as214
184 posts
msg #44589
- Ignore as214 |
6/4/2006 11:48:31 AM
A man who I admire the Rumpled One was just talking about trendlines and keeping it simple. That made me dig in my archives for an article that really stuck with me and has saved me thousands upon thousands of dollars. Please read this and you'll see why arbitrary stop losses like 8 percent recommended by IBD are incorrect.
http://profitwaves.com/Stop_Loss_Orders.htm
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TheRumpledOne
6,411 posts
msg #44591
- Ignore TheRumpledOne |
6/4/2006 12:43:43 PM
READ THEM ALL!!
http://profitwaves.com/6_Reasons.htm
http://profitwaves.com/Stop_Loss_Orders.htm
http://profitwaves.com/Million.htm
http://profitwaves.com/Risk_Management.htm
http://profitwaves.com/Low_Risk_Zone.htm
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WALLSTREETGENIUS
983 posts
msg #44598
- Ignore WALLSTREETGENIUS |
6/4/2006 4:16:05 PM
Love that article as214!.....Never used them....and never needed to! Confidence is the name of this game....and if you don't possess it....you're already done!
- RIGGS -
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markcrisp
187 posts
msg #44608
- Ignore markcrisp |
6/5/2006 1:54:14 AM
flawed...trendlines are even more subjective than any other Technical Indicator. What a contradiction.
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craigk
24 posts
msg #44609
- Ignore craigk
modified |
6/5/2006 3:16:34 AM
Interesting Idea, trendlines as stops. Another article says to buy in the “low risk zone”. Which is buying long at a lower pull-back trendline. But if you put the to ideas together, you would be buying at or near your stop. So your stop would be only 1-2% at most.
You might get stopped-out a little quick. Craigthinks
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craigk
24 posts
msg #44610
- Ignore craigk |
6/5/2006 4:17:12 AM
I thought of an idea as I just lost a big gain on Noble.
I am still trying to figure this trading thing out. So maybe I am a little off, but here are my ideas.
1) It seems that the stops should be based on what the overall markets doing, the sector is doing, and the history of the individual stock. ie: A stock that has a high beta and/or gaps needs a little more wiggle room. And if the market and sector are going against you, bail out.
2) Trade your plan. Stop depends on your system and plan. If you are using a back-tested system that says sell at 4 days, sell at four days. If you are momentum system, you might have an -8,-10% stop. (–8%, not being very good momentum)
For my Noble trade, on a high volume stock that went up some, I think I should sell some for a small profit. Then place a stop or trailing stop in a position just at the break even point. Now I am in the position of a FREE trade. If it goes down, I am out with out. If it goes up, I move up my stop up and in almost guarantee a profit.
Has anyone tried anything like that?
Craigthinks
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TheRumpledOne
6,411 posts
msg #44611
- Ignore TheRumpledOne |
6/5/2006 4:28:18 AM
If you are in the money, you can always sell part of your position to lock in profit and let the rest ride with a breakeven stop.
MAY ALL YOUR FILLS BE COMPLETE.
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markcrisp
187 posts
msg #44651
- Ignore markcrisp |
6/6/2006 5:21:53 AM
u should actually buy more of your winning stocks not sell out.
"do what is right not what feels good"
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nikoschopen
2,824 posts
msg #44667
- Ignore nikoschopen |
6/6/2006 11:37:54 AM
craigk,
I would love to see ure actual trade log. That is, do you mind sharing the information on where you got in and where you sold, including the stops that forced you out, if any. Other pertinent information, such as trendlines that you might have incorporated in ure charts, might also be helpful. This way, we can all perhaps learn a thing or two and share our knowledge with you as well.
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EWZuber
1,373 posts
msg #44703
- Ignore EWZuber |
6/7/2006 2:27:25 AM
I have found that using trendlines for an exit is somewhat effective but you may get an exit signal just to have the stock consolidate and move higher.
This chart shows some possible exit models for a recent move in PTSC. All these are valid systems, IMO.
The first is a double top exit which typically will net you the biggest gains when they present themselves. A gap up in the morning near resistance like this one is a sucker play and a great time to exit.
Next is the break of TLS(Trend Line Support). When I use this I also like to confirm with a stochastic -Xover which this chart does have. This is a fairly reliable exit signal but occaisionally you may get out too early as the stock may just drop down to pattern support just below TLS then move higher.
Next exit signal is the break of Pattern Support. This method will keep you from getting a sell signal the longest of the three. It is the most usable I have found if you are under the influence of the PDT rule. In other words it will keep you in longer, give you a reliable sell signal that is almost always correct but you may miss some gains as it does in this chart.
http://server5.pictiger.com/img/347705/picture-hosting/ptsc-exit-chart.jpg
I have also found that a buy or sell signal is not valid until the candlestick for that time frame is complete. The price can drop below pattern support, for instance, and it is still a hold as long as the candlestick closes above pattern support. If you don't have the patience to wait for the candlestick to complete itself then consider trading the next shorter time frame.
These signals can be used in any time frame.
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