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I know this answer is not what you want to hear, but rather than
reading a bunch of my posts on this and other sites, the better thing
to do is to start reading some of the system's development books that
will really answer your questions. Setup a reading schedule, consider
it your graduate education in trading. That will benefit you a lot
more in the long run. You will get a bigger return from your book
investment than you will get from your trading.
For example, rvalue just brought up the issue that stops reduce
profit. There's no quesiton that in most cases that's true, but it's
not true with all stops and in all cases. Different types of stops
are used in different circumstances. You can learn about this from
guys like Thomas Stridsman and others.
I have two stops on my trading screens, one is based on Chandelier
exits and one on adaptive ATR stops. The Chandelier stop is tighter
and adaptive ATR is somewhat more relaxed. Which stop I take depends
on the market conditions at the time. You can't program that into a
systems tester. However, when I use the adaptive ATR stop in the
tester the profitability of the system goes up so why wouldn't I
follow it exclusively? Market conditions!
I can't possibly explain enough about using stops in a couple of
short posts to teach anyone anything that will save their butts. I
learned the adaptive coding from Perry Kaufman and the Chandelier
methods from LeBeau. It took awhile to get it right, and it didn't
come from a post or two. Both methods use the ATR but there is a huge
difference in how they use it.
Andy asked the question about support and resistance for setting
stops. You can do that, some people advocate it, but it will cause a
lot of traders to go broke because they are not stopping out when
they hit the maximum loss they can afford for the size of their
capital account. (preservation of capital is more important than
profit) In addition, you can't get two people to agree on where
support and resistance is at on a chart.
Rvalue says stops reduce profit--as I said in most cases they do, but
they keep you in the game. Using a very, very large stop is called
buy and hold.
Boards allow many, many people to express their opinions.
Unfortunately most of the opinions are not backed up by any education
or substantive facts, so they are of little value, and at the worst a
lot of them are down right wrong. So I wouldn't come to a chat board
to learn anything. I would go to people who actually have to depend
on what they do to make a living. I don't mean the people who want to
sell you their trading systems and seminars. I'm talking about people
like Kaufman and Stridsman who develop systems for a living and share
they knowledge of what works and what doesn't in their books.
I often hear people say that they can't afford to read the books, or
they don't like reading, etc. Well, if you lose $20,000 trading, how
many books could you have afforded.
You can get your MBA from Harvard night school for less than $40,000
(night school doesn't have the entrance requirements like the day
program so that's not an excuse, and the diploma doesn't say night
school). How many people would do that as compared to those that have
lost more than that amount trying to trade. It's ridiculous how high
the cost of ignorance is.
When I was first starting in the investment business, I had a friend
who had been in the business for many years and was very successful.
He told me that if you asked 100 people if they wanted to be rich,
99% of them would say yes, but only 1% would be willing to do what it
takes. He was dead ass right!
--- In equismetastock@xxxxxxxxxxxxxxx, Divya Singh
<divyasingh01@xxxx> wrote:
> Superfragalist,
>
> I too find your posts extremely intresting and balanced backed by a
lot of experience (so it seems) - What are the other grps you post
in? would like to read them ..............
>
> Divya
>
> superfragalist <no_reply@xxxxxxxxxxxxxxx> wrote:
>
>
> Thank you for the kind remarks. I assume you're basing your
comments
> on a compilation of postings on all boards, not just this one. I
> don't post much on here. However, it's far too much for a lot of
the
> members.
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