The Baptist
Established member
- Messages
- 715
- Likes
- 45
A lot of commentary has arisen on the stop loss issue.
Larry Williams a well renowned trader has detailed systems without stops. Although I will also mention that following the entry he may have atime deadline for the trade if it has not done as expected. IE. If not 3% up get out at open of next day trade.
Many people miss place stops and are bumped out before letting a pattern evolve there stops are too tight because they trade too big!
If you have sufficient liquidity and you trade sufficiently small and are regularly nicking 100 points for a good few years you could probably take a catastrophic hit every 3 or 4 years, where this falls apart is the human factor, few would have kept the discipline of only trading single lots after 3 years of net gains when only utilising a small percentage of their stake. You can only increase exposure in proportion to your largest possible single loss.Most are trading up to 20% hit value on stake in many rookie instances.
There is far more to money management than just stops. Liquidity, bet size, speculative nature of system, is it a high gainer of small moves or low success on big moves, correlation to other trades you may have ie. an awareness of net position.
Finally Stops are not absolute particularly in massive drop days unless you have guaranteed stops with your spread bet company or other arrangements. I have had untriggered stops when the broker has simply said trade to light you never got out, do you want out now that the market has settled a further 300 point below your original stop? Gee Thanks.
I hope all the self rightous stop Loss afficiando's all have guaranteed stops or have read their Terms and Conditions really well with their broker.
I thought It was a broadly negative and quick to mock approach to someone who was prepared to share his thinking. I hoped for a more mature and consultative approach to us all when developing as traders regardless what percieved level of any thread poster.
I use stops all the time, but come Armegeddan without gurantee's many stops may fail. Good luck with your development
Larry Williams a well renowned trader has detailed systems without stops. Although I will also mention that following the entry he may have atime deadline for the trade if it has not done as expected. IE. If not 3% up get out at open of next day trade.
Many people miss place stops and are bumped out before letting a pattern evolve there stops are too tight because they trade too big!
If you have sufficient liquidity and you trade sufficiently small and are regularly nicking 100 points for a good few years you could probably take a catastrophic hit every 3 or 4 years, where this falls apart is the human factor, few would have kept the discipline of only trading single lots after 3 years of net gains when only utilising a small percentage of their stake. You can only increase exposure in proportion to your largest possible single loss.Most are trading up to 20% hit value on stake in many rookie instances.
There is far more to money management than just stops. Liquidity, bet size, speculative nature of system, is it a high gainer of small moves or low success on big moves, correlation to other trades you may have ie. an awareness of net position.
Finally Stops are not absolute particularly in massive drop days unless you have guaranteed stops with your spread bet company or other arrangements. I have had untriggered stops when the broker has simply said trade to light you never got out, do you want out now that the market has settled a further 300 point below your original stop? Gee Thanks.
I hope all the self rightous stop Loss afficiando's all have guaranteed stops or have read their Terms and Conditions really well with their broker.
I thought It was a broadly negative and quick to mock approach to someone who was prepared to share his thinking. I hoped for a more mature and consultative approach to us all when developing as traders regardless what percieved level of any thread poster.
I use stops all the time, but come Armegeddan without gurantee's many stops may fail. Good luck with your development
Well said Baptist.
Often I have often thought say for example another 9/11 happened during trading hours then many certainly will loose huge proportions of their account.. I suppose if one is taking trades over days then using options is insurance policy to consider and if a situation of 9/11 was again to happen would reduce the risk significantly if not abolish it by such action.
Often I have often thought say for example another 9/11 happened during trading hours then many certainly will loose huge proportions of their account.. I suppose if one is taking trades over days then using options is insurance policy to consider and if a situation of 9/11 was again to happen would reduce the risk significantly if not abolish it by such action.
MTaylor,
I have a d4f spreadbet account, but I don’t use it to trade this system.
If I was to use it though, I’d be using the daily cash, because the spread is smaller and I wouldn’t have to worry about contract expiry.
Baptist,
Thanks for that. I totally agree with what you have said. Basically, if you follow a winning system, be it eod or intraday, then you must stick to its rules and trade with the appropriate stake/contracts. If you don’t then one day there will definitely be a mother of all bad trades (a worse drawdown) that may wipe you out clean. A winning system then becomes a losing system due to bad money management.
CT
I have a d4f spreadbet account, but I don’t use it to trade this system.
If I was to use it though, I’d be using the daily cash, because the spread is smaller and I wouldn’t have to worry about contract expiry.
Baptist,
Thanks for that. I totally agree with what you have said. Basically, if you follow a winning system, be it eod or intraday, then you must stick to its rules and trade with the appropriate stake/contracts. If you don’t then one day there will definitely be a mother of all bad trades (a worse drawdown) that may wipe you out clean. A winning system then becomes a losing system due to bad money management.
CT
While I have been doing some more back testing, I’ve noticed on many occasions using the Dow cash for signals instead of the futures allowed me to enter into a position a day or two earlier. Meaning entry at a better price, increasing the chances of the profit target being reached so better overall performance.
