Jump to content

Welcome to the new Traders Laboratory! Please bear with us as we finish the migration over the next few days. If you find any issues, want to leave feedback, get in touch with us, or offer suggestions please post to the Support forum here.

  • Welcome Guests

    Welcome. You are currently viewing the forum as a guest which does not give you access to all the great features at Traders Laboratory such as interacting with members, access to all forums, downloading attachments, and eligibility to win free giveaways. Registration is fast, simple and absolutely free. Create a FREE Traders Laboratory account here.

Soultrader

Using smart stops instead of trailing stops

Recommended Posts

I am surprised to see the numerous amount of traders who trail there stops based on percentage or points. From my experience trailing stops blindly is a sure way to get stopped out just to see a further move in your favor.

 

When I trade the Dow mini's I will always use a smart stop. Instead of trailing a stop by certain amount of points, I will manually move them 3 ticks above a pivot point. For example, if I am short the Dow and the market breaks below S1, I will move my stop +3pts above S1. If if then breaks S2, I will move my stop +3pts above S2.

 

Another method I use is by taking the 50% range from the point of entry and the price where the Dow is currently trading at. For example, if my entry is at 11200 and the market is trading at 11150, I will move my stop to 11175. The idea behind this is that if the markets retrace by more than 50%, the down trend is no longer valid.

 

Note: I scale out on all my trades. My basic rule of thumb is to scale out half at +10, a quarter at +20, and the last quarter using smart stops.

Share this post


Link to post
Share on other sites

Hi Guys,

 

I have seen a lot of stop loss, trailing stop, and other exit strategies used. I have used many exit strategies my self when i was trading in the dow pit.

 

I have found while trading my own account (years ago) and watching others trading now that one of the biggest problem traders have is not letting their winners run. I agree that being too aggressive moving stops will only get you stopped out before you get a chance to catch a big run. Markets are very volatile and big runs happen often.

 

Don't use a trailing stop. Use a multiple bracket order strategy. Lets say you set up a 3 lot multi bracket stragegy with a 10 tick stop, one lot limit profit order at 5 ticks, one lot limit at 7 ticks and one lot at 10 ticks.

 

Once your entry order is filled lets say in the ESZ7 you buy a three lot at 1570.00. You will immediately have a 3 lot sell stop working at 1567.50. You will have a 1 lot sell limit at 1571.25, a 1 lot sell at 1571.75, and 1 lot sell at 1572.50.

 

Ok, you are definitely protected by your sell stop. What you do is cancel the highest sell limit at 1572.50. What will happen if the market breaks is you will be stopped out, but if it rallies your 2 limit sell orders will be filled leaving you long 1 lot with an unlimited upside potential and a 1 lot stop. Now move the stop where you want to lock in a profit etc. If you catch a run you will maximize your profit.

 

Just my 2 cents.

 

Tom

Share this post


Link to post
Share on other sites

That's a good idea Tom if the it fits your style of trading. For some, myself included, trying to get too 'fancy' on the exits only causes more harm than good. Again, depending on how you trade, a multi-bracket may not work well. As with anything else, the end user needs to do testing on any strategy before putting into real trading.

Share this post


Link to post
Share on other sites

I am strill personally debating on my exit strategy, as far as what is optimal....So far, even though the scale out seems more psychologically rewarding, I am liking the all in/all out...but I am constantly testing to see what I like best. Thanks for the info again Tom...

Share this post


Link to post
Share on other sites
That's a good idea Tom if the it fits your style of trading. For some, myself included, trying to get too 'fancy' on the exits only causes more harm than good. Again, depending on how you trade, a multi-bracket may not work well. As with anything else, the end user needs to do testing on any strategy before putting into real trading.

 

Hi Brownsfan,

 

You are right of course. Everyone has their own style of trading and must use what works for them.

