Kenneth Paine
Newbie
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Hi all. I am a beginner in this field and I share a spreadbetting alert service with a friend. The service will email us once a week with one or two opportunities based on technical analysis. The alert explains how the conclusion has been arrived at using charts etc. so it is also educational. My friend and I then go and lay our spread bets accordingly
My problem is that the usual instruction is "Buy/sell at X price. Target (say) +/-40 points. Set you stop at -/+ 50 points.
Point 1 is that I am uncomfortable with a stop loss which could give you a bigger loss than the potential profit. Fortunately the service has been quite accurate, but this leads to point 2:
Point 2 is that the service may take some time before it instructs the stop to be moved and by what amount. Meantime the price may have moved favourably and we are still exposed by 50 points unless we start interfering.
So the question is: If you were to find a pattern indicating a swing, how would you calculate your stop loss and trailing distance? I am looking for a proportional method that can be applied to all stocks whether they are trading at 40 or 400 points.
My friend and I have different bet sizing methods. He will think: "I want to make £200 out of this trade so I will place £5 a point while I am thinking I don't want to loose more than £200 on this trade so I will place £4 a point. This leads to a further issue: How do you compare apples with apples? How do you apportion equal risk amongst very different stocks?
There must be an ATR related equation that can be applied. Any ideas?
Many thanks,
Kenneth.
My problem is that the usual instruction is "Buy/sell at X price. Target (say) +/-40 points. Set you stop at -/+ 50 points.
Point 1 is that I am uncomfortable with a stop loss which could give you a bigger loss than the potential profit. Fortunately the service has been quite accurate, but this leads to point 2:
Point 2 is that the service may take some time before it instructs the stop to be moved and by what amount. Meantime the price may have moved favourably and we are still exposed by 50 points unless we start interfering.
So the question is: If you were to find a pattern indicating a swing, how would you calculate your stop loss and trailing distance? I am looking for a proportional method that can be applied to all stocks whether they are trading at 40 or 400 points.
My friend and I have different bet sizing methods. He will think: "I want to make £200 out of this trade so I will place £5 a point while I am thinking I don't want to loose more than £200 on this trade so I will place £4 a point. This leads to a further issue: How do you compare apples with apples? How do you apportion equal risk amongst very different stocks?
There must be an ATR related equation that can be applied. Any ideas?
Many thanks,
Kenneth.
