


    I also don't agree that exits are more difficult then entries. Entries are more dificult as they are the point of no return. Once in a trade you are vulnerable and the playing ball of the market. If the entry was good you have less stress and a more comfortable position which helps you to think more clear. Exits are easier as, if the entry was good, you are in a permanent profitable position which allows you to get out at the least problem.

    The article said also:" we sense lack of control, we must exit trades on terms set by the market". No, I have perfect control as I can close my profitable trade at any time.

    The chart on page 4 can also be replaced by a chart where the exit is fixed and the entries are variable. That would proof my point in the same way as it proof now the point of the writer. I can the clearly show how the entry can influence the trade's profitability.
    Where you enter AND where youy exit are important. Both are essential.
     
    Last edited: Feb 13, 2019
    #54     Feb 13, 2019
  5. You and I had that good discussion a while back. I use 6.8 times the 14-day ATR, as being compatible with my preference to hold things about a month on average. (I would always prefer it to be longer but the markets are usually too choppy.) Actually I use an average of what that calculation gives me and an 8% drawdown from the highest price the asset has achieved since the time I bought it. The 8% drawdown and the 6.8 times ATR are calibrated to give comparable stop prices but using the average of the two results in a more robust overall number.
     
    #55     Feb 16, 2019
    tomorton likes this.
  6. Whatever study you’re using better remain consistent, once you go live. Tweak the study values, and you’re looking for trouble. Proper preliminary research is paramount to your success.
     
    #56     Feb 16, 2019
    Steve Ladd and tommcginnis like this.