Catastrophic Stops

February 26th, 2012, 09:10 AM

Perry said something during his webinar yesterday that struck me.

Someone asked about what type of stops he uses and he said "catastrophic" about 10-15.

It just goes to show that everyone has their own bag in this game. I would consider that normal to
tight. Catastrophic starting at about 20.

interesting...

any thoughts ?

February 26th, 2012, 09:51 AM

tderrick

Perry said something during his webinar yesterday that struck me.

Someone asked about what type of stops he uses and he said "catastrophic" about 10-15.

It just goes to show that everyone has their own bag in this game. I would consider that normal to
tight. Catastrophic starting at about 20.

interesting...

any thoughts ?

Based on my trading style, stops of about 10-15 ticks would be considered normal as well. However if you are a scalper, 10 ticks stop is already catastrophic.

February 26th, 2012, 11:03 AM

It depends on how you trade.

I ran statistics on trading TF on 5 to 8 tick Range Bars with my methodology and found that based on the way I trade , a 10 to 15 tick stop would keep me in the trade longer without excessive drawdown.

Use what works for your way of trading.

February 26th, 2012, 11:23 AM

tderrick

Perry said something during his webinar yesterday that struck me.

Someone asked about what type of stops he uses and he said "catastrophic" about 10-15.

It just goes to show that everyone has their own bag in this game. I would consider that normal to
tight. Catastrophic starting at about 20.

interesting...

any thoughts ?

I'm with you on this...catastrophic...worst case for me would be a hair over 30 ticks on the TF

February 26th, 2012, 02:30 PM

tderrick

Perry ...................................... type of stops he uses and he said "catastrophic" about 10-15.

I would consider that normal to tight. Catastrophic starting at about 20.

interesting...

any thoughts ?

The two main thoughts I have are;
1. Every instrument has it's own personality, for an average trader a generic (N) tick stop might work well in the 6E or CL but fail miserably in the ES or YM.

2. I think the real issue is the distance relative to the entry. If the trade is going to fail it's most likely going to fail for everyone who entered long/short on "that support/resistance level." If you sat patiently when the move was developing and your limit order was filled a little deeper in the rotation of a long trade you might be able to trim 5 or 8 ticks off your stop. If I was impatient and entered my market order early in the rotation I might have to give the market that 5 or 8 extra ticks to prove to me the move isn't going to happen, but we're both stopped out on the same price when the move fails.

Catastrophic Stops

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Catastrophic Stops