 Gold Customer
Joined: 1/18/2008
Posts: 209
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Hi Guys,
I am having a terrible time picking a winner lately, except my ETF's. My shorts go up my, longs go down. What is a good stop-loss strategy?? I cant seem to get this right either as I stop out just before the reversal.
THanx for all help
Sharp
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Registered User
Joined: 2/5/2006
Posts: 1,148
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stops should be placed just below or above a minor support level, depending on whether your going short or long, keeping in mind your risk:reward should be 1:2, and assuming you have a valid breakouts (if your trading breakouts).
you may need to reconsider your entrys as well if your success rate has not been good. are your breakouts valid? are you identifying patterns and technicals correctly? are you trading with the sector trends?
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Registered User
Joined: 3/16/2007
Posts: 20
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What I like to do is use resistance and support levels for my stopouts (resistance for shorts, and support for long's). This works great for daytrading, but I havn't tested this on a daily chart yet.
Here is an example of a short on a 10M chart, with a stoploss level set @ a resistance level:
This is what I do, but I strongly recommend you test this for yourself before you use it.
Hope that helps, and goodluck with your future trades!
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Registered User
Joined: 6/6/2005
Posts: 1,157
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Hey sharppolly, you might want to consider the price channels...they help me to visualize the current price action and to place stops. You can also use Parabolic SAR or moving average cross-overs. Each will help you visualize where you are in the trade. They won't help with choppy conditions though...so if you find yourself in a trendless stock, prepare for whipsaws.
If you don't mind, could you provide a couple examples of recent dissapointing stop-outs before reversal highlighting entry and exit?
Or, if you are making money with your ETFs why not stick with those. What are you doing differently in regards to your ETF strategy? i think it's natural to focus on what's not working in an effort to fix it...but why? Focus on what is working and strengthen that.
David John Hall
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Gold Customer
Joined: 1/18/2008
Posts: 209
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 Hi Guys
Thnx for the replys. Funnymony, I see I have alot to learn.
Brodistock, thank you for your input. I see the first thing I need to learn is to properly ID resistance and support levels.
davidjohn hall, I am working very hard on the channels, but just got burned on GLW. Made a great purhcase on 6/11/08 just at the bottom of its channel(26.35), had 2 days of success and then the wheels fell off the wagon. I sold at 25.00. If I may ask, should i have 1)noticed that the last top within the channel didnt make it higher than the previous top? 2)I should have stopped out immediatly as the price dropped below the channel? 3) or at least when it dropped below the 50EMA? 4)I shouldnt have bought the stock in the first place due to (1)?
Also, about the ETF's, I have thought about that and have weighted my portfolio to favor 50% ETF's and try to school myself with individual stocks with the other 50%. My DXD has taken care of all of my recent losses and then some, so I am quite fortunate for that, although I sold most of it at 11,700. I am considering taking tiny positions in individual stocks until I get the hang of it and playing the DDM and DXD's.
Now that I am answering you guys questions, I can realise that I am putting the cart before the horse, I need to plan the sell BEFORE I buy. Checking on my recent slew of failures I am breaking alot of the rules that I have already learned (paid for).
Here is one of PKX, I think this is just bad luck. I see most of my other stop-outs were carelessness on my part.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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Sharppolly,
Would you be interested in / willing to post a few of your trades? Pics always help but, if not, explanation of entry price, order type, your methodology and goals, targets, etc.
I'm not sure we can really help you until we know where and when you are entering. Answers that assume a proper entry may be doing you a disservice.
While I've often argued that exits may be more important than entries, the statement does assume a correct entry. You could be entering at the wrong point making selection of an intelligent stop loss difficult or impossible. As I coach the boys in football, "It's tough to finish well what you start poorly".
Give us some thoughts and I'll bet you'll get an abundance of practical advice that you can use Monday morning.
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Gold Customer
Joined: 1/18/2008
Posts: 209
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The tags for the PKX chart above is bought at breakout, stopped out, and the big box is confused on when to take profits even if I am still in the trade.
Thnx for your help here guys, I see I am getting ahead of myself here. I need to study on the sell instead of the buy.
Sharp
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Registered User
Joined: 3/16/2007
Posts: 20
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QUOTE (sharppolly) "Hi Guys
Thnx for the replys....." ".....Now that I am answering you guys questions, I can realise that I am putting the cart before the horse, I need to plan the sell BEFORE I buy. Checking on my recent slew of failures I am breaking alot of the rules that I have already learned (paid for).
Here is one of PKX, I think this is just bad luck. I see most of my other stop-outs were carelessness on my part."
