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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures
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To: Tom Trader who wrote (2308)8/24/1998 12:45:00 PM
From: Patrick Slevin   of 44573
 
<had I moved my stop to say 70--the odds were that it would have been hit for sure.>

Yes. I use a mental stop until I can place one that is marginally profitable, like the physical stop I had at 92 on the first trade.

The stop out on the second one (for me) was mental and I would have "sent it in" at 86.20 as soon as the trade looked to have momentum that way. It was an unfortunate play, as it immediately bounced. So either way have it's detraction. My goal is simply to not lose money on most of my trades. I miss a lot of large moves that way unless it trends with me for a bit. When it does I give the stops more room.

<my target is predicated on making about 1 1/2 times what I am willing to lose, if the trade goes my way.>

The way I was taught is to find your "average" winner and your "average" loser. Try as hard as possible to reduce the "average" loser and if you are making more than your "average" winner who gives a damn where you stop out.

In other words, even if your average winner is 1.50 points and you are ahead in a trade by 2.0 points you are still beating your number. This is just one point of view, of course. The guy who suggested it trades anywhere from 10 to 100 lots and his average is only 1.7 or thereabouts. But his % winners is around 70%. His average loser is about 2 points so he's doing pretty well with scalps. I don't know how many trades he puts on a day; I think he only does about three, tops.
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