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Re: Stops



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At 9:15 AM -0400 5/3/98, Asher wrote:

>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." 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. 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?


Unless your entry technique is perfect, which none are, then your system
may miss the perfect entry by a bar or two. So you may need to give it a
little room.

A lot of work has been done on this by John Sweeney in his books on
"Maximum Adverse Excursion". You might like to look at these.

Bob Fulks