backtesting has proven time and time again that volatility stops are the way to go. They scare most people so only the most successful traders use this. Its not about the risk......its about the probability of the reward.
yeah like track said at entrance to most strategies ive also found that their is fight against the new trend or a pull back to a certain part before the bulls on long or bears on short give up and the other sides starts to pull ... so i always wait for that pull back then enter at what my stop would have been then i look for significant resistance or support areas near the change add a few pips to the other side of the support or resistance just to make sure that im not stopping out with the crowd. also maybe a good question to ask yourself is if you were the crowd seeing this pattern where would you place your stop then adjust from there dont stop out with the crowd..
Amen. I use just a MA of ATR of the chart I am trading to determine my stops and targets. I think it is one of the biggest keys out there. A fixed xStop will not work in all market conditions nor time frames. And, as always, if stops are bigger due to volatility, always risk same % per trade....which would me dialing down contracts with bigger stops (like in this market)
I do not aggressively average down into a trade until it turns around. That couldn't be farther from the truth.
The primary reasons noobs blow out in a short period of time is because they are undercapitalized and inexperienced. A noob has less of a chance of timing the market than even the most experienced trader and even the experienced trader can't do it consistently enough to ignore money management. Of course that could always be proven wrong with real-time results in the P&L thread. Simple enough.-------->>> I've posted enough of my results on the various threads of ET. I have no intentions of making a commitment to the P&L thread and if you don't believe I'm as profitable as I say I really don't give a shit.
Use of stops, tight or loose, and the success thereof obviously depends on specific strategies. It's not possible to say that there aren't successful strategies that use relatively tight stops. And even though the 1,000 little losses <i>can</i> kill you, so can "the big one" - and it will kill you more dead, more quickly. I would not trade at all without protecting against the "big one". I can only think of 3 ways to protect against sudden blowout: options, stops, or small position size.
I use a 4-5 tick stop on YM. 4 tick stop on ES stops movd to brkeven like 20-30 seconds later. pretty much trading on the move, if price isn't moving instantly to where you want it to go its not a good trade.
Against the trend needs larger stops than with the trend, because countertrend trading IS picking a top or bottom and the market usually continues to drift at least SOME with the prevailing trend. There is some wisdom in dumping your trades into a spreadsheet, and drawing a line where a stoploss would stop you out 20% of the time, and making that your stoploss.
the right place to put stops are a) when there is fear or greed, price moves away fast b) not during chop areas, but volatility areas c) a recognizable pattern that incorporates a) b) C) is the most important because this will define if price is acting correctly for you or not. If you are looking for some triangle shaped whatever, and out pops a square, you quickly close the position regardless if it hit your stop or not,