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Great answer, Ric. Specifically for the
OddBall system, rather than entering when the Oddball gives a signal, a
trader might be better off if he used the OddBall signal for a setup and
then used a price bar pattern for entry. As has been seen this past week,
the OB will give a signal but price keeps on going the way it was opposite of
the signal. That is one hazard of using a breadth measurement to trade price as
divergences occur causing premature or late trades and whipsaws. In being
fair to Mark, he said the OddBall was a place to start in developing a system
and has cautioned about the risks of the basic system.
bobr
<BLOCKQUOTE
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----- Original Message -----
<DIV
style="BACKGROUND: #e4e4e4; FONT: 10pt arial; font-color: black">From:
ric
ingram
To: <A title=realtraders@xxxxxxxxxxxxxxx
href="mailto:realtraders@xxxxxxxxxxxxxxx";>realtraders@xxxxxxxxxxxxxxx
Sent: Saturday, November 03, 2001 4:46
AM
Subject: [RT] Stops and Who Needs
Them
Bob,At 01 Nov 01, you wrote:
From: "BobR" <<A
href="mailto:bobrabcd@xxxxxxxxxxxxx";>bobrabcd@xxxxxxxxxxxxx>Subject:
Re: RT:ODDBALLLast year when Mark published his article in Active
Trader I asked him aboutstops, particularly the risk of overnight
exposure. He acknowledged theinherent risk, but he also said that
was one of its strengths in that thegaps tended to benefit it more so
than not. He also emphasized the basicsystem was an example of how
simple a system could be and yet be quiteprofitable in the long
run. Yet, who in the real world can trade withoutstops?
When I traded market direction I too used
stops for stop loss or trailing exits or used long options to try to limit
risk.I still take the occasional market direction based trade - for
example when the market has tanked so much, so fast, the index futures premium
is very negative and the rebound, when it comes will be huge, but few know
when it will come(and I am not one of them). Then I trade market
direction and use a stop loss stop, realising that it may well be traded
through in a fast market. A good example would be the DAX
falling from the 6000's to the 3000's and rebounding well over 1000
points.Stops are also often used for entry into trades by those
using a volatility breakout type of system.Other types of trading
system types such
as; - arbitrage
and other
spreads, - selling
covered
calls, - market
making, - ...either
can make limited use of stops or stops actually defeat the purpose of the
approach.As a traders coach it never fails to amaze me that one type
of client does not know what a stop is, some know of them and use then
occasionally, and another group cannot conceive of how it is possible to trade
without them.So the answer to your question :
Yet, who in the real world can trade
withoutstops? is
twofold: - many
traders, - all
of us could be more open to new ideas.I never cease to be amazed at
how little I know; and I just love having previously cherished beliefs
destroyed and replaced with better ones.Trading with good feelings,
Ric.<A href="http://www.traderscalm.com/";
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