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

To: cloudless who wrote (5332)	11/11/1999 7:05:00 PM
From: E. Davies	Read Replies (1) \| Respond to of 18137

I have through painful experience developed a system so I pretty much know exactly when I want to cut losses and learned to accept that as part of the process. I've even learned to be happy getting out flat if the trade doesnt start to unfold in a reasonable timeframe. My real problem is when due to a breakdown in my tools or simply not being able to get a fill the trade falls outside my "cut losses" level. Thats when I start acting like an amateur all over again. Its much harder at that point, You feel like dumping and taking the medium size loss. But then maybe not- I wonder would I have entered the position at this point vs. exciting? Do I expect the stock to hit resistance another 1/4 point down or so? Should I wait for that & see if it bounces? Should I average down? etc.. Eric

To: cloudless who wrote (5332)	11/11/1999 9:32:00 PM
From: Matthew L. Jones	Read Replies (2) \| Respond to of 18137

I would look for a minimum 3:1 risk/reward ratio (actually it should be called reward/risk). In other words, if I am going to risk one point (stop loss), then I want to see a minimum of 3 points before I run into a resistance level on the trade. Also, unless you are trading very short term (few minutes), I would always trade in the direction of the larger trend. Counter trend strategies are good for "short" term plays, but will kill you on swing trading. Also, unless you are investing, I would consider a lot smaller loss point. The guys that have studied systems say that over time, more than a 2% stop loss will eventually kill you with a series of "worse case" trades, which will eventually come. I personally like absolute dollar stops as opposed to percentage stops-- after all, it's money I don't want to lose, not percentages. Hope this is of some help. Matt