Tight stops and re-entries, or wider initial stops?

Discussion in 'Risk Management' started by KCalhoun, May 7, 2022.

  1. Jzwu2017


    I now exit/stop trades myself. Often I was late on exiting the wrong trades so I need to practice more.

    One way I am looking at this is I know what my winning trades look like (i.e., pretty much winning quickly after entry), so if the trade is not winning within a few minutes I am looking to exit it.
    #31     May 9, 2022
  2. EM1, you know when the conditions are wrong, not the price, per se.

    People with static stops are putting the cart before the horse. Perhaps they do not understand the difference.

    On an entry, the sequence should be
    1) Find a setup*
    2) Verify the setup,
    3) Find an Entry point that is reasonable.

    On an Exit, same thing, but one has the choice to treat it as two orders or just one.
    One order:
    1) find an exit setup*,
    2) verify the setup,
    3) find an exit point, ......


    Two orders:
    Similar, but you have a stop setup and target setups. ALSO the Stop setup and Target setups can interact.

    By this reasoning, for a two order exit, there is about 3x as much logic going into the exit than the entry.

    Again, by this reasoning, without an "EXIT" setup, you are not even in the game. If you have at least a single Target Setup, or a single Stop Setup, then you are getting there. When you have both and the ability to interact, then you got a clue. When you have multiple Target setups and multiple Stop setups, interacting when necessary, you are in the game.

    But of course, all the data, checks, cross checks, for a setup is a lot to do quickly. If you use multiple time frames- charts etc. it is probably too much, just with the entry. Then go 3x with Exits and you eyes and mind are very busy. Hard to sustain all day, everyday. But computers can do a lot of the heavy lifting! They are good at it, fast, precise and never tire.

    Bottom line:

    Static, point based exits, before the data comes in <> an Exit setup(s).

    Hope this helps.

    PS: EM1, Get me that pastrami sandwich please, extra pickle. :D I work with a trader locally and he buys lunch, usually this: http://redmillburgers.com/aboutus/
    Check out the last pic of BACON!!!!

    *PPS: For clarity: SETUP = the conditions under which you would place an order. Could be any combination of price, indicators etc.
    #32     May 9, 2022
  3. %%
    20 + 21 \200 can track trends well;
    sometimes strangely so.
    Could make a case for tight stops on something like SPLV.
    Good thing for me i dont trade it much; but i can see why some that like tight stops could do well with it........
    #33     May 9, 2022
  4. easymon1


    Just curious, but without any idea how you enter a trade ...
    Out of a dozen of your good trades, spread out so as not all to be in the same price cycle, so if you trade 1 minute charts that could be over the spread of a week whereas if you trade daily charts it might be spread across significantly more time but the principle is the same, for a dozen charts of your good trades, what percent of those had price travel below the lower of the entry trigger bar or the bar preceding it? 50%, 75%, 25%? How far did the winners run? How close were you able to hug those two candles with your stop zone? Was it close enough to allow safety while enabling profit? Depends a lot on setup but food for thought and only takes an hour or two to look into. Break a leg.

    #34     May 9, 2022
  5. Jzwu2017


    I used to look at candles but not any more. Now I only look at 5-min line chart trying to pick the big trend.
    #35     May 9, 2022
  6. easymon1


    What timeframe charts do you like to trade?
    #36     May 9, 2022
  7. Jzwu2017


    Day trading on 5-min chart.
    #37     May 9, 2022
    easymon1 likes this.
  8. KCalhoun

    KCalhoun Sponsor

    Trailing stops tight here on inverses, uvxy, went mostly Cash eod today.

    Will resume bear thesis trades on 2d high breakouts.

    I'm expecting a dcb tomorrow, going into midweek, then end of week selling. Helps to have a market-driven trade plan.
    #38     May 9, 2022
  9. easymon1


    Here's a shot in the dark. If you're interested in using stops here's one way, LP's been in the markets since the '70's. He risks $400 on each trade. He doesn't calculate stop gaps or run numbers, just let's er rip and if the $400 burns up he's looking for the next trade.
    #39     May 9, 2022
  10. easymon1


    Which part, the bouncing stiff cat?
    #40     May 9, 2022