No problem glad I/we could help! And your exactly right, you need to plan your exit before your entry.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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OK, some quick thoughts (keep in mind these are one man's opinions):
Add a bb20,20 and LR30 to price. Scroll back (the " [ " key) to your entry day.
Two issues, while the day looks pretty good as volume is up and TSV26 has
climbed above 0, you are bumping up against the ubb20 (a moving resistance
level) and you do not have direct support from the LR30 (price has slightly
out run its support).
I would have been willing to place a buy order on 5/06 but only conditional upon
5/07's price exceeding the high of 5/06. This would have kept me safely out of that
drop and stop loss wouldn't even be a discussion.
Since 5/06 was such a pretty signal, and then, based upon EOD data, 5/07 was
sitting right on the LR30, come morning of 5/08, I would move my conditional buy
order to a penny over the high of 5/07. Eureka, we're in at 126.50 or so.
Stop loss would become 122.37, the low point of 3 days and a sign of support.
EOD 5/15, I would move the stop loss to 134.46 (a penny below the high of that
high on 4/04).
5/16 my stop would move to 142.90 (a penny below the low of day) as the entire
candlestick/price bar has become completely detached from the ubb20 (frequently
a sign of exhaustion).
There are methods to catch that next little run up but, in this market, I don't get back
in without direct support from the LR30.
Again, just one man's opinions but I can tell you this, a system like this, followed faithfully,
has treated me very, very well.
Let me know if you'd like to discuss further.
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Registered User
Joined: 3/30/2008
Posts: 77
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Sharppolly,
I'm very new to this too so you might want to see what others say about my post., but frankly the price action on PKX scares me. It gaps up and down almost once a week. I would almost think that the laging indicators are useless. Well at least to a novice. Yes I see great short term upsides, but lots more nerve racking loses.
I've put stocks like SOLF and SBP behind me and having been doing ok with ones like ICO and ENT. Even though I'm only getting 5-10% I'm happy. I'm sure doing better than my Professionally Managed rollover.
Also I'd like to see how you trade ETF's. I think that they behave better which might be a clue.
just my 2 cents,
happy weekend everyone
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Registered User
Joined: 11/21/2007
Posts: 9
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I'll add my $0.02 on PKX as well. Not that I'm great at this but seem to be getting better. If you apply a LR30-30 to your price chart you can see that it is clearly a downtrending stock. In addition, OBV is heading South, RSI is below 0 and MS is reducing. Looking at it from an MA point of view, it has recently broken its MA8, MA20 and MA50 lines. One more thing to consider is that the 8-day MA just broke through the 55-day MA, which indicates a bearish move. If anything I'd be taking a short position on this stock as the next support level is its 500-day MA which held it back in Apr., meaning it could be in for another 10 pt. fall.
Just some things to consider.
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Registered User
Joined: 2/5/2006
Posts: 1,148
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glw was actually pretty a good short, especially considering what the broad indexes have been doing. you want to be very quick to take profits in this type of a situation.
you bought into:
a broken trend
price forming a bearish reversal
weak technicals
an macd sell signal midline cross
notice how price kissed the trend channel after breaking out. called the kiss of death.
nonetheless you should have taken partial profits(at least) at @27.5, overhead resistance. always lock some profit in, especially in these market conditions. then you should have been completely out once the doubletop neckline was broken.
also for a trade this shortterm you should be using intraday charting, ie 60 min or 10min.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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Sharppolly, Tobydad is right when you want to ask about a trade or a stock always share the details of what you did or want to do. You need to adjust your pixals on your charts to 600x800 on the server where you import your charts from so that they will fit the screen.
All the advice given here is very good. I am showing you a chart of how I would have played this one based on your entry date.
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Registered User
Joined: 3/21/2006
Posts: 4,308
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I would have used the swing low for support upon my entry and then moved my stop up as price moved up to protect profits. I would have sold when a bounce off the resistance was confirmed by average to low volume levels on 5/16 around $144 the high of the previous day.
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Registered User
Joined: 10/7/2004
Posts: 2,181
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Apsll, good points, thanks for the chart to clarify things.
A different point of view on the initial stop loss (assuming entry on the day Sharppolly first entered); I would go to a penny under the low of 5/01 as that fits the 1-2-3 stop loss system that has worked so well for me.
This also gives a little less loss in the event of a downturn.
It somewhat depends upon how you feel about the stock, its sector, etc. Sometimes you know you want to stay in one and it's better to give a wider berth.
