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Strategies & Market Trends : Systems, Strategies and Resources for Trading Futures -- Ignore unavailable to you. Want to Upgrade?

To: SE who wrote (25326)	6/15/1999 10:22:00 AM
From: Jerry Olson	Read Replies (1) \| Respond to of 44573

Scott what is the real time quote for the sppos right here...

To: SE who wrote (25326)	6/15/1999 10:51:00 AM
From: Chip McVickar	Read Replies (1) \| Respond to of 44573

Scott, Al Gietzen in his book 'Advanced Cycle Trading' developed a long mathematical formula for placing stop orders. He suggests: 1] short term traders with confidence in their system should Not use stops close to their entry as the natural auctioning of the market up and down over the range of a trend will cause these stops to be filled early in the move....ie mental stops are better when following real time trades. I would imagine significantly lower stops to control against market breaks would be advisable like John uses...out by 6 or 7 points. 2] Never let a profit go.....i.e. place stops or mental stops to catch any profit potential in short term trading. 3] Know at which point before you trade the most likely place for any reversal against your position is likely. Know what signals require you at those points to sell out of your position. Like in using MA's and cross overs signals. 4] Position Trading requires stops orders and the placement of these are done to protect significant profits when you are not watching closely. Traditional stops were placed at or just below previous short-term highs and lows and at some fixed dollar amount beyond your entry point. This can be right, but has two disadvantages. 1] It's a common practice and creates areas of bunched stop orders. When these are triggered they push the market beyond these areas causing spikes. 2] Your point of entry and the market price (and your profit) maybe to far away from a one of these locations. 5] Formula: So he developed a method of measuring the correct placement of stops after the trade has become profitable and one is position holding. It is a complicated mathematical formula that measures average trading ranges - short-term volatility - computed as an exponential MA - designed within cycle extensions of the period you are trading - he then adds a measure of likely variation of the range beyond average daily range - smoothing all of this by a factor of 0.5....This has to be adjusted for each market one is trading as they are all different. And is changed each day of the trade. Anyway it is all designed to keep the stop just out of range of the typical spikes within the trend. Looking at his chart the range seems to be about 2.0 to 2.75 6] Finally he says: "...if you have legitimately held through a short cycle top or bottom after the turn at which you entered, plan on setting a stop-loss that gets you out at or near break-even as you go into the next short cycle, regardless of the computed stop-loss point. In holding through a peak you are expecting the primary cycle to remain intact and allowing loss of capital is not worth the risk. TARGETS Obviously Gietzen believes cycles are measurable and in that you'd find the presence of targets. I'm using the pitchfork tines to establish targets and other price projections. What interests me are when once your target is reached...what tools and indicators signal a confident exit or is it just a fake roll which will carry onward? I don't have the answer yet. BTW....I'm Long from 1312 es99u [paper] from this morning on what I hope will be a position trade.

To: SE who wrote (25326)	6/15/1999 12:36:00 PM
From: John Meade	Respond to of 44573

Scott, My system is strictly odds based (higher percentage of going here before going there type of thing) Yes, if it appears like it will be a more volatile day I'll expand or bring in the P/L range depending on if I like the direction I am supposed to go. As I am sure you have noticed I am pretty much of a bear. Even 95% of my scalps and reversal plays are shorts. Oh yea, unless this contract was to get into the 1400's , which I don't think is going to happen soon, my targets will basically stay the same (6/7) give a point in either direction. When I get a setup for any play, I already have the stop and targets predefined for that particular trade. Trying to read every little tick that happens and having it affect my stop and target doesn't seem to work for me in the long run. For me personally, I find adding more contracts to a good system makes more money at the end of the month than running some type of trailing stop. BWDIK. Everybody is different and thats what makes this game possible for all of us. John