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Onno,
A couple of definitions:
A buy stop - An order to buy a security at a price greater than the current
market price.
A sell stop - An order to sell a security at a price less than the current
market price.
You can calculate and optimize your stop values any way you want. I don't
mean to be a smart-ass, but such choices are part of your system.
Here's a simple example. Suppose your system generates a buy signal when L
> mov(H,10,S), and suppose that you get such a buy signal at the close of
today's trading. I would place a buy stop tonight to buy on a stop at H + 2
ticks. My order would be executed tomorrow if tomorrow's high is two or
more ticks greater than today's high. This means that the market high must
move up for my order to execute. If it doesn't, I don't buy. In any event,
I've made my decision tonight, and the market will determine my outcome.
This approach has a couple of advantages for me. One is that I don't have
to decide what to do tomorrow. The other is that if I do buy, I'm at least
buying on strength. This has saved me quite a bit of money because I have
entered a number of stops based on buy signals, only to have the market go
south the next day. Had I entered a market order I'd have lost money.
Hope this is helpful to you.
Tom Strickland
At 08:45 PM 8/14/98 +0200, you wrote:
>Tom,
>
>But how did you calculate and optimize your stop values ?
>And please tell me definition of "stop values"?
>
>Thanks!
>
>
>
>At 11:06 14-8-98 -0500, you wrote:
>>Bruce,
>>
>>Here's a suggestion for your consideration. I've just started using it so I
>>don't have a sufficient track record yet, but I feel better (i.e., less
>>indecisive) about my trading.
>>
>>I have my program generate stop values at the end of the day and set them
>>at night for the next trading day. This way, the actual trades are
>>automatic - the market actually decides for me.
>>
>>Hope you find this to be of some value.
>>
>>Tom Strickland
>>
>>
>>At 07:25 PM 8/13/98 -0700, you wrote:
>>>Hello,
>>>
>>>I have a good mechanical system that works well for me. I have found
>>>that one of the most important parts of my trading activity relates to
>>>my willingness to pull the trigger when the system generates the
>>>signal. My hesitation results in my profitablity being reduced. I
>>>would be interested in finding out if anyone else has had this problem
>>>and if anyone might have a constructive suggestion.
>>>
>>>Thank you,
>>>
>>>Bruce Giroux
>>>
>>>
>>
>
>
>
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