I respectfully disagree. You still entered a trade willing to assume 8 ticks of risk but only profited with 3 ticks of profit. There is no way to predict the outcome of a trade and if you continually enter a trade under that approach it will only take a few losers to take your account into the red. From a long term approach I believe this tilts your r/r out of favor and thus relies on generating substantially more winners then losers to stay positive.
Yes, personally I am more in the set it and forget it camp.
I am wondering about where to "set" it though. Swing high and swing low makes a lot of sense......but all the professionals know just where your stop is and delight in coming to take those stops out.
So the question is "Do you place stop according to market volatility?" or "Do you place stops according to your risk tolerance?" Now it seems to me that the market does notgive a damn about your personal risk tolerance. We have to have protective stops based on volatility.
It's interesting to note that Don Miller does not use stops anymore. He controls his risk through position sizing.
Lately I've been thinking that a good stop placement is just above or below the previous bar high or low of entry.
I'd like to hear some other "reasoned" opinions on this topic.
A quick beta test of the Shark Attack on a 4 range chart in market replay 8/24/09 trading the open and every dot got me 6 winners and 2 losers with ES. 3 tick target 5 tick stop, 3 contracts. I let the losers hit my stop. +$450. Take a good look at the chart. Nice job developers.
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Sorry I had to steal your title temporarily in the chatbox because I was ROTFL when you said it yesterday. I wish I could HJay... Really. I under strict orders here... I am sure you understand but also I understand how everyone may be feeling at the moment out of the loop.