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Bill and List:
1)Frankly, I got involved in this thread because I think it irresponsible
for anyone to advocate trading without stops (particullarly to novice and
near novice traders). This is all about managing the bad tail and avoiding
the magic bullet that wipes out your equity..... markets do not have to do
anything. They certainly don't have to pause to let you out and there is
never a guarantee that they will come back.
Frankly, what you claim is true more, often than not, but it is that one or
two or three times a year that markets don't pause or come back that can
ruin you (especially of you are a small account trader). Additionally, the
psychological strain of being way under water and reduced to hoping is much
more than most (myself included can bear).
>There are ways of dealing with the 'melt down' situation, but when >people
>really want their stop to work for them, it is usually when 'they'
declare>a fast market and your little order is stuck at the bottom of the
pile.
My little orders almost always get filled promptly with only a modest
amount of slippage. Damn right I want to be stopped out of a fast market.
That means that something has gone wrong, and I certainly don't want the
burden of waiting through several hours or days of being upside down...
just get me the hell out and I'll reconsider things.
>For example, when Ruben resigned the bonds tanked $700 a contract and you
>can bet you would have been filled at the bottom. A couple of minutes
>later and it was back to normal. A stop simply would not have saved your
Again, things happen.... that is part of trading. It just as easily could
have gone another 700 or 1400 or 2100 or 2800 against you as come back to
unchanged.
Anyway: Im finished with this thread. I will answer the e-mails from those
of you who sent them them this weekend. Again, Im not conceited enough to
think that I have all of the answers, but I am pretty damn well convinced
that trading without stops is just asking for the trading gods for trouble.
Stewart
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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