raviram80
30 posts
msg #89949
- Ignore raviram80 |
3/19/2010 3:06:45 PM
Hi All,
I just wanted to know what do you guys use as Entry point and Exit point for stocks based on last day's price?
I mean how far above the open or top of last day's stock should one use for entry point by setting stop limit?
Thanks
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Kevin_in_GA
4,599 posts
msg #89954
- Ignore Kevin_in_GA |
3/19/2010 4:28:40 PM
I just finished reading a very good chapter on how to set stop losses (from "High Probability Trading" by Marcellus Link).
He suggests that you place a stop at 2 standard deviations from the current price (he uses a 10 day look back to set this). Basically it is the same as setting your stop at the lower Bollinger Band (10,2).
Here's an example: let's say that today at the open you thought that AAPL was going to make a good move (it didn't). The open price was 224.79. You would put your stop at 2 sd from the MA(10), which means that the chance of it being hit is only 5%. For today the LBB value was 219.92 - only about a 2.2% stop, but it is statistically positioned such that if the trade does not go as planned, you are out with only a minor loss. Today AAPL closed at 222.25, down 1.07%. If the trend continues, you would want to be out without too much loss.
If the stock moves up as you had planned, then you can reset the stop at the bottom of the BB(10,2) periodically and continue to ride the trend.
Kevin
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miketranz
962 posts
msg #89957
- Ignore miketranz |
3/19/2010 5:01:50 PM
It could depend on what time frame your trading.Are you looking for a quick scalp,a swing trade,long term trade? Different time frames,different methods....
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raviram80
30 posts
msg #89962
- Ignore raviram80 |
3/19/2010 6:27:06 PM
Thanks Kevin for the suggestion.
It will not be daytrading. I have a day job so will want to make sure how I can avoid major downsides if I am unable to look at the stock in the day.
So it would be kind of swing trade i guess
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Kevin_in_GA
4,599 posts
msg #89965
- Ignore Kevin_in_GA |
3/19/2010 7:06:37 PM
Then this type of stop loss may be worth considering.
I have tried others with limited success, and my biggest mistake has been to ignore them, them get caught in a big bad move against me and panic.
I will be setting this type of stop loss with each trade going forward.
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miketranz
962 posts
msg #89966
- Ignore miketranz |
3/19/2010 8:42:16 PM
If your entry is based on the previous days price,enter .10 above the previous days high,place a stop loss .10 under the previous days high.That way you'll be buying in the "right direction".If the stock falls back below your entry,and you get stopped out,the stocks heading in the "wrong direction".Most people loss money staying in stocks that are not "moving in their favor".On exits,you take what the market gives.The easiest thing to do is enter a trade.The hardest thing to do is exit it.Very simple methods that will keep you from getting into trouble....
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raviram80
30 posts
msg #89967
- Ignore raviram80 |
3/19/2010 8:52:29 PM
Thanks Mike for your input.
What you mean is 10% above the high price of the last day could be the entry, just confused when you said 0.10
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miketranz
962 posts
msg #89968
- Ignore miketranz |
3/19/2010 9:03:02 PM
.10 meaning ten cents or a tenth of a point.....
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taylorsk
106 posts
msg #90003
- Ignore taylorsk |
3/20/2010 11:19:43 AM
HI miketranz,
I was trying to backtest a filter where your entry would be .1 above the prior day high.
The problem is, if that price is not met the backtest uses the open...
Even if I select the box that indicats if the price is not met do not use enter on the following day.
Thoughts?
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miketranz
962 posts
msg #90012
- Ignore miketranz |
3/20/2010 1:58:41 PM
Hi,I never used back test criteria for this method of trade entry,only my own market experience.If a trade does not trigger into the buy zone that day,you could always wait till the next day to enter,if the stocks still acting right.But my best entry method is buying right on the close,stocks with high momentum,or those with known gap up tendencies.You get the best odds of a gap open if you're in the right stocks.Not a bad way to open a position.It sure beats random entry.....
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