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Gold Customer
Joined: 1/18/2008
Posts: 209
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Hi Again,
Apsll, thnx for that chart and I will adjust the pixels. I can see I have much to learn. I was going over my recent failures to give examples, but all I can say to myself is 'What was I thinking??'
Yinzer, I hear ya. It really broke my concentration to have hiccupped out of a 20 point move which, looking back, was the start of my losing streak. (Again, I had a 50% position in DXD which has saved my behind, but I need to get back on track with the individual stocks).
Funnymony, I print screened your chart and will study it. At this point it is beyond my abilities. I wonder if CNBC sends out subliminal messages to get one to buy these crappy stocks at just the right time?? My timing has been almost as bad as Cramers. (in fact I think he recommneded GLW 2 days after I bought it, right at the top.
Tobydad, thnx again. I really need to learn to use more indicators. I rely on primarily stocastics, and was having really good success using stocastics and MACD early in the year. The way I do it almost always puts me in a 'bottom fishing' mode and this could be the cause of my recent failures. In the first 3 months of the year I was 19 for 19 and up 15%. Waiting for weekly and daily stocastics to become oversold, then the daily crosses over 20. MACD 5 34 4 crosses over on the 2 day period, a successful crossover at 3 day is when the pop happens and sell as daily stocastics top out. My shorting is opposite (or was). Was this just a lucky string? Hmmm, maybe I strayed away from this a bit.
I am going to get this stuff, I am sick of getting robbed by my 401k fund 'managers' . Out of 123 fund options in my 401k, I am outperforming 91 of them with a meagre 2.7% gain for the year. Thats after 5 months of seriously trying to learn this stuff. What is wrong with this picture???
Thnx again..I see I need to visit this forum much more often.
Sharp
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Registered User
Joined: 2/5/2006
Posts: 1,148
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glw was a classic trend reversal for a "short". study it. you'll see em for longs too only in reverse.
study it.
cheers
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Registered User
Joined: 4/18/2005
Posts: 4,090
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I'm in a similar boat... but it's easier to see other peoples trades than your own some times. Also I haven't read the full thread as yet.
Reguarding PKX I don't think you did any thing necessarily wrong depending on the time frame of your hold .. If it's 1-3 days it was fine. If you are holding for a longer swing your stop was obviously to tight but that is also a judgement call. Shit Happens. Also we have had a new down leg start right recently.. so best thig is to wait till there is more upside energy. Easier said than done.
Now if you were buying he highs of the consolidation of 4/23 - 5/5 then your stop should have been under 4/29, 5/1 - something (.25?) at the verry least, unless you go with a wider ATR type stop. If the spread is wide for you drop the share sizes. Going under the daily low of a low range candle like 5/1 and 5/2 can but done but you increase the risk of stopout.. You need to give it room to wiggle but get your stop over your purchase point quickly.
I try not to touch my stops for 4 days (or bars) unless I get lucky and get a clear large range push. Other wise nicely done.. this was In my book counter trend so aside from the trend lines general daily choppyness some times this happens. When i'm in proffit I tend to trail my stops under daily lows as well. Soem tiems you get stopped out to soon on "noise".
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Registered User
Joined: 10/7/2004
Posts: 2,181
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Sharp;
Keep in mind, anything (well, practically anything) was working early in the year. We were having a good run for a while there.
That's part of the game. It's like the ol' pool sharks. Let you think you're winning. You start putting more and more in the pot. A couple of losses? Must be just a bad string, my luck will come back.
Then you reach the point where you've lost enough that you feel like you have to try to win it back.
Problems. Big problems.
Your trading must be a business for you. And to be successful in business one must be always studying one's markets, competitors, buyers' interests and so forth. I'm a builder on the side. Right now, Green Construction is the coming rage. The wave is just building, it's going to be big. So do I fight Green Building? No, I go to college courses to become a certified green builder.
Trend is your friend, that sort of thing. You always have to be on top of it. Which way is the market going? Which sectors are hot. Sentiments, etc, etc. Your techniques will work; but you'll have to adjust them to what the market is doing. Don't guess.
All the best.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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QUOTE (slickrock1) I'll add my $0.02 on PKX as well. Not that I'm great at this but seem to be getting better. If you apply a LR30-30 to your price chart you can see that it is clearly a downtrending stock. In addition, OBV is heading South, RSI is below 0 and MS is reducing. Looking at it from an MA point of view, it has recently broken its MA8, MA20 and MA50 lines. One more thing to consider is that the 8-day MA just broke through the 55-day MA, which indicates a bearish move. If anything I'd be taking a short position on this stock as the next support level is its 500-day MA which held it back in Apr., meaning it could be in for another 10 pt. fall.
