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Ian,
I place my stops with my on line broker. Not all stocks or Options
excepts stops but the majority do. I just figure out the price I want to get
out at and I use a stop order. For options through I have figure out what
that price might be by taking the stock price and using the delta to figure
out what the option price will be if the stock drops that low. For example:
Lets say my option is at $20 & has an delta of 50. The stock is at $110 and
I want to get out of my option if the stock drops to $100. I take the
current Stock price ($110) minus my exit ($100) that equals $10. Then I take
the $10 and times it by the delta which is 50. That equal $5. I then
subtract the $5 from the current Option Price. Which would make the Option
price around $15 if the stocks drops to $100.
It takes a little work but it works for me. And that is what is
important. Not if Stops are a popular tool or not but what works for you.
----- Original Message -----
From: Ian Burgoyne <iburgy@xxxxxxxxxxx>
To: <metastock@xxxxxxxxxxxxx>
Sent: Wednesday, April 12, 2000 9:26 PM
Subject: Re: Money Management Stops
> As a matter of interest on my part Bob, how are your stops placed? Are
they
> mental stops which you act on or do you place the stops through your
broker
> and they act on them? Or, can you set stops with on-line brokers over the
> web.
> Most brokers I've had dealings with here in Australia don't accept stops
or
> say something like, "we'll do our best but we can't guarantee anything"
> which often is not good enough.
> Just today I've started with a broker who will accept sell stops but not
buy
> stops and charges 1% brokerage for the effort. The orders from the client
> are given over the web but they actually place the buy/sell orders and
stops
> manually whereas a lot of the cheaper on-line brokers charge $20-$40 but
> have straight through processing (ie. direct to the exchange). As far as
I'm
> aware none of the on-line brokers accept stops.
> Often I've read with envy how you and others are able to trade
economically
> with stops with apparent ease. Is this the case? Do most traditional
> brokers/on-line brokers offer this service?
>
> regards
> Ian
>
> >From: "Bob Rago" <r.rrr3@xxxxxxx>
> >Reply-To: metastock@xxxxxxxxxxxxx
> >To: <metastock@xxxxxxxxxxxxx>
> >Subject: Re: Money Management Stops
> >Date: Wed, 12 Apr 2000 05:07:59 -0700
> >
> >I use stops all the time. In today's market vs. last year I use an 8%
stop
> >on stocks and for options since I am a short term option trader I use the
> >close from the previous day as my stop. If the trade for me doesn't go my
> >way it normally turns to a loser that is why I get out. I have minimized
my
> >loses with an increase in losing trades but my winners well out pace the
> >dollar amount of my losers. Getting out of a trade when it turns on me
> >gives me the money to get back into the ball game. Also if you don't have
> >control of your emotions some losing trades most often turn into large
> >loosing trades, because of your research goes from sound practice to
> >hopeful and wishful practice. Last year was different when the market was
> >trending up with around 50 % pull backs before another up run. On my
> >options then I uses a 50% stop on volatile under lying stocks and a 40%
> >stop on others. But this is not a rule for all my trading. It all
depends.
> >This is what I use for my monthly income short term trading. For my Long
> >term and IRA's fundamentals have a lot to do with it. I play the down
side
> >with covered calls and selling Puts. I don't use stops on this. This is
my
> >investing account. The other is my Trading Account. I think you have to
> >term which type you are. A Trader or an investor. I feel at least for me
> >they both have 2 different criteria to manage your risk management.
> >
> >Bob
> > ----- Original Message -----
> > From: A.J. Maas
> > To: Metastock-List
> > Sent: Tuesday, April 11, 2000 4:30 PM
> > Subject: Re: Money Management Stops
> >
> >
> > An upfront question would be better:
> > What do you see as being a <Trade>, eg what comprises?
> >
> > If a future, than ............
> > If an option, than ............
> > If a share, than ............
> > This since these <Trades> differ in Temper <like fire and water>
> >completely.
> >
> > I like seeing Stops when trading shares, but not trading options{it
will
> >get you bankrupt and soon}.
> >
> > Regards,
> > Ton Maas
> > ms-irb@xxxxxxxxxxxxxxxx
> > Dismiss the ".nospam" bit (including the dot) when replying.
> > Homepage http://home.planet.nl/~anthmaas
> >
> >
> > ----- Original Message -----
> > From: John Manasco
> > To: metastock@xxxxxxxxxxxxx
> > Sent: dinsdag 11 april 2000 14:05
> > Subject: Re: Money Management Stops
> >
> >
> > Guy
> >
> > What criteria do you use to exit a trade that goes against you?
> >
> > John Manasco
> >
> > ----- Original Message -----
> > From: <CRLeBeau@xxxxxxx>
> > To: <metastock@xxxxxxxxxxxxx>
> > Sent: dinsdag 11 april 2000 10:23
> > Subject: Re: Money Management Stops
> >
> >
> > In a message dated 4/10/00 9:30:14 PM Pacific Daylight Time,
> >grt@xxxxxxxxxxxx
> > writes:
> >
> > << We don't use any stops in our trading which means that some bad
> >trades can
> > be very expensive. Stops will only mess up your system, unless you
> >used
> > stops when systems testing. We don't use stops in testing our
system
> >and we
> > don't use any stops in trading it.
> >
> > Just my opinion.
> >
> > Guy >>
> >
> >
> > Sounds familiar.
> >
> > "I have never used stops, even to bail myself out. Somehow, having a
> >fixed
> > rule to exit provides my adversaries too great an advantage. " -
> >Victor
> > Niederhoffer, from "The Education of a Speculator", page 376
> >
> > Chuck LeBeau
>
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