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cb wrote:
>
> Today I was short one mini CD from .6601 with stop at .6475 . stopped
> out at .6540 on the open. While i'm grateful for the $300 profit, i'm
> aware it was almost $1500 (about 6x the margin!) at one time. Seems to
> happen too often! I try to run stops that will keep me in the trend but...<snip>
You might look at John Sweeney's approach of using Maximum Adverse Excursion to
set stops.
I've never fully tested this approach, but, (and this is THE critical point in his
work) if you are using a mechanical method for entering trades and this method
gives consistent entries that can distinguish between random and non-random price
action, then this may be viable. It's worth a look.
I think most people probably try implementing the method before testing to see
that their entries are better than random.
Regards,
Bill Vedder
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