trailing stop

Discussion in 'Strategy Development' started by tradingblues, Dec 19, 2005.

  1. Why do all these morons brag so much about trailing stops in all the columns they write?

    It seems completely useless.
    Just got stopped out on 5% trail on SGP. looks like MM. See the intraday graph.
    Got 0.25 % profit instead of 4% hold.
    Now I dont want to enter till there is a pull-back. And since I am sitting on the sideline this stock will rally like none before.

    I have seen 15% range on TIE the other day. OK i agree TIE is volalite. But SGP is not.

    About to add trailing stop in DONTS list.

    Comments? Suggestions?
  2. GTC


    You might want to use "trailing stop-limit" order. Depending on the stocks/volume/volatility, sometimes "trailing stop-limit" order is more useful than "trailing stop (market)" order.
  3. I dont think stop limit would have helped either.
    Most of the times they simply shake the market 5% in both directions to make sure the shorts and longs flushed down the drain.
    Even though their primary target is directional day traders. Someone like me gets hit.
    I think only way to play this seems to be diversify a lot more and live without protective stops.

  4. maxpi


    I have backtested systems with trailing stops, they never seem to quite work out as well as other methods. I would place them as "good but not great" maybe.
  5. mark1

    mark1 Guest

    trailing stops IMHO are good only to smooth your equity curve, in the long run they are not really usefull.

    On the contrary when they are too tight they cut your winner
  6. I had a thread on this, and I agree that the MM's shake the tree. If I use them as alerts, I set the time to go into effect to 10AM.
    Looking at past results, 15% would have worked much better assuming decent stock selection.

    I find it amazing that they can move the price as far as they do in both directions. Still looking for an easy way to back test various stops. I'm not looking for a subscription service, just a relatively easy way to determine how tight a stop could be set and not stop frequently.

    I would have said set a 2 point stop on GOOG until today, but today was a little different than most. I'm sick of re-buying stocks but I often save a few points of loss. No bragging here because I often buy at a higher price. Selling low and and buying high is not the formula for success :mad:

    Still learning to be patient and let stocks run.
  7. arzoo


    Hope you dont mind sharing, which other methods would perform better?

  8. sccz97


    take a look at some of the exit strategies employed here.

    I find that a combination of a number of exit strategies works best to account for most market conditions. The proportion of your position you want to assign to each strategy depends on the instrument you're trading so you'll need to backtest to find the ratios
  9. dac8555


    regardless, you should always have a stop. I reset and recalculate my stops at the end of each day.

    you realy need to have a volatility measure to be optimize the use of your stops.
  10. sccz97


    I dunno if this reply was to my post, but the exit strategies are used to price your stop level. Take a look at the link and you'll find that most of the recommended exit strategies are based off volatility
    #10     Dec 20, 2005