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

To: Matthew L. Jones who wrote (3902)	9/13/1999 6:32:00 PM
From: Eric P	Read Replies (2) \| Respond to of 18137

Matt: Sorry to hear that your play in GIC this morning did not turn out better. However, I firmly believe that successful trading must begin with rigid MONEY MANAGEMENT. However, the money management constraints DO NOT determine your stop loss points, => You do. You decide on the stop loss points based on your view of the stock, and use money management concerns to limit your total number of shares, when necessary for stocks needing wide stops. Granted, the magic 2% 'rule' is somewhat arbitrary in my opinion. If we change the 2% stop loss to 4%, then traders will still find that on occasion their stops take them out of a position at the exact wrong time. Unfortunately, it's unavoidable. In the long run though, money management is a winner. Or, as Martha Stewart would say "It's a very good thing." <smile> Good luck tomorrow, -Eric

To: Matthew L. Jones who wrote (3902)	9/13/1999 7:07:00 PM
From: Threei	Read Replies (1) \| Respond to of 18137

Matt, my approach to stop loss: 1. Stop loss should be placed on the level of support for long entry/resistance for short entry. 2. Stop loss should be as big as you are comfortable with, your capital/risk tolerance wise. 3. Accordingly, your entry point should be not farther from the support level that what you are willing to allow stock to go against you (i.e., if support level is $20 and you are comfortable with 1/4 stop, you shouldn't enter the trade higher than 20 1/4. If you do, you risk to get shaken out BEFORE stock hits the support or you have to take the bigger pain than you were willing to). 4. Now and then stock will turn around after you got stopped out. It's quite OK, never take it emotionally. NO system can avoid it. If it happens too often it indicates that system requires bigger stop than you are willing to adopt. Regards, Vadym

To: Matthew L. Jones who wrote (3902)	9/13/1999 7:18:00 PM
From: Cormac	Read Replies (1) \| Respond to of 18137

Matt - I daytrade or more accurately am called a scalper... sometimes the thread makes me feel like a distant cousin that nobody wants to talk about...even as a scalper I will not knowingly enter a position if I do not believe that the "potential" is at least 1/2 a point and I will not ever by choice enter a position with less than 300 shares and that very rarely. If I were to use a 1% or 2% criteria for stop losses I would be at a loss...I would be in the market all the time and I am a proponent of being out of the market a good deal of the time...where better to take advantage of my liquidity...I rarely enter multiple positions...2 or 3 is all that I can handle at once. As a general rule I set a stop of 1/8 below best bid at the time of entering...but having said that...that is rarely the case - I treat each stock differently and factor in "whole numbers", time of day, volume, long or short position, depth of market, pace and last but not least my "intuitive" feel for the stock...and having factored all that in I will exit a stock 90% of the time if it stops behaving in the manner that prompted me to enter the trade in the first place. Matt, I know this is not what you were looking for but this is my approach to my daytrading stop losses... I approach my mid-term to long term trading differently...I trade story stocks...stocks that have a story to me, of interest to me based on their "story"...sorry folks not technical in any way...in these trades I set my stops more in line with the 1% rule but I also am willing to lock profit in by selling a partial position and use a trailing stop. I also weed out non-performing stocks as I add new "story" stocks. I also factor in overall market trend, sector dynamics, support and resistance, etc. again treating each stock with some individual bias. Regards Cormac

To: Matthew L. Jones who wrote (3902)	9/13/1999 8:23:00 PM
From: OZ	Respond to of 18137

Does anyone have any thoughts concerning where to put stop losses? Matt: The 2% rule sounds good and nobody ever seems to want to publicly question it (among other things) but If one is going to set a stop losses under rigid guidelines, then I think you need to compute your risk/reward ratios. You probably already read this but here it is anywise. intelligentspeculator.com I think that some kind of trailing stop in the time frame that you are trading is probably the best plan. As far a your specific trade today.... You shorted a stock that is in an uptrend in the short, intermediate and long time frames in addition to being up for the day. This method of shorting a rising stock has been a recent topic of discussion here on the thread. Some people are for it and some are against it. And some (like Alan) are for it if it is moving into resistance (which it was not). Under that scenario, I would set the stop just above the resistance level. Though I personally would have followed the guidelines of waiting for a up gapping stock to fail and take out it's first 30 minute low. At that point a trailing stop on each 5 min. bar would have taken you to the lows of that decline. Another gutsy method some use is to average in to a rising stock they "feel" is going to tumble. I would never do this myself. They know that they cannot find the top so they accumulate first in small lots and increase the buys as the probabilities of a reversal increase. That guy KENSEY over at clearstation.com does this and I am amazed at his results. hope this helps. regards, OZ

To: Matthew L. Jones who wrote (3902)	9/13/1999 8:26:00 PM
From: Dominick	Read Replies (1) \| Respond to of 18137

Matt: Finding the right stop depends on the individual personality of that stock. Whether you are a position or day trader, you must review historical data to determine the average pull back caused by the market, its group and the stock's own personality. Happy Trading, Dominick

To: Matthew L. Jones who wrote (3902)	9/13/1999 9:08:00 PM
From: marketbrief.com	Respond to of 18137

hi matt, I am very opposed to any kind of arbitrary stop loss point (X points, X percent) since every situation is unique. I wrote a little thing about trailing a stop, not really how one sets it initially, that you may find useful. intelligentspeculator.com Oops, I did write something specifically about where to place it.... intelligentspeculator.com ~Smart$

To: Matthew L. Jones who wrote (3902)	9/13/1999 9:12:00 PM
From: Chas	Read Replies (2) \| Respond to of 18137

You can make all the right decisions for entry into a trade and still be proven incorrect. Intra day noise can stop you out once or twice before your stock trends. Most day traders do not re-enter the trade and miss the major move of the day. ($4,000 left on the table). Successful traders learn to take many small losses, getting stopped out, but are not afraid to re-enter the trade even if it means at a slightly higher price. (lower for shorts) Don't beat yourself up over missed opportunities, it comes with the territory. Missing an opportunity in this business is like missing a bus in NYC, there will be another is a few minutes.