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Hi Philip,
I love the message! Glad you found the discussion of interest.
To answer the question, let us assume we have had a decent run up and then
the market has a quick pause. Say we retrace 200 - 300pts and have sensible
sized bars (not the crazy volatile ones that have been too damn frequent
lately!) there is room to place a buy stop below the level of the high just
made and sufficiently above the current price to ensure we only get picked
up if the up move resumes.
If the retracement is 50 - 100pts to ensure that the up move was continuing
would dictate that the buy stop was placed higher than the recent high.
There will be loads of stops above that recent high because that is where a
lot of people put them. If the market hits a big bunch of stops it runs up
fast and there is nasty slippage.
Faced with the choice of (a) being too close to the market for it to prove
the up trend is intact, (b) putting my stop where I will get loads of
slippage or (c) passing up on that opportunity, I prefer to go for (c).
There is always another bus coming!
Hope that helps.
Kind regards
Simon
-----Original Message-----
From: Philip Schmitz <pschmi02@xxxxxxxxxxx>
To: UKTrading@xxxxxxxxxxxxx <UKTrading@xxxxxxxxxxxxx>
Date: 16 August 1998 16:28
Subject: Re: Enter on Stops ?
>Greetings Simon,
>
>Imagine my surprise when I opened up my email and
>discovered a message to ME, Philip, from a total
>stranger, who even spelled my name right! My
>surprise was even greater when the contents of the
>post addressed and clarified some issues I have
>been wondering about! Nice coincidence, what?
>
>Since you (unknowingly) hit the nail right on the
>head, perhaps I could venture a question:
>
>> If the retracement is so shallow that my stop
>> would be outside the previous swing high or low
>> I pass up on the trade.
>
>Don't quite understand this point, sorry to be
>slow. Could you expand on it a bit?
>
>Finally, do you think it's possible that all
>aspiring traders named Philip are asking
>themsleves the same questions? (Please don't take
>the levity amiss, Simon, I've found your comments
>very helpful.)
>
>Best regards,
>Philip Schmitz
>
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