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AbeSmith

AbeSmith 7-26-07 YM

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But it is only information and I think over time I will be able to process it better.

 

Exactly. OVER TIME.

 

Just hide the P&L for now. Give it a try on simulation and see how it goes. Just humor us.

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Abe - don't let your software be the reason for not using hard stops. There's plenty of brokers and software packages that will in fact do what you want. For example, Open ECry has a nice bracket feature where once your order is filled, your exits (profit and loss) are placed on the dom. You set all the parameters. It's pretty nice in my opinion. I just like that your orders are ready to go as soon as you get filled, so it speeds up the process of your place in the queue. Not a big deal on the YM, but if you dive into the ES, that can make a small difference.

 

Here's an example of a sell bracket on the OEC dom. What I like about it is that you see in orange where your brackets will be.

attachment.php?attachmentid=2074&stc=1&d=1185554951

 

Thanks for the recommendation Brownsfan.

 

Exactly. OVER TIME.

 

Just hide the P&L for now. Give it a try on simulation and see how it goes. Just humor us.

 

Well, I guess it won't hurt to try. But I don't like the idea of running away from information. Especially in this case the information is not just noise but could be useful.

 

P.S. How do you do signature in your posts?

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Hey TinGull. Thanks for the excellent advice. I will look into doing firm stops and also into doing less trades. Just to clarify, I made a miscalculation about how many points I made. It was actually closer to 33 points and 15 roundtrips.

 

Hey Abe,

 

My suggestion...stop using the term "I will look into it". If you just look into something you're making no firm commitment to yourself to actually affect the change. Stop using words like "try" or "soon" or anything of that sort. It'll tell your mind that you are still going to search for something else, a reason you can find to not put a stop in place. It's something you need to do. So, tell yourself "I will do it on my next trade and every trade there after". You'll do yourself a great service.

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Hey Abe,

 

My suggestion...stop using the term "I will look into it". If you just look into something you're making no firm commitment to yourself to actually affect the change. Stop using words like "try" or "soon" or anything of that sort. It'll tell your mind that you are still going to search for something else, a reason you can find to not put a stop in place. It's something you need to do. So, tell yourself "I will do it on my next trade and every trade there after". You'll do yourself a great service.

 

LOL. You're right. I will do it.!!!

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There are other ways to view the info other than in $, maybe points or ticks, if you can find it in your software. Believe taking that info will be like taking your first pee after a long night of beer drinking.

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There are other ways to view the info other than in $, maybe points or ticks, if you can find it in your software. Believe taking that info will be like taking your first pee after a long night of beer drinking.

 

Thanks Torero.

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One of the weakest moves you're making right now is a mental stop loss. I am absolutely still a beginner in these markets and I have never even considered a mental stop loss. I think they could be used by only the most disciplined of traders, and even at that, intraday I don't think they are appropriate. Moves can happen SO fast, especially as of late, that a mental stop loss won't get you out in time for a small loss to turn into a HUGE loss. And with taking just 20+ points on 16 trades....1 of those losses is going to put you in the hole by a margin you don't want to dream of.

 

One of the biggest reasons I put it hard stops and targets is because you never know when your computer or Internet is going to go down. This happened to me just the other day. I had been having problems with the Internet slowing to a crawl so that TradeStation was affected.

 

I was short soybeans when the Internet quit on me. Fortunately I had my bracket orders in, so I wasn't too worried. I was getting enough information to know the trade was working out but I was getting no updates on whether my targets had fired. The screen was showing them still live, even though price had moved below them. I called the TS desk and the guy there told me indeed my targets had been hit and I was out of the trade.

 

Now here's the nightmare scenario. :nahh:

 

On a bright Friday morning, with hope in your heart and profits on your mind, a buy signal fires and you go long 5 YM contract at 13000. You enter no hard stop, however Rather you decide to use 10 point "mental stop." Your target is 13020. If the trade works out you will gross $500, with a risk of only $250, a nifty 2-1 risk reward ratio. That's a somewhat bold but not too risky 1% risk on your $25,000 futures account.

