The thing I dont like about stops

Discussion in 'Trading' started by cashmoney69, Jan 28, 2007.

  1. You may want to look at average true range for stop placement. Assuming a daily time frame the average true range for YHOO has been roughly $.60 to $1.00 this month. For me I would try to catch some percentage of the range, so that on a daily time range I'd be happy taking a dollar profit on the stock. I wonder if you had an exit in mind before you entered the trade. Some people use the average true range of the stock times 3.

    #11     Jan 28, 2007
  2. It's like driving ... you wouldn't drive a car without brakes right?

    They let you slow down as you approach your goal or in the worse case scenario they enable your vehicle to stop when something unexpected happens.
    Your Protective Stop is there in case the reasons that you entered the trade changes ... they are a worse case scenario protection.

    However, so long as the initial reasons that you entered a trade prevail, you should remain in it.

    #12     Jan 28, 2007
  3. lindq


    Cash, your question...and just about any question regarding stops...can't be addressed in a vacuum without consideration for strategy, timing, objectives, capital, etc., etc. etc.

    A scalper with a 10,000 share position in Yahoo who is buying into momentum is going to have an entirely different approach to stops than a longer term trader who just bought into pullback and is holding diversified positions. Each is a completely different universe that operates to its own laws of time and space.

    This thread is like so many here on E.T. While the site has its value, when a subject like stops is opened, folks seem to want to quickly jump in with advice, without the slightest consideration of all the factors involved in the decision. While we might all consider ourselves to be traders, there is in fact only a very short list of things any of us have in common in trading, or should really expect to have in common.

    So IMO, the very first question that should be asked with a subject like this is: What is your strategy, and what are your objectives? What universe are you playing in?
    #13     Jan 28, 2007
  4. billp


    Why is that a loser's game? His reward/risk is > 3:1 which is more than reasonable. The only thing I can think of is that because it is a swing trade(CM69 is a swing trader, hence my assumption), the stop loss of 30 cents may be unrealistic and because of the additional risk of overnight gaps, the reward/risk should be larger if possible. Also, based on Yhoo's volatility, a reward of $1 for swing trade is too low. If there are other reasons, would like to hear it.

    #14     Jan 30, 2007