Time Based Stops

[GammaJammer 10]

Interested in who uses time based stops as part of their money management discipline (seems the logical place to incorporate it as there is of course an opportunity cost of tying your funds up assuming you have some constraints on your risk budget)

 

GJ

[wasp 10]

Interesting idea but not one I could implement. I prefer to trade on action pip by pip so wouldn't know where and why I would do it.

 

Do you mean because you would want to free up equity for other positions or place them due to news releases or............?

[GammaJammer 10]

Just meaning that most people have a finite monetary resource pool (even at bigger shops, but especially on the retail side). Plus sometimes imho the mere fact that the trade hasn't gone your way quickly can, depending on your reasons for the position, invalidate your reasons for being in it in the first place.

 

I've sometimes used them to good effect, and sometimes I've taken myself out of possies only to be proved right a bit later, so just wondering if other people here have thoughts on them.

 

edit: of course, when I say 'quickly gone your way' it is of course all relative. I'm not talking minutes here necessarily.

Edited May 15, 2008 by GammaJammer
added extra comment

[Sledge 13]

I cannot for the life of me remember where I read it, but I once read this blurb about a guy (pre-computers) that used to look at the tape, get into a position and literally use an hourglass of some size. When the hourglass ran out, he closed out- win, lose or draw. Apparently, he was quite successful at it. Not sure I would attempt such a thing personally. The blurb never went into detail about what he saw on the tape that made him enter a postion or how BIG or SMALL the hourglass was- which would make a large difference, no doubt

Sledge

[Guest forsearch]

You know, Sledge, I recall the same thing.

 

I just can't recall who it was or the context.

 

-fs

[Kiwi 16]

Interesting post sledge.

 

I use them two ways. If I'm in a trade too long I start looking to clear out simply because I shouldn't still be there (my trades all have targets). I watch the price bars and if I get two swings in the direction of my trade and its still not happening I tighten up the stops or exit. I see the second one as a sort of structural time stop.

[torero 10]

If I'm in a trade and the pending news is coming up, I usually time it to exit wherever it may stand. I have no hard rule on how much time up until the schedule news release. That part would depend on the price action, how much size I have and of course, how much or win/loss I'm incurring.

[Sledge 13]

If I'm in a trade and the pending news is coming up, I usually time it to exit wherever it may stand. I have no hard rule on how much time up until the schedule news release. That part would depend on the price action, how much size I have and of course, how much or win/loss I'm incurring.

 

AMEN brother!

 

This is just my (and apparently Torero's trading style) some folks may say "Screw the news, let it whip and dip- it won't change the long term trend) They are correct. Alot of times I ride the news, other times, I bank $ It depends on the situation. If the news is arriving at a S&R level- DEFINATELY bank $, if the news is between one major S&R Zone and another- I let it ride!

 

If you are up $1000 bucks and the news is coming out right at an S&R level- BANG, Bank that Money and wait for amateur hour to be over- then re-assess and begin again! You may be able to get in again even lower on a long term bull trend and take that gap that it slapped down up higher. So in essence you are making $ on a section of the road you already travelled and are getting paid TWICE! Or you can watch it unfold, see that it is a trap, sell high and ride the short trade!

 

The news is the best time at an S&R level to trap the would be background trend traders into further positions- just before they turn the ship around and take your money!

 

Sledge

[manojjonam10 10]

I am interested in time based stops however I never got an opportunity for it. Most of my working discipline comes under action to action management where time based stops are less used.

[BlowFish 10]

If a trade dosen't go my way within a 'reasonable' amount of time I stop it out. Usually that is the cue for it to take off! I should really define 'reasonable' in my plan (hell 3-5 bars would do) but as it is now its pretty much a feeling (so emotional) thing.