 

The trade moves your way a bit, inching up to 13010, but then turns around past your entry and hits your mental stop loss at 12090. You hesitate, hoping it will turn back up, but it drops another 5 points, an additional net loss of $125. Now you are getting nervous. You reach for your mouse to close out the trade, but you screw up the order and accidently buy 5 more contracts. Now you are long 10 contracts, and YM has just dropped another 5 points. Now its down 20 points from your entry, and you are down $625 on the trade. You scramble to close out the trade but your heart is now pounding and your adrenaline is pumping. You scramble to change the number of contracts to 10, but your sweating palms make it difficult. YM drops another 10 points and you are down $1125.

 

Finally you move the mouse to the sell button. But the mouse pointer won't move. Your computer has frozen! Panic-stricken, you fumble for the reboot button. While your computer is booting you turn on CNBC. The Dow is down even more. You figure down 40 points since you entered the trade. You now losing $500 dollars for every 10 point drop, so now you are down $1625.

 

Your computer finally reboots and you re-open your trading platform. You nervously type in your username and password and click Logon. Nothing happens. "Cannot find server," your platform informs you. You open up a web brower, but it cannot find your home page. The Internet is down! You glance at the television. The Dow is down another 20 points and you are in the tank for $2625, over 10% of your account.

 

You decide to call your broker to close out the trade. Where's your cell phone? That's right, you left it in your bedroom. In full panic mode you rush upstairs, but not before checking the news. Dow down another 10. You're loss is at $3125 and dropping. Upstairs you grab your cell phone and open it. Nothing happens. The battery is dead. You bolt downstairs for the land line.

 

When you get there you reach for the receiver so hard you knock it across the kitchen, breaking it. Fortunately, your phone base has a speaker phone. You press the button and gasp with relief when you hear a dial tone. But you can't recall the broker number. When you wanted to call them before you just looked up the number on the Internet. But its down. Just then your dog trots into the kitchen, sits down and regards you with a strange expression. You turn away from him in embarrassment.

 

After some calls to long distance information finally you get the broker number. But since it is the general number it takes awhile to get ahold of the trading desk. Then you have to use your social security number for them to find your account because you can't remember your futures account number. In the meantime, the Dow drops another 35 points.

 

Finally, you get the broker to close out your trade. You sell YM 29885, 105 points from your entry. On one trade you've lost $4875, 20 times your planned risk and 20% of your trading account.

 

All because you didn't enter a hard stop. (And were unprepared for disaster in just about every other way.)

 

Can't happen? I'll bet something like this happens every day to somebody out there.

 

 

When electronic trading always enter a hard stop and, better yet, always send a stop OSO order along with your trade order to guarantee if your trade is executed your stop will be in place.

 

For that matter alway have a fully charged cell phone with your brokers trading desk on the speed dial. Keep your account number written down and handy.

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Great post GCB.

 

after you get over the mental vs real stop game, the next step is when you make a trade and it starts to go your way but you don't fill on your limit... now it comes back and below your entry. you decide you THINK you have a good trade on your hands, so you push your stop twice as far away as the initial stop. 'I am not getting stopped out on noise on this one,' you say.

 

Flash forward 10 minutes... a well-meaning nice man's voice calls out to you "Order Filled" (its the Tradestation Voice-guy) -- yes, your loss doubled.

 

Use a hard stop --- sometimes you stop out to the tick... but man is this better than the alternative. I have stopped out and heard that voice because some news hit the market and the market has moved so fast that my screen is now 10-20 seconds behind real-time --> trust me, nobody has real-time charts. but my orders were executed to the tick without 1 tick of slippage. had I had a 'mental stop' -- I would have not even SEEN the first 5-10 points of adverse move... then I have to react to that? that sucks. news just hit that Iran did blah blah blah to so-and-so or some Yankee pitcher just flew into a building or the price of tea in China just spiked causing the S&Ps to drop 6.

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If I was on your place Frank I would sell this Idea for a Stephen King movie ¡¡ jejeje... but its absolutely true, not having a stop on the system its like not having a spare tire on your car, you may not need it today, but some day you will need it... also having 2 Internet providers is a good Idea... but still not having hard stops can be very painfull on one of this movies...

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