|
Quote: |
|
 |
|
|
"For example, if you trade off of a 5 minute chart, you can calculate 2.5 times of a 10 period ATR and use that as your initial stop loss. "
ant, clarification -- curious if you personally use the 'close' of the bar or the 'high' of the bar for the calculation -- assuming you are long and would like to automate this stop?
I use a very similar method where the EasyLanguage code (for a stop to be used with a long is):
value1=highest(c,3)-(3.0*avgtruerange(10));
-- I use highest close just because of the occassional intrabar spikes -- and I would stop out on a violation of the highest stop price.... rarely does this get hit if pattern is legitimate.
I have experimented with entering on a 1.0 to 1.5 ATR pullback after a momentum-high-pullback type of set-up so the distance to your initial stop (3.0 ATRs)... is around 1.5 to 2.0 ATR's (entry pullback #ATRs minus stop # of ATRs)... this has worked pretty well -- though the market doesn't let you in on days of spikey non-stop/no-pullback moves. |
|
|
|
|
Dogpile, I agree with you. For a long trade, I would use the high, not the close for automated stops. Thanks for the stop info on the "Momentum High-Pullback" setup. I'm always hesitant to put a stop in that is less than 2 ATR, but I think the smaller stop could work well with that setup. By the way, that setup is probably the highest probability trade I've tested on multiple markets when playing for a small win.
Q. When entering a trade, do you enter when the high/low of the previous bar is taken out or do you try to enter on the bid/ask (i.e., before price turns)? I always enter before price turns because I think a trader gives up too much when they wait for the high/low of the previous bar to be taken out.