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

To: Patrick Slevin who wrote (24154)	5/25/1999 11:24:00 AM
From: Chip McVickar	Read Replies (2) \| Respond to of 44573

I ran across a formula for devising stops...It is very fancy and mathematical Primarily he does not like using previous short-term highs and lows pick the stop point....#1 - a common practice and keyed off by the floor traders. #2 - these were often to far out or to close. So he developed a method of computing the stop-loss point for tomarrow after the close of the market today. He believes this is a function of market volatility...as this determines potential gain and risk. #1- develop a measure of interday or short-term volatility using average trading range per day #2- compute with an exponential MA of the daily range #3- smooth this constant according to the cycle range you are trading. #4- measure the likely variation of the range beyond the average value It goes on... After all these calculations he suggests each day varies from 2.0 to 2.75 for short term trends stop-loss points. I'm supposed to calculate this every evening for the next day....I Fib You not... Biggest Problem is still selling and when to take profits shy of your target. I like the idea of getting something back for your trouble and I'm approaching this as a business. I've have been buying atleast 2 contracts at a time...setting a target and selling one after 50% of the target is reached on any substantial weakness and then getting out of the 2nd at cost if it retraces for a short move and +5 for longer moves. This morning I'm long from 1307 es9m with a target of 1348. There is weakness here at 11:00 and I will sell one here at 1320 and place a stop +5 at 1312