I think it’s the nature of the futures markets; they are a lot more volatile and tend to move further away once a direction is established.
For example today, using the Dow futures for signals, I had missed the trade i.e. the sell limit I had at 10653.
Using the Dow cash instead, the signal was a sell as soon as the Dow cash reached or exceeded 10626, well it did and I would have gotten in at worst at 10633 on the futures at 2:32pm GMT.
From the next trade onwards, I will be changing the way I trade the system.
My signals will be generated using the Dow cash index instead of the futures.
I will post up a back test some time this week
Paper Trade
23/02/04 - Currently short at 10633, Target- get out when Dow cash reaches or exceeds 10526
CT
I think it’s the nature of the futures markets; they are a lot more volatile and tend to move further away once a direction is established.
For example today, using the Dow futures for signals, I had missed the trade i.e. the sell limit I had at 10653.
Using the Dow cash instead, the signal was a sell as soon as the Dow cash reached or exceeded 10626, well it did and I would have gotten in at worst at 10633 on the futures at 2:32pm GMT.
From the next trade onwards, I will be changing the way I trade the system.
My signals will be generated using the Dow cash index instead of the futures.
I will post up a back test some time this week
Paper Trade
23/02/04 - Currently short at 10633, Target- get out when Dow cash reaches or exceeds 10526
CT
Last edited:
FetteredChinos
Veteren member
- Messages
- 3,897
- Likes
- 40
and i thought my systems had big drawdowns!
errr, yikes!
errr, yikes!
Ok on the face of it it is profitable but psychologically disastrous! Could anyone really trade it?
Look at a couple of individual trades:
21/1/2000 - at one point 1637 pts in profit, closed for just 65!
16/9/2002 - from 1157 pts in profit to closing for 78.
9/3/2000 - from 367 pts in profit to a LOSS of 679 pts.
You need to look at some sort of trailing stop loss to try to lock some of those big gains in.
It averages less than 100 pts a month even with the 200pt targets which isn't exactly earth shattering.
Also, look at the effect if you miss the best trade of each year.
In 2003, one trade made 774 pts compared to a profit for the year of just 626.
In 2002, one trade made 1701 compared to a total profit of 2060 for the year.
Similarly, 2001, one trade made 1580, profit for the whole year was just 985.
You need to go back to the drawing board on this one, it's untradeable and too reliant on individual trades.
Look at a couple of individual trades:
21/1/2000 - at one point 1637 pts in profit, closed for just 65!
16/9/2002 - from 1157 pts in profit to closing for 78.
9/3/2000 - from 367 pts in profit to a LOSS of 679 pts.
You need to look at some sort of trailing stop loss to try to lock some of those big gains in.
It averages less than 100 pts a month even with the 200pt targets which isn't exactly earth shattering.
Also, look at the effect if you miss the best trade of each year.
In 2003, one trade made 774 pts compared to a profit for the year of just 626.
In 2002, one trade made 1701 compared to a total profit of 2060 for the year.
Similarly, 2001, one trade made 1580, profit for the whole year was just 985.
You need to go back to the drawing board on this one, it's untradeable and too reliant on individual trades.
Fettered Chinos,
Yes, the drawdowns for my system are a bit steep, but if I trade accordingly then the number of winning trades will make up for it.
Sidinuk,
you’re referring to the SAR results. I am not trading this one, but I agree with you about it being psychologically damaging and untradable, the drawdowns are way too high. As for using those fixed profit targets, then the system is tradable. I know the results are not fantastic but I’m still working on improving the system.
One of my ideas for improvement was to use the signals to maybe confirm a potential formation of a price pattern e.g. right shoulder of a head & shoulders pattern and then adjust the profit target accordingly. Anyway, thanks for your comments and I appreciate the advice about using some sort of trailing stop loss. I will give that a try.
CT
Yes, the drawdowns for my system are a bit steep, but if I trade accordingly then the number of winning trades will make up for it.
Sidinuk,
you’re referring to the SAR results. I am not trading this one, but I agree with you about it being psychologically damaging and untradable, the drawdowns are way too high. As for using those fixed profit targets, then the system is tradable. I know the results are not fantastic but I’m still working on improving the system.
One of my ideas for improvement was to use the signals to maybe confirm a potential formation of a price pattern e.g. right shoulder of a head & shoulders pattern and then adjust the profit target accordingly. Anyway, thanks for your comments and I appreciate the advice about using some sort of trailing stop loss. I will give that a try.
CT
trendie
Legendary member
- Messages
- 6,875
- Likes
- 1,433
Hi Fruity,
I was very interested in your system, and looked forward to your postings.
There havent been any of late !!
Have you given up ?
I hope you havent been put off by the many negative comments.
I for one am still interested in how you are doing.
I was very interested in your system, and looked forward to your postings.
There havent been any of late !!
Have you given up ?
I hope you havent been put off by the many negative comments.
I for one am still interested in how you are doing.
Similar threads
