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Asher -- comments follow, below:
At 04:15 PM 5/3/98 +0300, Asher wrote:
>RT's
>
>This has been a most timely and interesting discussion from which I have
culled quite a lot.
***take a look at Wilder's Parabolic and Volatility stops. Smart stuff.
>I note that, except for risk/reward considerations, the participants seem
to have no questions about initial stops.
>
>As a beginner student/practitioner of short term (3-15 days) trading, I
have often run into expressions like "exit aggressively as soon as it is
apparent that the trade premise is violated."
***this is excellent advice; keeps your capital more-or-less intact. What
is "apparent," to each of us, may be different however.
>Isn't a primary trading premise for ST trading that once the particular
trigger signal is accepted, from the initial entry point at least, prices
must move as predicted and not look back.
***would be great if this happened with complete certainty; price mustn't
do anything, except move where it's going to move. Remember that trading
well is a "probabilities" game -- as a couple of the guys interviewed in
"The Innergame of Trading" observed -- and one in which you're constantly
looking for ways to enhance your edge.
>This would seem to imply an extremely tight initial stop for ST trades,
something which I have yet to see recommended anywhere. A couple of ticks
under/over yesterday's low/high is the tightest I've seen mentioned. Why?
Am I missing something obvious in my considerations?
*** "a couple of ticks" stop might make your broker happy (earning the
commissions from lots of trades) or might be very savvy, if the market
immediately trends in the right direction. How does the trader "know" the
latter will happen? That could be his edge....
>Thanks,
>Asher
With best regards,
Colin Johnston
Colin C. Johnston
<colinjhn@xxxxxxxxxxxx>
Carpe Diem ...
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