|
Quote: |
|
 |
|
|
Pivot - my observation on this would be that your stop is too far to begin with. Stops are there to take you out at the very point that you are wrong. If your stop is 15 ticks and at 12 you know you are wrong, then your stop should have been placed at 12, not 15 in my opinion. |
|
|
|
|
Here we go again LOL. I really do like hearing your thoughts. Hope the same is true for you.
|
Quote: |
|
|
|
|
For me, and I've mentioned this before - I am not wrong until my stop is hit. That's it. My stop must be taken out before I know I am wrong on the trade. That's the purpose of protective stop losses. They stop a loss from becoming larger. The reason for this is simple - unfortunately not every trade is immediately in profit. Sometimes the trade is in the red for a few moments and then moves in my direction. As long as the stop is not taken out, this is a great trade in the end. Of course we all want to be in the profit immediately, but that's not realistic. |
|
|
|
|
A protective stop is used for protection. It is placed to get a trader out of a bad trade. During the trade itself, some traders would be inclined to sit and wait , and worse, hope. Hope that price will turn around and prove them right. The stop loss is placed to keep a loss from becoming bigger than it has to be, because the trader couldn't do what needed to be done-admit he is on the wrong side and get out.
If you place your stop at a level where the analysis that caused you to go long (for example) would be no longer valid, then it is true that your stop being hit would mean you are wrong. But if you use a money management stop, it can just mean you are wrong on timing and not wrong on direction (or overall analysis).
As far as too far away, you know the 15 ticks was just an example. As previously stated, the "best" type of stop is a market stop. Many times I find that this stop (based on old highs or lows, pivot levels,
Value Area,etc) can be too far away for most people. If that is the case, then the stop used is based on account size and says nothing about market reality.
But if one's stop is just about account size, why does one have to lose all the entire amount of the stop? Wouldn't it be prudent to exit prior to the stop loss and save money? Yes one may be willing to lose 150.00, but that does not mean one has to. Get out after losing 75.00. I hesitate to use numbers for two reasons: during a trade one should not think in terms of money gained or lost, but rather points/ticks/pips. And two , people will question the 150.00 number as if it is real. It is just an example.
BTW, thanks for your help in the previous thread. You helped me get back on track. I was not really a fan of the time stop,luckly, it had not been an issue in real time.