YM stops based on pivots

[Freddie 10]

Hi,

 

I trade YM on 5 minute timeframe and have found that when I enter trades and look to place my stop below the recent pivot low for longs that it is in the 30 - 40 YM points away from my entry. This I find to be too large. This may all be a function of my entry signal but was just wondering what most people use as a normal stop loss range in points on their entry for 5 minute or other timeframes.

 

I may switcht to a lower timeframe if that means smaller risk on entry.

 

I would really appreciate any comments.

 

thx,

 

Freddie

[brownsfan019 17]

A few things Freddie -

 

1) A lower timeframe should result in smaller stops.

2) A lower timeframe could also result in more fakeouts and more stopouts, albeit smaller.

 

I personally base my stop on the pattern/condition being traded. I don't use fixed stops.

 

In order to max your stops smaller, you'll want to consider a lower timeframe or improving your entry.

[Freddie 10]

Brownsfan,

 

Not using fixed stops but placing them below pivot lows for longs and above pivot highs for shorts. Yes, entry could be improved as I'm waiting for confirmation which may be causing me to enter a bit too late.

 

thx,

[MC 10]

  Freddie said:

Hi,

 

I trade YM on 5 minute timeframe and have found that when I enter trades and look to place my stop below the recent pivot low for longs that it is in the 30 - 40 YM points away from my entry. This I find to be too large. This may all be a function of my entry signal but was just wondering what most people use as a normal stop loss range in points on their entry for 5 minute or other timeframes.

 

I may switcht to a lower timeframe if that means smaller risk on entry.

 

I would really appreciate any comments.

 

thx,

 

Freddie

 

For the YM I like 3 minute and 144 tick charts depending on the signal.

Check those out and see if it improves or impairs the quality of your signal.

My guess is it will improve entry and exit as well.

[brownsfan019 17]

  Freddie said:

Brownsfan,

 

Not using fixed stops but placing them below pivot lows for longs and above pivot highs for shorts. Yes, entry could be improved as I'm waiting for confirmation which may be causing me to enter a bit too late.

 

thx,

 

If the stops are fixed, which they are here (fixed on the pivot level), then your entry is the only thing that can change. That's it. Your stop level is predetermined based on the pivot, even though the size of the stop may fluctuate, so the only change that can be done is to improve entries.

 

Since you said the stop size is too large for your liking, that would tell me you are waiting to ensure the pivot level holds before entering the trade, which makes perfect sense. If you want that additional confirmation that the pivot will hold, then you will have to risk more to keep your stop above/below that pivot. If your entry was much closer to the pivot, then your stop will be that much smaller. Of course, with that will come more fakeouts.

 

So the question you must ask yourself is - I am better suited taking multiple trades with multiple small stops or less trades, but larger stops?

 

That's all I see at least.

[MC 10]

  brownsfan019 said:

So the question you must ask yourself is - I am better suited taking multiple trades with multiple small stops or less trades, but larger stops?

 

That's all I see at least.

 

I am asking myself that same question...25 point YM stop or 2-10 point stops might get the job done as well?

 

I'm 10 trades in live on futures and new to daytrading so I'm still seeking that balance for my mind. Not like anyone said being a rookie is fun though. :o

[Freddie 10]

  brownsfan019 said:

If the stops are fixed, which they are here (fixed on the pivot level), then your entry is the only thing that can change. That's it. Your stop level is predetermined based on the pivot, even though the size of the stop may fluctuate, so the only change that can be done is to improve entries.

 

Since you said the stop size is too large for your liking, that would tell me you are waiting to ensure the pivot level holds before entering the trade, which makes perfect sense. If you want that additional confirmation that the pivot will hold, then you will have to risk more to keep your stop above/below that pivot. If your entry was much closer to the pivot, then your stop will be that much smaller. Of course, with that will come more fakeouts.

 

So the question you must ask yourself is - I am better suited taking multiple trades with multiple small stops or less trades, but larger stops?

 

That's all I see at least.

 

 

Ahhh! Gotcha now. I thought you were talking about a fixed point stop of say 20 points from entry. Good ideas for me to think about. Thanks.

[Bam-Bam 10]

Freddie:

 

Stops are a frustrating yet necessary part of trading. I posted a question about a week ago on this forum. A number of seasoned members gave some excellent input. If you watch the CBOT webinar recommended by ranj, you'll hopefully develop a better approach to stops. Also, start tracking how far against you the price moves. My stops tend to be triggered at the very extremes of moves against me.

 

Here's the link to the Q&A:

 

http://www.traderslaboratory.com/forums/f30/help-with-stops-2724.html

 

(it doesn't look like it hyperlinked, so you'll have to copy-paste into your address bar).

 

If you're having trouble with YM and not afraid of big ticks, consider ES. For me, the order flow is much easier to read. YM tends to have a lot more fake-outs and shake-outs. That means a lot more busted trades for me. ES just has enormous volume that ramps one way or another once it starts going.

 

Best 'o' luck,

 

Bam-Bam

 

* Not a newbie, I just trade like one.

[brownsfan019 17]

  Bam-Bam said:

If you're having trouble with YM and not afraid of big ticks, consider ES. For me, the order flow is much easier to read. YM tends to have a lot more fake-outs and shake-outs. That means a lot more busted trades for me. ES just has enormous volume that ramps one way or another once it starts going.

 

Good point Bam. I think too many are afraid of the ES b/c the pro's are there. But as you pointed out, that volume can be a good thing if it suits your style of trading. Like you, the amount of fakeouts is much lower there for me as well.