setting stops

Discussion in 'Strategy Development' started by dac8555, Jan 20, 2006.

  1. dac8555


    hi guys. i have been pretty good at picking direction of my stocks so far...but i think i am screwing up on my stops. it get stopped out all the time, and as a result i need a better formula for my stops.

    right now i have a $60k account
    each position is $10k, regrdless of the price of the stock
    My risk is .5% of that account, or $300 per position. i set the stop to only lose $300.

    should i set the position size lower and have a more forgiving stop? or set the stop at 1% maybe. i am going over mystatements from last year and i should have made a killing.....if i hadnt stopped out at the wrong time!!!!thanks.
  2. not to confuse the issue but....

    I use different stops for different types of days.
    One stop for swing trades.
    One stop for momentum trades
    One stop for scalps

    And stops can change according to different times of the day. For example when the market opens and volatility is high, I use a wider stop than when trading at lunch.

    So using one hard stop for each and every trade may not be the solution you're looking for.
  3. =============
    Reno had some good points.

    And to put it simple ,swing traded JDSU once last year & was able to hit my stop/loss which, was about 3%;
    HOWEVER took a smaller position, because daily JDSU range swings are likely to be much % than daily range of approximate $83 oil/gas NYSE stock.

    No way i would keep trading same position size with JDSU;
    as position size of $83 approximate NYSE oil/gas stock.

    And while you may be able to do better than about 8% stop William O 'Neil max suggestion; your first choice about lower position size/ more forgiving stops,
    sounds better than 1% which would be noise for most swing trades.:cool:
  4. Gold_Ric


    WIll be doing a class in 2 weeks. Would be happy to have you in, its an open forum. Email me I will let you know when it happens. We just finished a session with a Market Maker , was pretty awesome. Send me a note about "Setting Safety Stops"
  5. bighog

    bighog Guest

    Try this: 4% max loss on stocks in the 15 to 20 dollar range since you do not have a whole lot of experience in trading stocks. Actually you should be trading the YM or the ES but that is another subject.

    4% divided by 100% = approx 25 trades, not including the cost of commissions and a few bottles of Maalox and or Rolaids....:D

    If you go broke after 25 trades do yourself a favor and reexamine your gameplan. 25 trades in real battlefield will be well worth the costs. Either you get better or you decide to quit before the roof falls in.

    good luck, be patient and remember this: IT ain't EASY....:mad:
  6. dac8555


    thanks for the invite...tried to send you a didnt allow PM. I work during the day so dont know if i would be able to log on. Is it one of the ET forums that we can review afterwards? thanks!
  7. dac8555


    To clarify.....i woud LIKE to swing trade. 3 day positions minimum. 4% doesnt sound too bad...but that will definately involve small trade sizes to keep under 1% risk per trade.

    I have actually thinking about a transition to commodoties...or any market that is not as squirrley and unpredictable.

    YM is the dow e-mini and ES is S&P e-mini correct? tell me why you prefer these. did you start with stocks and move on from there?

    Thanks for the help guys!!!


    Dac, 60k, and you don't have a clue?

    Give it to a charity.

    Fools and money?
  9. omniscient

    omniscient Guest

    i think you might find that commodities can be very squirrely. take two 2-lot positions with a 2-pt loss on the ES and you're down 8-pts for the day. and you can trade a 2-lot on as little as $600 at some brokers, and $1000 at most brokers. there is a reason commodities brokers cycle through accounts so quickly.
    yes and yes.

  10. Learner


    If you drive a car---crashed; Get another car from different car makers will not guarantee you are safe........

    No matter how many % you set to stop loss and how small % it is , mechanically you will loss them all eventually.

    Your problem is not how many ticks would be "a safe stop". It is how to trade.

    Once, You did get out when it was 5 ticks against you, in the end you avoided lost at lest 25 ticks; Next time, same situation, 5 points against you you don't get out; it turns in your favour after it kissing 6 points drawdown; in the end you win handsomely!

    Can you tell the different of the two trades, if you do you know how to trade, otherwise you never be safe.

    I am a learner until the day I retired from daytrading.
    #10     Feb 11, 2006