Tight Vs Logical STOPS

[new_trader]

Why would any trade ever go into negative territory?

It only takes one trader to make the market move in the direction you don't want it to, even if it's only one tick...or am I missing something?

 

[Splitlink]

I'm going to give you some advice, Split. Never trade without a plan. Not being able to identify mistakes points to a person commiting the cardinal sin of trading without a plan. Get a plan, write it down, refine it and stick to it. Best of luck with the indexes.

Thanks, I'll try to remember that.

Split

 

[Windowsill]

Why would any trade ever go into negative territory?

The Spread.

 

[Tuffty]

The closer the stop is to the entry the worse the results from most entry criteria tend to be. Well, at least from my testing on the subject.

 

[damianoakley]

The closer the stop is to the entry the worse the results from most entry criteria tend to be. Well, at least from my testing on the subject.

The closer the stop is to the entry, then the lower your winning strike-rate is likely to be.

This doesn't necessarily mean that your trading results will be poor because the tighter the stop, the higher the risk/reward ratio for the trade.


Thanks

Damian

 

[Splitlink]

The closer the stop is to the entry, then the lower your winning strike-rate is likely to be.

This doesn't necessarily mean that your trading results will be poor because the tighter the stop, the higher the risk/reward ratio for the trade.


Thanks

Damian

No, but the shorter the timescale, the closer the stop and the more frequently the stops will be triggered. This is, perhaps, one of the reasons that a new trader may get cold feet. He starts what he cannot finish. Therefore, he tries stops farther away, with a longer timescale. That may make him feel better until he takes a few bigger losses and he is likely to get cold feet again.

It's a tough business!

Split

 

[damianoakley]

Damn right it's a tough business !


Damian

 

[tar]

activate

 

[north5]

IMO. A tight stop means a punt - a logical stop means a thought out trade. However, a logical stop can also be reasonably close.

 

[Splitlink]

Do you manually close your logical stops i.e. are they mental ones? I do if I am at the screen. I have a feeling that logical stops are where the SB company makes a lot of money. They are so logical that everyone puts his stop there and they get triggered. Numerical stops are less likely to go unless they are near the logical ones.

I, also, wait for the 5 or 10 minute bar to complete. It's a kind of discipline and helps to keep you from getting stopped on a spike. Makes me sweat, sometimes, while I wait the allotted time.

 

[north5]

All my stops are hard. They don't move apart from up to breakeven. I like to have a stop in what I feel gives me two chances. That means that when I feel that my first factor is gone I can exit on a mental stop and take the hit, but if I feel that it was just bad timing I just adjust my takeprofit and hold on and accept a lower reward. This requires patience in entry but saying all that they are still relatively close IMO and around 1 period ATR.

 

[new_trader]

IMO. A tight stop means a punt - a logical stop means a thought out trade. However, a logical stop can also be reasonably close.

What if they are both the same thing?

 

[tar]

IMO. A tight stop means a punt - a logical stop means a thought out trade. However, a logical stop can also be reasonably close.

I like it

 

[tar]

What if they are both the same thing?

= perfect entry