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The usage of stops is a microcosm of the whole universe of trading. Most of
you have probably seen T-Shirts with the message "Real men (women) don't use
stops". When you ask yourself the first question about using a stop it blows
your mind. "How much money do I want to lose anyway. Actually, I don't want
to lose any money but if I put my stop close I'll get stopped out for sure
so I can't do that; but by putting my stop way out there I'll lose a bundle
if it gets hit." So you put it in the middle and it gets hit anyway.
I think that Bill has developed a style that allows him to finesse the way
he gets out of a trade. As has been stated having a stop in does not
guarantee that you will be out anywhere near that price. Having a small
degree of flexibility may not be all bad for an experienced trader. You had
not better need to use the toilet though. I know of a trader that got
flushed when he used the toilet with a trade on:-)
It surprises me that more day traders wont even try using an option; not
even once. If a Bond Option for instance is within a week or 2 of expiration
(one expires every month) the cost of an at the money option is only a few
hundred dollars. You'd lose that much in a blink of an eye.
Other then having a little more liquidity there is no benefit for telling
other traders about using options. They are there for me or you anytime we
want to use them. I believe it is just worth the time and effort to learn
and think about using them.
Brent
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>I think this discussion of stops needs some amplification.
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