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Hi Russ,
TASC did a series of articles about testing stops back in the March - May
1998 issues. The author's conclusion was that barrier stops, such as a
trendline or fib support level were more effective than a trailing stop.
He thoroughly tests trendlines as stops in the May issue and the dollar
amounts you might allow the bar to penetrate before stopping out. He
balances that with a money management stop and says pick the one that's less
risk on each individual trade. His best combo was a $500 money stop with a
$100 penetration stop.
My struggle is finding a stop far enough away to allow for noise and yet
close enough to not blow the risk : reward ratio. A solution might be
waiting for those classic 50% or 62% retracements. Your stop (a barrier
stop of fib support) can be close to your purchase prices, greatly
increasing the risk : reward ratio. Now to exercise the patience required
to wait for those retracements to set up so beautifully is another
struggle...
Linda
linda@xxxxxxxxxxxxxx
Climb the mountains & get their glad tidings: Peace will flow into you as
sunshine into flower; the winds will blow their freshness into you & storms
their energy, & cares will drop off you like autumn leaves. John Muir 1838 -
1914
>I look forward to other position sizing ideas. Thanks Kevin and others for
>the good responses to my post! I don't have a lot of time and I am spending
>my sleep hours reading this list but I will do my best to respond to the
>other position sizing comments.
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