One of the most critical aspects of trading is a stop loss. 1) Entry 2) Exit 3) Stop Loss wanted to devote a journal to stop losses, in the various commodity markets and track which ones get hit.
System 1: Cocoa -1952 Mexican Peso - .091175 Eurodollar 3 month - 95.89 Eurodollar 3 month(pit) - 95.8410 Coffee - 129.40 Natural Gas - 8.438 Live Cattle - 97.525 Feeder Cattle - 105.450 Lean Hogs - 61.850 Soybeans - 991.25 Wheat - 804.50 Corn - 424.25 System 2: Cocoa - 1908 Eurodollar 3 month(pit) - 96.9620 Canadian Dollar - 90.45 Australian Dollar - 73.53 Gold - 654.3 Mexican Peso - .089425 T-Notes - 107.1406 British Pound - 180.90 Eurodollar 3 month - 96.97 T-Bond - 110.75 Swiss Franc - 85.24 Silver - 1380.6 Sugar #11- 13.95 Coffee - 131.30 Natural Gas - 15.364 Crude Light - 76.37 Live Cattle - 99.950 Heating Oil - 214.63 Lean Hogs - 82.150 Soybeans - 798.50 Wheat - 563.50
a stop loss ideally is a point in a price scatter that has a low probability of falling in the distribution of price scatter after the entry. or has minimal chance of being hit. one way to reduce the chanes of getting hit within the days following trade entry is to have a greater degree of distance from the entry price. the smaller the distance the higher the chances of being hit. the disadvantage of a large stop loss, is eventually if a trend shift has occurred even a large stop loss will get hit. so how is a optimal stop loss generated, where the implied preceding price action minimizes yet achieves a balance between the large loss that would be registered from a trend shift.
A proper stop loss should reflect the breach of a support or resistance line This optimizes your chances of profit and keeps you in the trade despite sharks trying to hit arbitrary stops thereby minimizing whipsaw And only gets you out only when absolutely required
then it is implied.... trades should only be entered in markets that are near some sort of daily weekly monthly support or resistance. Everything else means price meandering will hit your stop loss.
the other point with optimal stop losses, you want price to be volatile in a given session, volatility implies price will move away from a zone, and continue to put distance from that zone upon entry.
What do you think of multiple small stops equivalent to just one big one ? Little more costly in terms of commissions but each entry supported by a completely new premise of why you should enter a trade therefore increasing your chances of success. Anek
it works in 'gapping' markets, but small stop losses can be retested frequently since price is within the scatter zone during slow sessions.