Setting stops

Discussion in 'Strategy Development' started by Comptalk, Jul 28, 2006.

  1. It seems.. Everytime I set stops and a really bad day (or few weeks) are hit they all trigger on the same day or same few days. The next day, the stock or stocks recover the next trading day from what they lost before. I am thinking I am setting my stop losses to low. I was usually keeping them around 8% from what I purchased the stock at. Is that still a good system to use? I am usually in tech, metals, oil, and sometimes service stocks. Any guidence would be great.

    Thanks!!!
     
  2. i still suck at trading, so take my advice with a grain of salt. I would say the best place for stops is where s/r levels are.. My rule is to try and never risk more than .50 on a trade.
     
  3. If you are able to watch the market on a daily basis(at least taking a glimpse at your postions) do not place any stops. Have your number in your head and when it hits it sell. If you place your stops out there for the specialist or market maker to see, you will be taken out the bulk of the time.
     
  4. Yea, that what I thought what was going on. By the next day, the stock was up 3%. Since then (two weeks ago) I removed all stops. I watch CNBC all day.. So any BIG jumps (plus or minus) I would be alerted. I can also setup daily alerts at the broker. It would page me when they are met. I am thinking that is better than the stop losses. Those market makers are not to be trusted... :mad:
     
  5. Surdo

    Surdo

    Some platforms will allow you to set up audible alerts at a price, I even send text messages to my cell phone from TradeStation as a wake up call.

    I never use stops, I have a plan of entry/exit before putting on the trade.
     
  6. They are here to hunt for your stops.
    It's best your stops being kept within your computer.

    By the way, is it trustworthy if the stop is stored in brokerage firm servers instead?
     
  7. I think the brokerages must submit the stops to a central database or something. When they are triggered, the system sells them. I use Banc of America, and I've setup alerts to be sent to both my e-mail address and cell. Either way, I am going to try it this way for a while. Some how, I think you are right. They are searching for a particular stop price to shake the smaller traders out. I am not a day trader per se, but I usually only hold on to a stock for a few days or weeks. Once I hit my profit (or loss) point, I am usually out. I thought to put the system on auto pilot with the stop losses, and in one day because five stocks went down 8%, I lost like 2k. Not much, but by the end of the day, 2 of them recovered. Since then I pulled all my stops. Was going to set them up again, but after some googling I am going to try it with the alert system for a week or so. Let's see what happens. I am going to try an be an optimistic person on this trial... :cool:
     
  8. There´s a problem with the alert system...
    in the event of a market crash... one of those black days... you´ll waste valuable time before excecuting your exit. That could cost you a lot of money.

    You should set your stop at the absolute maximun you´re willing to lose in a particular trade... at the point of no return against your trade... and set an alert at 8% or something like that.
    However I prefer watching the market closely and excecuting all positions manually... but that´s just me.
     
  9. What's the point of not using stops and having alerts set? What are you gonna do when the alert comes (if you're still in time to do aynthing usefull)?

    So has anyone using stops.

    If your plan involves closing positions when certain price-levels are reached you might as well use a stop. I don't see the difference.

    I think (trailing) stops are a great tool that force you to make up your mind before you place the trade. If you can't name a stoplevel to your intended trade before you open, something is seriously wrong with your strategy, imo.

    Ursa..
     
  10. I take this back. It depends on your holding period. a .50 stop on a stock that your holding for a few days is too tight, and for scalping..way too loose.
     
    #10     Jul 31, 2006