|
PureBytes Links
Trading Reference Links
|
Greetings all:
This post is directed to those of you who are familiar with Phantoms rules.
I am hoping to get some of your viewpoints regarding the whole notion of
keeping losses as small as possible and the related implications of this
practice.
1) Do you think that Phantom is implying that a position should be closed the
instant that the mkt crosses the entry point? If so this would eliminate many
potential winners, increase the number of losers, but it would preserve those
wonderful trades that are instantly profitable. Or: do you think that he is
simply saying that within an individual trading approach, a strong emphasis
should be put on getting out as soon as one doubts the correctness of the
trade? This might preserve some good trades but is still likely to cut out
many potential winners. Also, is takes alot of fortitude to be wrong alot,
even if the lossses are small. Any thoughts along these lines are
appreciated. Please feel free to take this where you may.
2) A related matter:
How do you gents feel about "never let a winning trade turn into a loser"?
On its face this statement appears to be very good advise. Yet it also seems
to imply that as soon as a trade goes your way and appears to be a winner
(lets say at least one full bar) that the stop loss should be moved to "break
even". We all know that even this seemingly sound tactic will cut out many
winners as the market decides to pull back to the entry point and/or flip
about a bit while the balance is worked out and the direction of the move is
finally made clear. Is it worth it? Does this relentless defesiveness pay
off in the long run? Do these rules force us to only catch those moves that
take off and don't look back? Is this viable? Certainly if one is stopped
out, one has the option to get right back in but this smacks of chasing and
can increase commission costs and could be a pretty frenetic appoach when day
trading. I know there are no difinative answers here, but many of you guys
have great input and that is all I am hoping for. Your insight.
3) Related to #2. Suppose one does move the stop loss to a point of "break
even" and the trade goes well. If it is a good move the market will move
through the next support/resistance (possibly faltering a little at these
points); what about moving the stop again to below/above the next sup/res area
once the market has proven its volition to continue through? In day trading
this can happen fairly quickly. My question is, how many cancell/replace
orders can one use (moving the stop loss to the next level) befor pissing off
the floor broker? Is this a legitimate use of cancell/replace orders? It
seems like a good tactic to me, especially if one is adding contracts along
the way. I know the topic of cancell/replace orders was flogged on this fourm
not too long ago, but this is different take here (I think).
Enough for now.
Thank you all.
Sincerely,
Pomatis
|