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To: Jill who wrote (4075)	11/9/2000 4:00:42 AM
From: Grandk	Read Replies (1) \| Respond to of 8925

Jill, I couldn't help but have a sense of de ja vu at your question. A buddy of mine asked a very similiar thing recently, and I'd liked to give you my short answer. Where should one place stops. First off, let's assume MM's read the same charts as you and I. Second, let's assume that 60% of the time we are wrong in our assumption. What doi we do? Do we create a fromula that reads M=.60 + y? Believe me, I've set up many a calculator to quiet my fears. If Fibonacci equals 60%, etc.. Funny how we can still follow Nison, even though his book is a best seller in the Candle stick market. Do you Honestluy think that we are the only ones that can read candlesticks? Of course not. So what does this mean. IMO, we are at a place where the media and the market in kind think that they can predict us. Well, what if we all decided to sell tomorrrow. We crash. We all buy, we rally. There IS strength in numbers. How unfortunate that we are all so "independent". I dont think that is how we were made. When we were at our peak, we all believed in eachother. We crashed when our Commander In Chief failed. We have yet to recoup. When we have a Leader again. When we have someone that takes charge. Then, and only then (IMO) do we rally. When confidence is regained, we rally. P.S. Dorry to bore you with muy ramblings. I believe that 1 out of 100 of a crazy man's ramblings are true. Im looking for that one truth.

To: Jill who wrote (4075)	11/9/2000 9:55:43 AM
From: Michael Watkins	Read Replies (1) \| Respond to of 8925

Personally I think 20% is far too high. A 20% loss means you have to earn 25% just to get back to even. When you take into the other dimensions of money management - % winners/losers; avg win/avg loss; frequency of trades; size (% of capital) of trades - you are likely to conclude the same. On Teresa's site there is a great spreadsheet tool called the Matrix - intelligentspeculator.com - check it out. At bare minimum, even blink but faithful stop placing / minimizing losses will at least help a learning trader hold on to capital longer, offering more time for the trader to get the education required to be successful. But it pays to get educated fast. Conservation of capital is number one, so that we can live to fight another day. The trader is going to be thinking of more variables than how far away from my entry or price should my stop be... eg - is the market trending or range bound? - is the market testing an important top or bottom? - if in a trade, does it fit what the market is doing? No point in initiating a trend following trade if the market is testing an important top or bottom. - should the trader be in a/this trade? Not being in a trade is frequently where we should be! Personally, my stop is not a fixed percentage, its usually one bar away from where I made my entry on a trade. If I have gone long or short on an important test of bottom/top, my stop is going to be below or above the bar that I used as my set up to get in the trade. There will be times when I am stopped out more frequently, but that's the whole point. If the market proves me wrong, I do not want to be in the trade "hoping" that "I" will soon be "right". And if I am being stopped out too frequently, then I am trading in too small a time frame for the market in question (or I am reading the tests/failures completely wrong). Bottom line, I prefer small frequent losses. An important discussion is how to manage winning trades too...

To: Jill who wrote (4075)	11/9/2000 12:57:21 PM
From: Teresa Lo	Read Replies (1) \| Respond to of 8925

Using Stop Losses and Traders as GunSlingers: "...I cannot believe the dream I just had, that woke me up--about trading stocks somehow associated with gunslingers. LOL." And you know that gunslingers typically have a short life-span, right? "...I'd like to discuss stops a bit more, and how you set them. People often have a rule such as lose no more than 20%; or they set just above or below obvious points of resistance or support, you say you don't do that." That's WAY TOO MUCH rope, and why the 2B tests always nails 'em. This is exactly how they all puke, on a MARGINAL high or a MARGINAL low, when they put their stops just "beyond reach"... "I can understand if you're trading the trend it isn't as "bad"--but the whole point of support and resistance is about gaps and in a sense stops, so where do you set them so that you don't get "taken out" on a "force" up or down by the mm's to the stops/gaps--or is it just a necessary evil you live with?" The point of using stops is to protect capital; and in trading, there is absolutely ZERO perfection. John Magee talks about the concept of "necessary and sufficient", and that is good enough for me. We can't wring every last penny out of the trade. If you watch the PENNIES and focus on being "robbed by MMs", then you will end up giving back loads of DOLLARS. Do not let this stop you from protecting your account. Do not begrude the MMs for making money. You need to read this: ispeculator.com Teresa