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<DIV><FONT color=#000000 size=2>Rather that boot em out why not give them their
own forum. </FONT></DIV>
<DIV><FONT color=#000000 size=2>I dont like getting mountains of tripe. However,
I can</FONT></DIV>
<DIV><FONT color=#000000 size=2>delete it.</FONT></DIV>
<DIV> </DIV></BODY></HTML>
</x-html>From ???@??? Wed Sep 02 19:38:02 1998
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Date: Wed, 02 Sep 1998 21:31:24 -0500
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From: John Ahaus <jahaus@xxxxxxxxxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxxxx>
Subject: Re: preserving profits
References: <v01530500b21341068e34@[199.4.64.153]>
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Richard wrote:
>
> Another way is to purchase an option.
>
> Now I know there was discussion on this forum a while back about using that
> strategy instead of a stop. Now I don't think for a minute that a standard
> strategy of using stops instead of options when you initally enter a trade
> would result in overall profit, but what about purchasing one when your
> trade reaches its profit goal? That way you could stay in the trade and
> control risk.
>
> Of course you have to watch implied volatility to be sure you're not being
> ripped off for such insurance and you have to have some time horizon in
> mind.
>
> Look at it this way....Say an insurance salesperson comes to your office
> and says, "Look pal, I see you have $1000 in open profit on that trade. For
> an insurance premium of $250 I'll insure you against any loss on the trade
> and let you keep any additional profits that come your way. That way you
> won't have to put a stop in the market."
>
> Sometimes that might make sense and sometimes it wouldn't.
>
> -RB
>
> >There is one other way and that is to reduce your position when the
> >volatility excedes your risk allowance.
> >
> >Neal Hughes wrote:
> >
> >> Conrad,
> >>
> >> You're running into the standard problem with trailing stops,
> >> you lose profit when you try to exit the trade in the direction
> >> of a new trend/movement. So in a fast-moving market you are exiting
> >> with everyone else in a panic market. In a slow-moving market the
> >> loss of profits is less, but the possibility of whipsaw is increased.
> >>
> >> I've not found a magic solution, but what works for me is to have
> >> a pre calculated profit objective. This gets me out near a peak before
> >> it turns and erodes profit. The disadvantage then is a) sometime
> >> price does not reach my profit objective (too greedy), and
> >> I also miss out on "big moves". However, there is nothing to
> >> stop me getting back into the market in a "big move", so that
> >> downside is not too critical.
> >>
> >> You could compromise and exit half your position with a trailing
> >> stop and half with a profit objective?
> >>
> >> -Neal.
> >>
> >> ---
> >> DiNapoli Fibonacci techniques -
> >> http://www.fibtrader.com
Problem I have run into with this method is that options and future do
not expire on the same date. You are then faced with a decision to
liquidate both or hold onto the future (when it is profitabel) some
more?
John Ahaus
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