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Strategies & Market Trends : DAYTRADING Fundamentals -- Ignore unavailable to you. Want to Upgrade?

To: keith massey who wrote (1168)	6/20/1999 6:44:00 PM
From: -	Read Replies (1) \| Respond to of 18137

<re: placement of stops> Keith, Yes stop placement is a topic worth giving a lot of thought and study to, if you swing-trade or position trade. Regarding trailing stops, when I am "riding" a swing trade I'll often place the stop just under the prior day's close, and as the trade develops and I still want to ride it but don't want to give up the gains, I'll move it to just under the current day's low. Another good way to set trailing stops for longer term trades, is to use the "ATR" indicator (Average True Range). An ATR stop is an objective, volatility-based method to use when you want to give the stock a little more room to run. Set the averaging period of the ATR indicator to say, 3 bars to give a very short-term average (high-low=range); this will just give you an indicator which measures the average daily height of the bar going 3 days back). Then, you can trail your stop 1, 1.5 or 2 ATR's under the current price, depending upon how volatile the stock is. I know a guy that does nothing much else productive in life but trade the corn futures (yep, corn) and he is very successful. All he does is figures out his entries (he uses both TA and FA for that) to catch potential trends, and use an ATR stop. He lives up in the mountains above Silicon Valley, and spends a lot of his days watching squirrels, birds, and nature (vs. worrying about his P&L/positions). He doesn't look at the market when it's open, and adjusts his stops in the evenings. It works for him... Of course there are many other ways to set stops, including recent pivots/swing-lows, S/R levels, dollar stops, etc. Regards, -Steve