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I may just borrow that method after some backtesting. |
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since you are entering on a little momentum, you want it to move right away... thus if it doesn't, you don't HAVE to wait for the swing low to trigger your stop.
if it does move right away in your favor, you can move your stop up fast. I often move my stop quickly to the opening price of the bar that triggered me in or to the low of the bar that triggered me in -- with logic being that the momentum you joined in on needs to carry or else you will exit for scratch or rounding-error type of loss.
another thing is if you do get the initial push up, you can take a piece off like 1/4 of the position and now keep a slightly wider stop to ride out some noise and the gain on the 1/4 position offsets the small loss on the 3/4 of the position for again, a scratch. you essentially get a free ride -- a free call option with asymmetric payoff relative to risk.
you occassionally get chopped up a little no matter what you do anyway. this type of method works for me because you can still catch a big move -- higher timeframe reward if you are right about the higher timeframe technical pattern with lower timeframe risk if you are wrong.
another option is to take a small initial position on a limit with a wide stop and wait for the parabolic to trigger to complete the position and then take your stop up to something near the swing low.