Just some things to consider.
At the time of his entry the swing broke a trend line extending from the high of October through the high ofFeb (with extensions) so that donw trends back may have been broken. However it's not that common for stocks to suddenly reverse trend... so asdie fromt the extra energy in the back breaking move some sidewayse action should be expected. As a swing trade it was great minus the gap down that stopped him out. At this point there are several negative ma crossovers.. but we've seen that in the market in general. Junes high is now clealy a "Pincers top" or a small double top. But untill 128 was broken it couldn't be confirmed and could have been 2 in a series of 3 + taps to the roof of a sidewasyechanel forming.
Shorts could be taken hereishfor that 10 point gain.. but you might expect a bit of a bounce at 120 and again at 112. I don't see that many general stock bottoms that have only one movng average crossover ... some times they dance back and forth a few times. So far Tobydad's managemetn seems to be teh most sensible with the least risk. And He is really good at getting in to the fiddly parts of a move. The trailing buy is a great tactic that I honestly forget to use more often than not.
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Registered User
Joined: 4/18/2005
Posts: 4,090
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QUOTE (sharppolly) Hi Again,
Apsll, thnx for that chart and I will adjust the pixels. I can see I have much to learn. I was going over my recent failures to give examples, but all I can say to myself is 'What was I thinking??'
Yinzer, I hear ya. It really broke my concentration to have hiccupped out of a 20 point move which, looking back, was the start of my losing streak. (Again, I had a 50% position in DXD which has saved my behind, but I need to get back on track with the individual stocks).
WHY ? I'm becoming more and more convinced that that is where the dager is... it's possibly a fallicy that there are huge gains in trading a bulk of individual stocks...deceptive illusion. Trading the index ETF's is allot safer IMO.. and that is one reason I have avoided them...I'm starting to do it now. If that is working for you don't stop. consider this.. trading them the nly fundamental info you need is your take on market sentiment and if you are economist enough to figure out what the lates fed action and current events/global trends will mean for stocks.... and you don't need that. They are heavily diversified and it's extreemly unlikely that you'll see a breathtaking gap against you. You wont see on for you either but you DXD trade is one to be proud of , when your out completly mark your entries and exits and print the chart.. frame it and hang it ont he wall.
Funnymony, I print screened your chart and will study it. At this point it is beyond my abilities. I wonder if CNBC sends out subliminal messages to get one to buy these crappy stocks at just the right time?? My timing has been almost as bad as Cramers. (in fact I think he recommneded GLW 2 days after I bought it, right at the top.
don't listen to that crap, problem solved... Cramer will get lucky some times and so will we. IN fact as traders we make our livin in the realm of "sometimes" There re no 100% things. However hearing Cramers recomendation would make me move my stop to the current candle close. Take yor own picks and make your own plan.
Tobydad, thnx again. I really need to learn to use more indicators. I rely on primarily stocastics, and was having really good success using stocastics and MACD early in the year. The way I do it almost always puts me in a 'bottom fishing' mode and this could be the cause of my recent failures. In the first 3 months of the year I was 19 for 19 and up 15%. Waiting for weekly and daily stocastics to become oversold, then the daily crosses over 20. MACD 5 34 4 crosses over on the 2 day period, a successful crossover at 3 day is when the pop happens and sell as daily stocastics top out. My shorting is opposite (or was). Was this just a lucky string? Hmmm, maybe I strayed away from this a bit.
Either .. it's easy to do.. I've had the 20 in a row thing before... the important thing is not to let your self feel like a genious. then we get sloppy. BUT there is aslightly different dynamic in the market now, aside from a clear down trend. there is a certain amount of managed "luck" in trading I believe. I once took 54 losses in a row..... right on the tail of 22 wins in a row. I went from a trader to a God and back to a Worm.
Those things may work. but don't forget the cronic cndition of an up trend is over bought and a down trending market is over sold. In a choppy market buying the over sold and sellign the over bought works well...It may have also been that thre was simply more upside energy going on at the time those trades wre in play.
I am going to get this stuff, I am sick of getting robbed by my 401k fund 'managers' . Out of 123 fund options in my 401k, I am outperforming 91 of them with a meagre 2.7% gain for the year. Thats after 5 months of seriously trying to learn this stuff. What is wrong with this picture???
