Tight Stops Nightmare!

Discussion in 'Trading' started by Gordon Gekko, Dec 9, 2002.

  1. here's an example of a real trade i made. i didn't have a real stop order in because i hate getting stopped out at the low of the day or something. luckily i fell asleep and totally missed what would happen later. lol so i am still long this trade. btw, it's a swing trade.

    my question is not whether this is a good swing trade, the question is how to deal with stops on a stock like this??? how on earth can a trader keep his risk small when shit like this happens?!

    after looking at the chart, what should i be thinking right now?

    1) should i have got out where i wanted to? was it too tight of a stop?

    2) should i only exit at end of day and ignore ridiculous intraday moves?

    3) should i have made my initial stop a lot bigger, maybe using ATR?

    4) should i have taken the small loss and just accepted that this trade did not go my way, and move on to the next trade?

    i ask these questions because i am trying to keep my losses small. i have always been a tight stop person because we all know our best trades are those that go our way almost immediately. so why should i hang on to trades that don't go my way? also, the larger i allow my losses to be, the harder it is for the gains to make up for the losses. so that's why i want small losses. i just don't see how a trader can keep his losses small when shit like today happens?!?!?!?!?!?
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  2. catman


    BBA traded 122,000 shares today. What I see on your chart is normal for an illiquid stock. Stick to issues with avg. daily volume
    of at least 1 to 2 million shares.....bare minimum.
  3. unfuckingbelievable..........shit like this makes me want to quit...but i won't.

    here's how my stock closed today........

  4. ramuk


    While I am a fairly inexperienced trader, I think it is
    better to stick to your original stop.

    The action on this stop has now reinforced the thought
    that perhaps sometimes it is better to let the loss grow

    Sure as hell, one day you will take a major hit hoping that
    it was just a transitional reversal that happened like today.
  5. JayK



    The first stop was fine, imo, although I would have placed it closer to 4.35, below the previous low of day.

    The exit you were forced to take because of the long candle next day was, theoretically, the correct one - that's why we need stops, to avoid big damages.

    However, what I do in similar situations, is I have an alarm tell me that the stop was hit, and then I wait 15-30 seconds to see if the market really means it.

    Now, in my case, I trade the SPYs and mostly the QQQs, and they are famous for their long tails. I'm not sure if your stock warrants that sort of safeguard - but... food for thought.
  6. My question would be what drew you to this stock in the first place? I personally don't see a significant tradeable pattern where you entered on the daily, unless you were buying that break above the 12/5 price?
  7. the pattern is an uptrend. i used to always try to buy pullbacks of uptrending stocks and they would just continue down further and stop me out. so now i'm just going with the current trend, hoping it continues.

    there's more to it than that, but that's the general concept.
  8. catman


    To expand on what richtrader said, I think the issue has more to do with the stock pick as opposed to where you placed the stop.
  9. ok i will admit the volume for this stock is a little low. but what's wrong with buying an uptrending stock?

    i'm outta here for now...i'll be back later. i don't want to think about this any more right now. :mad: :mad: :mad: :mad: :mad: :mad: :mad:
  10. catman


    There's nothing wrong with buying a stock in an uptrend...but the danger of buying any illiquid stock is that the spreads can be horrendous.....if you want to be an investor, then it doesn't matter as much, but as a trader, the dilemma is getting stopped out if your stops are too tight (and what exactly is a tight stop with an illiquid stock), or losing your butt because you had no stop and now the uptrend has reversed.

    The real answer in my opinion is to stay away from illiquid stocks, period.
    #10     Dec 9, 2002