'Top Stop Exit' in Traderclub.com's forum ?

Discussion in 'Technical Analysis' started by yoyo2000, Dec 16, 2005.

  1. yoyo2000


    I heard of a 'Top Stop Exit' in Traderclub's forum,but I couldn't find the exact description about it,anyone here knows it?Could you please give me some clues,please?

    Thanks in advance
  2. kww


    I did a google search at the Trader Forum site for "top stop" and also "top" and "stop". I didn't find anything that looked like it was what you're looking for. Unless there's a hole in the google search, it looks like there's no such thing on the Trader Club Forum.

    I also did a general google search for "top stop". The only thing I could find trading related was a reference to a trading system needing a "top stop loss exit". Of course this is not referring to a specific method but to a "very good" method.

  3. Risk3


  4. yoyo2000


    I got it in your address! Thanks,Risk3 ,the description in detail is:

    By Adam White on Wednesday, June 20, 2001 - 12:33 pm:
    I thought I shared this exit idea before, but it didn't come up on search, so I'll share it now.

    I call my idea the Top Stop, and its a form of adaptive objective exit. The goal is to have an objective selling price that moves up when the stock moves up, and moves down when the stock is not moving up.

    Illustrating on a long stock purchase: (This should work with any tradable, long or short.)

    1. Start the Top Stop X ATR's (or a percent of the close) above the just purchased stock.

    2. Adjust the Top Stop up or down by rules a and b below.

    3. Sell when the Top Stop finally falls below the stock. (Of course use some sort of downward protection as well on the trade, say the Chandelier Exit, etc.)

    Adjustment Rules:

    a. if the stock moves up and creates a new higher close of N bars, adjust the Top Stop up an equal amount.

    b. if the stock fails to create a new higher close of N bars (which can happen on either a move up or down), lower the Top Stop an amount equal to the net price move.

    When a stock moves up consistently the Top Stop will remain safely above the stock, but in all other cases it will fall towards the stock, eventually triggering a sell from the upside. Speaking abstractly, the Top Stop places a limit on the total amount of price movement of the entire life of trade that does not go in the desired direction.

    Testing should optimize for the number of ATR's that the Top Stop begins above the stock. In my testing the Top Stop scores a very high percent of wins to losses, but of course does place a limit on the life of the trade.

    There are five things about the Top Stop I like:

    1. It signals on an up move, not a down move, and thus it captures the equity lost by exits that trigger on downward movement.

    2. Logically it can allow an infinite amount of movement in the desired direction.

    3. Logically it can trigger at a price very near the ultimate top of the trend.

    4. It is adaptive to price volatility.

    5. It is suitably simple. It does not rely on additional indicators or controversial assumptions.

    I've got to admit I have an agenda with sharing this- my testing resources are very limited, and I invite any interested persons to test the Top Stop further and report back to us.

    Thanks! Adam White

    And,Kww,could you please share your link about that 'very good' method?
  5. kww


    Didn't save the link. Don't think it was anything that would help you. You can do another google search for "top stop".

    I guess Google site search doesn't always work.