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Hi Stewart,
I appreciated your ideas about stops but I trade mostly NASDAQ stocks and
options on them, no T-bods, no futures, so I will see if it's applicable (I
strongly hope so....am at level 101 of "STOP" learning). By the way, how
many stops should I use in a given trade?....you talk about market based
stops, physical stops....and I read about also trailing stops, target stops,
technical stops, stop-loss,....etc......as you can see I'm reaaly at level
101 on this matter.
M.G.Major
OptionsGMTrading@xxxxxxxxx
-----Message d'origine-----
De : Stewart Taylor <staylor@xxxxxxx>
À : T-Bondtrader <t-bondtrader@xxxxxxxxxxxxx>; M.G.MAJOR
<optionsgmtrading@xxxxxxxxx>; Jeffrey Harteam <jharteam@xxxxxxxxxxxxxx>;
REAL TRADERS <realtraders@xxxxxxxxxxxx>
Date : Thursday, June 24, 1999 7:07 AM
Objet : Re: Nature's Pulse
>
>I would probably agree with Bill about where to place stops but I
>completely disagree with holding them out of the market. In my opinion,
>they should be physically in the pit and waiting. Frankly I am proud of the
>fact that it has been 15 years since I took a position without a physical
>stop waiting behind my trade.
>
>Maybe that just comes from my being paranoid, but I have seen markets (I
>trade about 95% bonds) move so fast against a position that by the time you
>pick up even a direct line you already have a market that is a significant
>distance away from where you intended to get out. I do have to admit that
>overall the bonds have been easier to handle over the last few years... but
>you still have to avoid the big problem (Larry Conners calls it "Managing
>the bad Tail").... stops are an essential exercise in discipline to keep
>you alive and trading.
>
>Two points: 1) I prefer market based stops. I always hide my stops a short
>distance above or below a significant support or resistance. 2) The first
>thing I consider when putting on a trade is, Where will I stop out at? If
>the stop is too far away from my entry point... I just don't do the trade.
>3) If you have a problem with your stops getting hit to often (as a market
>sets an extreme), you need to work with your entry techniques a bit. Wait
>for either a washout of the supp/res level (when everyone else gets their
>stops run) and then enter or wait for thrust in the direction of your trade
>(worse entry point but less risk). A good example is found in yesterdays
>bond chart. The old support at 113.25 was violated, running stops and
>inducing breakout trades, as soon as the stops were run the market turned
>on a dime and rallied back above the breakout point. The rally back above
>the breakout point (plus a small fudge factor) allowed you to enter a
>market where the stops had already been run.
>
>This is one time when an oscillator can help you a bit. If the market
>approaches a strong support but is already oversold, odds become quite good
>that a breakout will be false (I use a very slow moving oscillator and
>price channels for overbought and oversold). I like to judge short term
>overbought and oversold in terms of the hourly chart. 4) Learn to read the
>tape. Price action will allow you to recognize the point of danger beyond
>which, if you are right, the market should not move.
>
>This has rambled on and I don't mean to demean anyones trading style.
>There are tons of ways to skin the trading cat. I will tell you, most of
>the really good traders that I have met (and since it's my business I have
>met quite a few) wouldn't consider trading without a physical stop. ON THE
>OTHER HAND: I have known a few really good traders who never use a physical
>stop and are quite successful. I personally think they take too much
>risk... but that is my opinion.
>
>Anyway, my two cents.
>
>Stewart.
>
>
>
>
>>In a hugely liquid market like the T-Bonds, it is important to use stops,
>>but not in the market. The measured tread on the one hand and the
>>potential extreme range on the other allows this - provided you have good
>>communications with your broker and you are only in the market at the
right
>
>Stewart Taylor
>Taylor Fixed Income Outlook
>Voice: 501-219-9774
>Fax: 501-228-0963
>E-Mail: staylor@xxxxxxx
>Web Site: http://www.cei.net/~staylor/
>
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