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Most liked posts in thread: Explanation of Trailing Stop needed

  1. Tradesurfer

    Tradesurfer

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    I posted this thread a while back around volatility and stop placement. This is how I like to pick a stop that lets a stock have some breathing room. This can be applied to trailing stops as well although I prefer to wait until there is a profit before switching from an initial stop to a trailing stop

    https://www.aussiestockforums.com/forums/showthread.php?t=15975

    For most brokerage firms, there isn't a charge to enter a trailing stop, only if a trade gets executed.

    Keep in mind around a % trailing stop as opposed to $$ or points. 10% of $50 is 5 points- 10% of $70 is 7 points. As a stock moves higher- if it is entered as a trailing stop % the gap will widen a bit. If entered in dollars that doesn't happen but its up to you which you prefer.
     
  2. tech/a

    tech/a No Ordinary Duck

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    ATR and Volatility stops are from the group of systematic type trailing stops.
    fine for trading a positive expectacy model.

    Personally I prefer to skew expectancy in my favour by setting stops at levels which clearly tell me sentiment has or is changing.
    These of course vary day to day and hr by hr on smaller timeframes.
    Most of the time a trade is performing it wont have a trailing stop.

    Systematic stops are generally far enough away not to be affected by noise.
    Problem is that they cannot discern noise from sentiment change.
    not that important over a longer timeframe but shorter ones can be killed.
     
  3. satanoperca

    satanoperca

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    Hi Tech/A,

    If this is the case, what criteria due you use to exit the trade?

    Thanks
     
  4. tech/a

    tech/a No Ordinary Duck

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    Good question.

    For my discretionary trading

    Eventually it becomes a trailing stop.
    Again a personal preference is very tight initial stops
    giving me larger position sizing (provided the pattern allows it)
    and wide exit stops.
    When I can see sentiment changing I place the trailing stop.(Volume and range---plus pattern).
    Once out I then place a re entry above the most recient high (3 ticks) and set the initial stop below any reversal.

    If this isnt taken out in 2 days I just close it and walk away.
     
  5. satanoperca

    satanoperca

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    Thanks for the reply. This strategy makes a lot of sense as it gets you back in the trade if you have been stopped out prematurely and 2 days seems a far enough time limit.

    Exiting is a skill in itself. I have taken to setting the stop at the start of each day based on how I feel the trade is progressing based on volume, price and pattern.

    What you have mentioned above gives you a second chance if knocked out to early.

    Cheers
     
  6. steelcat

    steelcat

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    what is Trailing stop? - index trading

    what is Trailing stop? - index trading
     
  7. tech/a

    tech/a No Ordinary Duck

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