Diogenes
Was wondering what you base your stop loss points on, for example, a few cents below previous day low, or a certain S/L level, etc?
Also - I missed the buy signal frmo last night/this morning, am wondering if it is generally not a good idea to jump in a day late. Any thoughts?
thx for any info on this.
For the purpose of this thread, I've been using the Summation simply as a stop and reverse point. Be long when it's rising, short when it's falling. But in reality, there is much to be said for selling into strength and buying weakness (using the lows-above-lows and high-below-high divergences in the McClellan Oscillator itself, especially late in a move) since the Summation often lags the turns.
Other than that, stops, of course, are a very personal with traders, primarily based on risk tolerance. How much can you stand it going against you? For instance, I can hardly stand any draw down. I want a trade to go my way from minute one. So in day trading, stops are extremely tight -- like if I buy something above the open, the low of that day is likely the stop, and I will move the stop to open itself just as soon as I have the room to do it. Below the open leads to a red candle on the daily and red candles on the long side are never good.
As to your "a day late" question, Linda Bradford Raschke, a great trader, once said the quick and easy way to enter on on-going move after you missed its beginning is to wait for a down day (or days), and buy the next up day. That's as good a method to get over what is truly a psychological hurdle as any. I've sort of marked those points during the last rally on the SPX chart above. In that case, I'd suggest using the low of the day you enter or the low of the previous down day as the stop. Using the SPX chart, it looks as if you might be stopped twice using the previous down day stop, but by jumping back in on the next up day, would capture a considerable portion of the move on that rally.
Ms. Raschke also once said: "Never take a loser to bed." That's a great stop too, to say nothing of the fact it's a great lesson in life.
"If you've heard this story before, don't stop me because I'd like to hear it again," Groucho Marx (on market history?).
“I've learned in options trading simple is best and the obvious is often the most elusive to recognize.”
"The god of trading rewards persistence, experience and discipline, and absolutely nothing else."