Tightening a Trailing Stop

Hi all,

I am running a breakout system and have reviewed my trades over the last few months and an area I think I can improve on is tightening my trailing stop to maximise profits.

In a number of cases a share jumped 50 - 100% but then slid away and I gave back a good chunk of the profit. I realise I will never hit the top, but I am looking reduce my 2.5 ATR stop as the profit level rises e.g. when 50% + then change the stop to be 1.5 ATR.

Do others do something similar?

I am currently working on some AB code to test this with historical data.

Cheers

I use this technique ONLY if price rises (Including any gap from close) 30% + in a single session. ATRs too slow.

If over 100% Rise Ill sell on CLOSE no question.
For others I hold 30-50% rise +---- Ill sell on OPEN next session
The others Ill set a stop at 50% of the previous sessions move
Next day I set the stop at the Low of the previous days trading
and follow it until closed out.
Ill also look to re enter if the stock makes a new high.

Other than that on to the-----
NEXT.

Superboot said:

Hi all,

I am running a breakout system and have reviewed my trades over the last few months and an area I think I can improve on is tightening my trailing stop to maximise profits.

In a number of cases a share jumped 50 - 100% but then slid away and I gave back a good chunk of the profit. I realise I will never hit the top, but I am looking reduce my 2.5 ATR stop as the profit level rises e.g. when 50% + then change the stop to be 1.5 ATR.

Do others do something similar?

I am currently working on some AB code to test this with historical data.

Cheers

Click to expand...

on a breakout i like my stops to be strategic with my stops placed where the probability my analysis is wrong , i assume you are trying to ride trends as far as possible , i like to hide my stops behing swing lows and highs depending on trade bias . whilst trailing stops do lock profit they can tip you from trends that may go further if room given . all comes back to expectations and trading styles . breakouts from a range sometimes will just repeat that range to the downside/upside and some will run on further . trend trader or range trader or combo it really comes down to personal style .

ps .. ahhhh noted systems trader ... pretty well ignore what ive written here , im hands on discretionary

You could slap a Parabolic Stop & Reverse on the chart as a 'guide'. Remembering ..... indicators only look good in hindsight and when we make a profit. (hint = indicator bias)

Superboot said:

Hi all,

I am running a breakout system and have reviewed my trades over the last few months and an area I think I can improve on is tightening my trailing stop to maximise profits.

In a number of cases a share jumped 50 - 100% but then slid away and I gave back a good chunk of the profit. I realise I will never hit the top, but I am looking reduce my 2.5 ATR stop as the profit level rises e.g. when 50% + then change the stop to be 1.5 ATR.

Do others do something similar?

I am currently working on some AB code to test this with historical data.

Cheers

Click to expand...

FWIW: depending on the speed of the rise/ momentum, I use a trailing stop on a shorter time frame. In case of extremely explosive moves, that can go down as low as 1 minute, but usually, I apply a half-hour framework.
I agree that the usual ATR(10) calculation is too slow; I run an ATR over a maximum of 5 ticks and tighten the screws from 2.5 to 1 or 1.25 in most cases.

Thanks for your comments It gives me some ideas/strategies to trial. Translating them into AB code will keep me busy

Cheers