Hi Jerry,
I have a couple of questions about trade management but wanted to give them a bit more thought. Seeing as Maildigger mentioned stops I thought I'd chip in anyway. I'll think as I go along
Back in the newbie days when things where nice and simple the way I understood it was you would enter at the
VWAP with a stop at the
PVP? (or was it a couple of ticks the other side perhaps?).
You then introduced us to
SD's With options of taking a trade there. At this time the stop would still be the
PVP with the option of adding to your position at the
VWAP. In fact a Whole section was devoted to risk tolerance. Again if I understand this correctly we decide what the maximum amount is we are ever to risk (based on account size) and then use market statistics (VWAP,SD) to enter and the
PVP for a stop?
All well and good to this point however when you introduced breakout trades and counter trend trades I think a couple of different styles of trade management where also introduced. With BO's you would move the stop to BE as soon as possible? As an aside because BO's break and go you would consider entering these aggresively without waiting for the Shapiro effect? Also the way I understand it you would only do this at a BO of the
SD band. A BO through the
VWAP would be managed normally?
With countertrend trades (symmetric distribution) you offer a couple of choices for stops - add 1 at the SD2 for a return to
SD. -or- Stop and reverse if your trade moves against you for a journey to SD2 (I guess you are switching from counter trend to BO)?
Does this sound correct? Things are certainly a bit more complex than when newbie started out!
One other thing you mentioned briefly (can't remember where) I seem to recall you mentioning those with low risk tolerance could put the stop behind the Shapiro bar? Maybe I dreamt that. I also recall you saying you where 'conservative'. I wonder how you reconcile that with wide action points (I hesitate to use the word stops) particularly those introduced for 'newbie'? Especially in light of the paragraph that follows :-
Another thing about the Shapiro effect - if the tigger bar (the bar that touches the band) is of a wide range, we can end up giving away a lot of potential profit
and adding to our risk (as your stop must be further). For example for a short at the
VWAP if the bar comes from halfway between the SD1 &
VWAP we give up half the potential profit and our stop is correspondingly further away while we wait for the low of this bar to be broken. Do you pass those trades or maybe not use Shapiro, or maybe drop down a timeframe for a more precise entry?
Cheers,
Nick.
P.S. great scalping video (closet scalper here).