Steve,
An excellent post. Very sound advice indeed.
When I was an active trader I began by "freehanding" my stops, if I used them at all. This proved very unsuccessful.
It was when I went to very rigidly defined stops that I saw my trading improve immensely. One of my mentors calls this, "beginning with the end in mind." This can be powerful advice for a trader, and for me the use of stops in my trading allowed me to do exactly that.
Since this is the CyBerTrader thread please allow me to raise a CyBerTrader-related topic, which is exactly along the lines you discuss in your post.
As a trader I often found that I would many times overrun my stops if I took my eyes off of the screen, especially in fast moving markets. This was because because the "stops" were not actual stop orders, but were only the personal limits I had set for particular stocks. This meant that if my attention were, say, on another position my "stop" did me no good at all.
The other end of this spectrum would be taking the time to request a true stop order. Unfortunately the use of a true stop order, while being very effective in its practice, takes affirmative and often detailed action by the trader which, again, removes the attention from the market. This could actually cause the situation one is trying to avoid. Additionally, stop orders are usually not available on all stocks, on all exchanges.
CyBerTrader, Inc. has addressed this issue with CyBerTrader 1.7, which goes into limited Alpha test today with a small group of CyBerBroker customers. One of the major additions to this release are the Alerts/Stop Manager.
These modules allow the user to select both global and individual alerts and stops based on completely customizable criteria. The trader may use the functions for any NYSE or AMEX listed stock, or any NASDAQ NMS security.
There are also several levels of alerts that the user may select, and the alerts themselves have selectable audio and visual signals to the user (so if you are a hardcore CyBer user and do not have a soundcard, this could be your excuse to get one!).
What this means to the customer is the ability to tailor the system to their exact trading style and/or current market conditions on the fly, and in real time. In markets such as we have seen recently true risk management becomes critical for the trader, and we want CyBerTrader to be the best weapon in our customers' arsenal
I hope that CyBerBroker customers will comment on this thread as the new version is released.
If you would like to see more of what is in store, please visit the website at http:\\www.cybercorp.com.
Thanks again for the post Steve. A great deal of wisdom there.
Happy Trading!
Mark K. Stryker
CEO
CyBerBroker, Inc. |
