|
PureBytes Links
Trading Reference Links
|
<x-html><!DOCTYPE HTML PUBLIC "-//W3C//DTD HTML 4.0 Transitional//EN">
<HTML><HEAD>
<META content="text/html; charset=iso-8859-1" http-equiv=Content-Type>
<META content="MSHTML 5.00.2014.210" name=GENERATOR>
<STYLE></STYLE>
</HEAD>
<BODY bgColor=#ffffff>
<DIV><FONT size=3>I would like to thank all who contributed to the discussion of
stops. The discussion brings home the seriousness of the situation that many
underestimate, either newbie or experienced trader. I think the major
points made i.e. as an MO of conducting one's trading, how it only takes one
lapse of discipline to take you out of the game, and that at the very extreme(
although real possibilities when one is out of their mind, so to speak)
bankruptcy and loss of life are a healthy reminder that this is a SERIOUS
business and should be treated as such each and every day.</FONT></DIV>
<DIV> </DIV>
<DIV>Again, this discussion was extremely helpful to me and I hope everyone else
on this list. Thanks again for the experiences relayed to the group.</DIV>
<DIV> </DIV>
<DIV>Randy Lopez</DIV></BODY></HTML>
</x-html>From ???@??? Mon Jun 28 12:58:44 1999
Return-Path: <owner-realtraders@xxxxxxxxxxxx>
Received: from ml.nw.verio.net (ml.nw.verio.net [204.202.220.47])
by purebytes.com (8.8.7/8.8.7) with ESMTP id KAA07936
for <neal@xxxxxxxxxxxxx>; Mon, 28 Jun 1999 10:20:34 -0700
Received: (from majordom@xxxxxxxxx)
by ml.nw.verio.net (970819888) id IAA13675
for realtraders-sendemout; Mon, 28 Jun 1999 08:47:53 -0700 (PDT)
Received: from mail1.nwnet.net (mail1.nwnet.net [192.220.251.8])
by ml.nw.verio.net (970819888) with ESMTP id IAA13669
for <realtraders@xxxxxxxxxxxxxxx>; Mon, 28 Jun 1999 08:47:49 -0700 (PDT)
Received: from deimos.frii.com (deimos.frii.com [216.17.128.2])
by mail1.nwnet.net (970819888) with ESMTP id IAA17627
for <realtraders@xxxxxxxxxxxx>; Mon, 28 Jun 1999 08:47:48 -0700 (PDT)
Received: from garynt (ftc-0225.dialup.frii.com [216.17.134.73])
by deimos.frii.com (8.9.1a/8.9.1) with SMTP id JAA16661
for <realtraders@xxxxxxxxxxxx>; Mon, 28 Jun 1999 09:47:42 -0600 (MDT)
Message-Id: <199906281547.JAA16661@xxxxxxxxxxxxxxx>
From: "Gary Fritz" <fritz@xxxxxxxx>
To: RealTraders Discussion Group <realtraders@xxxxxxxxxxxx>
Date: Mon, 28 Jun 1999 09:47:40 -0600
MIME-Version: 1.0
Content-type: text/plain; charset=US-ASCII
Content-transfer-encoding: 7BIT
Subject: Re: Thank you, I will
Reply-to: fritz@xxxxxxxx
In-reply-to: <000e01bec137$5021b160$e61dbed8@xxxxxxxx>
X-mailer: Pegasus Mail for Win32 (v3.01d)
Content-Transfer-Encoding: 7BIT
Sender: owner-realtraders@xxxxxxxxxxxx
Precedence: bulk
Status:
Brent wrote:
> I'd love to hear what you think about using stops within systems
> sometime. Every time I have added a stop to any system and back
> tested it the profits begin to erode immediately. Employing stops
> within a system would seem to be a tricky balancing act.
It is tricky, and often counterintuitive for a beginner. A newbie is
likely to think that tight stops will protect his profits, but for
most systems you will find that, as Brent says, it will in fact
REDUCE your profits. Why? Because you get stopped out for a loss on
a lot of trades that would have rallied back for a profit.
HOWEVER: MM stops are an important factor in most systems I've
developed or closely looked at. (The major exception is in systems
that have explicit rules to exit or reverse when the market turns
against them, so they don't usually hit the MM stops.)
Yes, it's true that MM stops will often (but not always) reduce your
profits. However, they also often reduce your risk dramatically.
Not just in the "avoiding a catastrophe" situation that's been hashed
out here lately, but in plain old everyday drawdown. I generally
develop and initially test a system without MM stops, then add in MM
stops to reduce drawdown. It usually reduces the profits and win
percentage, but usually the drawdown reduction is worth it. It's not
unusual for the initial drawdown figure to be cut in half.
Gary
|