 

Tom

Share this post


Link to post
Share on other sites
I am strill personally debating on my exit strategy, as far as what is optimal....So far, even though the scale out seems more psychologically rewarding, I am liking the all in/all out...but I am constantly testing to see what I like best. Thanks for the info again Tom...

 

Hi Reaver,

 

There are many exit strategies available. Sometimes a simple in / out works best. This is a great forum and I truly enjoy interacting with traders. I know it takes guts and determination to do what you do. Best of luck to you all.

 

Tom

Share this post


Link to post
Share on other sites

Join the conversation

You can post now and register later. If you have an account, sign in now to post with your account.
Note: Your post will require moderator approval before it will be visible.

Guest
Reply to this topic...

×   Pasted as rich text.   Paste as plain text instead

  Only 75 emoji are allowed.

×   Your link has been automatically embedded.   Display as a link instead

×   Your previous content has been restored.   Clear editor

×   You cannot paste images directly. Upload or insert images from URL.


  • Topics

  • Posts

    • ...hallucinates.... Student: “What if we gave the monkey LSD?” Guru: “The monkey already did LSD”
    • Question: To those that had/have cancer, what were the signs that made you think “something is not right here” to make you go see a doctor? Answer: So, 5/25/2018, I woke up, got ready for work, and as I walked to my car, I started gagging. Like something was stuck in my throat and I needed to clear it. And then it went away.   But 10 minutes after that, I was T-boned at 40mph on the driver side door. But what made me see a doctor was while my muscles felt better and bruises were going away, the gagging still continued, I started having fevers, my neck felt swollen, I was having such a hard time breathing, and I'd have random sharp pains in my chest, but not from where the seat belt saved me.   2 weeks after the accident, I finally see an urgent care doctor, who looks me over, tells me I'm fine, but luckily requests a neck X-ray. And I ask for a chest X-ray, which he rolls his eyes but let me have (most of my pain was in the neck, so I understand).   The very next day, he calls and says “So, that chest X-ray shows there's a 4 inch mass on your heart and lungs, and your lungs have been filling up with fluid, as well as in your pericardial (heart) wall. We need you to come in tomorrow.”   Turns out the big mass, due to the accident, caused my heart and lungs to tear and fill with fluid, the swollen neck and gagging was caused by 2 metastasized tumors, and the fevers and weight loss were symptoms. Stage 4b Hodgkin's Lymphoma.   But thankfully, we went very aggressive with chemo (and had a lot of bad side effects that don't normally happen to patients), and now I'm about 16 months cancer-free. Yay lucky X-rays! Rachel Jurina, Quora Source: https://www.quora.com/To-those-that-had-have-cancer-what-were-the-signs-that-made-you-think-something-is-not-right-here-to-make-you-go-see-a-doctor   Profits from free accurate cryptos signals: https://www.predictmag.com/  
    • As a man, the reality of life is the harshest part. I don’t mind looking older or becoming weaker over time; it’s nature.   Have you ever heard that the only people who will be loved unconditionally are women and children? Men will only be loved as long as they can provide until they are no longer needed. It doesn’t matter if you already did your best to get your kids to the best school or get the best things for them, if you stop before they’re done with it, there will be no thank you. The only thing they will remember is that they have to quit school at 15, ignoring all the previous 15 years of life you provided for them. The only people who will accept you, no matter what, are your parents. But in this situation, you might be that ungrateful child.   EDIT: Wow, I didn’t think this would get so much attention.   For those who disagree, I can only say that everyone has their problem. If you don’t get the chance to face such a thing, be grateful. Remember, sometimes what you throw in the garbage is something that someone wishes ever to have.” – ElZee, Quora   Profits from free accurate cryptos signals: https://www.predictmag.com/    
    • The good thing i had noticed so far is that the traderpot value is also on the rise..
    • yup its a gradual rollout the right way in my opinion, its really good and its exciting for the sto in 2027
×
×
  • Create New...

Important Information

By using this site, you agree to our Terms of Use.