Chimp`s Universal Stop System

[walterw 10]

On this thread I explain my universal stop system...

 

Why universal ? because whatever type of aproach or setup I use this stop system still its valid... so when I design a new x setup, I dont need to design a new stop system as I always use this very same system wich I find it very reliable...

 

Basicly when you take a trade, you have an argument for wich you took the trade... so a stop for me is the absence of that original argument that got me into the trade...

 

I do believe in price action... and price action has to be measured in the relationship between moves and pivots...

 

Pivots swings are key "events" on any price action reading...

 

When I open a position, I normally do it on an inflection point (pivot).. so the inmediat pivot where I took my position is KEY for me... a swing of that pivot against me will normally invalidate my argument for wich I took the position... so that makes a stop...

 

 

 

So basicly my stop will normally be some pips/ticks below the pivot where I took the trade... very simple... very Tight too, for a nice RRR...

 

So this describes how the chimp gets stopped... cheers Walter.

[Soultrader 12]

Very interesting Walter. I have begun to use mental stops only and use an extremely tight stop. I dont place them below a pivot or use a fixed stop anymore but just react to what the markets is telling me. (mainly tape) If I go long and the market does not move, I dont care to wait but quick to break even or take a 1-2 tick loss. I expect minimal heat per entry for my trades. I am definitely becoming more of a scalper while at the same time position trading some automated strategies.

 

One of the biggest lessons I learned this year was my reaction to stops. This may be affecting some of you traders here, but ever get in a trade and the trade doesnt feel right? You have a sick feeling but yet you tend to hold on because it has not hit your stop yet. On how many occasions does it come back to stop you out?　I have learned to reposition my trades if I do not feel right without waiting for price to stop me out. It appears that I am switching my mind constantly but I am actually trying to get a feel of market direction to position myself for a move. I may take a 1 tick loss 2-3 times in a row but once Im confident on the right side, I look for 10 tick moves so more than makes up for the losses.

 

I have also started to double up or average down. If I sense market direction is down but my short timing was off, I may take some heat but reshort my initial position size. So instead of my mental stop getting hit, I will grab another short. Then take that short for a target where my first entry was. Hence, a trade that would of been a loss becomes a win and a break even for the first position. I do not recommend this for the newer traders, as you will likely double your losses. But the key here is to know when your initial market analysis in terms of direction is correct, but your entry timing was off.

[walterw 10]

Interesting Soul... on scalping some times this unresponsivness is a reason to get out... still I am more inclined to stay in while my pivot is intact...

 

for me price action is king ¡¡ and pivots give us a great information on that..

 

I add here a video on this... and let me publicly say thanks James for this great functionality off being able to upload Videos ¡¡ makes the interaction process much richer ¡¡ cheers Walter.

Chimp Universal Stop System.swf

[cattus 10]

Hi Walter and Soultrader.

 

Walter, the method you use to place the S/L is very logical and simple. I guess the few pips above/under the pivot that you use to place the S/L are 1 or 2 pips more than the spred cost, is it not thus?

 

It is to say, for example, if the argument is to entry with an up trade and the pivot mark is of 1.2000 and the spread of the pair is of 2 pips, then, you sum 1 or 2 pips to the pivot, in order to prevent a double or triple bottom, then the S/L would be in 1.1997 or 1.9996. Or at least, following your method I would do on this way.

 

The comments of Soultrader are very interesting, thanks for those inputs.

 

Greetings.

 

cattus

[walterw 10]

Hi Walter and Soultrader.

 

Walter, the method you use to place the S/L is very logical and simple. I guess the few pips above/under the pivot that you use to place the S/L are 1 or 2 pips more than the spred cost, is it not thus?

 

It is to say, for example, if the argument is to entry with an up trade and the pivot mark is of 1.2000 and the spread of the pair is of 2 pips, then, you sum 1 or 2 pips to the pivot, in order to prevent a double or triple bottom, then the S/L would be in 1.1997 or 1.9996. Or at least, following your method I would do on this way.

 

The comments of Soultrader are very interesting, thanks for those inputs.

 

Greetings.

 

cattus

 

It will depend on the pair, but basicly 2 or 3 pips below/above the pivot will make it... cheers Walter.

[cattus 10]

Yes, Walter. It depend of the pair we are trading.

 

This year I experimented with the S/L, using ATR, fractals, moving averages, a variation like describes Soultrader (the best one than I used), and other very bad methods to place the s/l. And since the middle of this year to now, I am convinced that the best is to give the smaller number of pips in the case of if we propound in wrong way the trade (wrong argument), recognize this, wait for a better point to entry on the same way, or finally, switch the mind from bull to bear or viceversa.

 

Anyone of the strategies of S/L that you and Solutrader described here it is an excellent method in order to use like last defense (well, I guess that the first method of defense is to have a good argument to entry with a trade).

 

Yours methods to place the s/l confirm to me what I was thinking about the best way to manage s/l...

 

Thanks.

 

cattus

[walterw 10]

Yes Agustin... I believe that taking stops from price action criteria is the most easy way and at the same time best RRR... take care man... cheers Walter.

[Nick1984 10]

James thats a really aggressive way to be playing your stops. Have you got any data to show you how effective it has been over say a three month period?

 

I do like however the way you will average out and reshort. That is another very aggressive play and definately not for a newbie (I wouldn't do it yet lol). It's very similar to the video in the trading with market statistics posts, though can't remember which one it is :S

[Richard III 10]

Walter,

 

I like your approach, clean and simple. How do you determine the number of pips to use. Keeping in mind that MT holds a minimum stop of 2X the spread or in the case of a trailing stop a minimum of 15 pips. It seems the down side risk is ordained by the trading gods.

 

With a good argument 5 pips stop below the swing plus the amount of pips in the three bars following the swing then the spread added in at entry would make a desent RRR difficult to obtain when scalping.

 

What do you think?

Richard:confused:

[PYenner 10]

The markets have lacked confidence for much of the year.

It has lead me to look for shorter quicker trades with less drawdown.

These days I tend to scalp out before "that sick feeling" sets in.

Currently prefer a quick stop and wait rather than risk "double sickness" in a "less secure" market but it depends on the day.

[walterw 10]

Walter,

 

I like your approach, clean and simple. How do you determine the number of pips to use. Keeping in mind that MT holds a minimum stop of 2X the spread or in the case of a trailing stop a minimum of 15 pips. It seems the down side risk is ordained by the trading gods.

 

With a good argument 5 pips stop below the swing plus the amount of pips in the three bars following the swing then the spread added in at entry would make a desent RRR difficult to obtain when scalping.

 

What do you think?

Richard:confused:

 

 

HI Richard... and once again welcome aboard ¡¡

 

Here we have a topic called "forex broker type"... I learned here on TL when I started to look into forex that there are "Forex Bucketshops" and there are "Forex ECN`s"... wich is very diferent the impact on your trading, from what you mention in terms of wide spreads and some non conveniant non-tight numbers...

 

So far I am experimenting with a ecn type broker at efx... very competitive spreads and costs as well...

 

Bruce (Pyenner) just mentioned his scalping tendencies and taking small risk... I am also on a very similar situation... tight stops... with the right broker you may want to consider a max 3 pips below your pivot...

 

If you will trade larger timeframes like sundowner is doing, you can have a little more tolerance, maybe up to 6 pips below the pivot, but we must understand he is also working with much larger targets...

 

hope this brings some answers... cheers Walter.

[Richard III 10]

Thank you ,Walter. I will look into EFX.

Regards,

Richard