What the fund managers are taught. they believe taht you can't time the markets, that they are random and the way to gains is through long term holding and value buying ala Warren Buffet, dividents and compounding over a LONG TIME. Most don't realize that (1) Buffet often gets personaly involved in the turn around of the companies he buys, which we can't do. (2) Buffet is much more liquid than any of us have ever dreamed of being and can afford to wait it out. But he does make mistakes.. everyone acts like he dosen't. In the 80's he made a series of bad silver transactions. (3) His original fortunes were not made the way he makes them now (4)He is a trader... they all say he's an investor but check the Berkshire hathoway reports.. they trade the leap options on the shares they aquire.
I don't know why more don't idolize Livermore, Richards, Darvas Etc. but other than racking up trading fees (which they can't compeet with on line brokers) the methods that made those guys allot of money devalidate the brokers work and labors. They are human and want to be "smart" and "right" also.
Thnx again..I see I need to visit this forum much more often.
Sharp
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Registered User
Joined: 12/2/2004
Posts: 1,775
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QUOTE (sharppolly) ....I cant seem to get this right either as I stop out just before the reversal.
Sharp
Pat yourself on the back for actually taking your stops and not pulling them; that shows discipline and that you have a plan for knowing where you're getting out if trade goes bad, and I think probably the number one rule for all traders. It's been an awfully tough market to trade the past few weeks for all, so with all the whipsaws it's to be expected that your positions keep getting stopped out.
You mention that you're stopped out just before the reversal. We've all been there done that and it really frustrates and racks one's mental state. How to fix that? Buy the stock back. I don't mean that instant, but monitor the stock and see if it settles down and offers another try. Sometimes you end up buying back at a higher price, other times lower, but over time imo it balances out. Consider the reentry as simply what it is...a fresh new trade. I've found reentry to be an important part of my method as it's kept me in some good picks. After you buy back the stock you just got stopped out of, it's important to maintain discipline and stop out once again if price yet again moves against you.
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Registered User
Joined: 1/28/2005
Posts: 6,049
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"I am sick of getting robbed by my 401k fund 'managers' . Out of 123 fund options in my 401k, I am outperforming 91 of them with a meagre 2.7% gain for the year."
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sharppolly
You have to realize what funds are. They basically amount to being SP500
indexes. They will give poor returns in bear markets and good returns in
bull markets. Typically they have rules against "active" trading.
Returns are deceptive because they are about the long-term.
I would imagine that a money market fund has also beaten these funds.
Does that mean a money fund was a better bet? Long-term no.
You are seeing these returns because the market is bearish.
In 2002 (bear market) a money fund returned about 2% the SP500
lost about -22%.
Does that mean money funds are a smart move for your 401K? No.
From 2003 to 2007. (bull market) The return on the SP500 was about
83%. The return on the money fund was about 15%.
401K type funds should be viewed for the long-term.
-------------------------------------------------------------------------------------------
As far as your trading goes. It appears you are going in a lot of different
directions: long, short, stocks, ETF's, indicators. I think it would be
good for you to pick a few things and try and master them. When you
have that down, then you can add something else.
I think its better to do 3 things well than 10 things poorly.
Thanks
diceman
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Registered User
Joined: 12/31/2005
Posts: 266
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over the last 8 years the sp-500 returned -18%, the nasdaq -60%
2000-2003 the sp-500 returned -50%
2000-2003 the nazdaq returned -90%.
2003-2007 the sp-500 returned 87%, the nasdaq 150%
historically stock indexes return 7%/year,
now just think of the returns if you were able to ride the swings.
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Registered User
Joined: 12/7/2004
Posts: 393
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Very good point.
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Registered User
Joined: 3/25/2005
Posts: 864
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Well, all I have to say is that it is inexcusable to have achieved at least a $1/share profit
(as you had with GLW the next day after your entry) and not lock it in.
If you want to know where you went wrong. That was it. If you don't do this, you are just asking
for trouble and in your case you got it.
If you can get more after locking in the $1/share profit then, by all means, go far it
(to do that use trailing stops after your $1/share profit has been realized)
As far as PKX is concerned, why didn't you follow suit like you did with GLW and enter
on the day after the Swing Low occurred?
JMO,
mp
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Registered User
Joined: 3/25/2005
Posts: 864
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"Well, all I have to say is that it is inexcusable to have achieved at least a $1/share profit
(as you had with GLW the next day after your entry) and not lock it in."
Sorry, I meant to say here, "as you had with GLW in the following 2 days after your entry".
(Also, I'm still trying to figure out how you came up with those particular channel lines on PKX.
I don't see those as forming any kind of channel. Maybe it's just me).
Thanks,
mp
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