Pivot and Soul - I understand what you are saying. And it makes sense that if a person is placing a stop purely based on a dollar amount, then that stop may not need to be hit to be wrong.
It appears there may be 2 ways to place stops:
- A monetary stop
- A stop based on the trade/pattern/etc
To be honest, I never really thought about placing an arbitrary stop based on a fixed dollar/tick amount. But, I can see why traders, esp new to trading, could try this method. If using a monetary stop, there may not be a reason to wait till it is hit.
With the way that I trade, each stop is different and dictated by the current market conditions and trade. Sometimes I literally have a 2 or 3 tick stop. Sometimes it's up to 10 ticks. The reason for stop placement here is simply based on the market conditions and movements. In essence, my stops are at 'micro-trend respect levels'. I know that doesn't make a ton of sense, but basically my stops are put at an area that on a short-term chart that level is being respected. For sake of discussion, call it minor support/resistance. So, if I am going long and I place my stop just beneath some short-term support, until that support is broken, I am still in the trade.
I understand that we all want instant profits and quick. There's nothing better than a trade that just sky rockets in your direction. But in reality, that doesn't always happen. So, for those new to trading or looking for ideas, just keep in mind that if you place stops in areas that are respected, you should consider giving that trade room to move. That's my opinion. Others say get out and then look to re-enter. I personally don't care to jump in and out b/c I am waiting for the move and maybe I am a tad early. I'm ok with being a little early and being patient. Others disagree.
Here is another key in all of this - your commission costs. Any trader should take the time to contact numerous brokers and negotiate a good commission rate. Keep in mind that if you are trading 1 contract and 2 or 3 times a day, you are not going to get rock bottom commissions; but, it doesn't mean you need to overpay as well. I personally would recommend the following futures brokers:
Also - as you trade more, make sure you are still receiving good rates. Brokers are good at giving you a rate to get your busines NOW, but very few (if any) review your account to see if you qualify for better rates. So, every so often as your volume and activity increases, be sure to test the waters again. Most often, you can simply get your current broker to lower rates if they know you may change.
Negotiating commission rates is just part of the business as far as I am concerned. If you are not doing this, you may be overpaying!
02-25-2007, 09:31 AM
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