Forum Archive Index - May 2002

[Phaedrus <Phaedrus@techemail.com>]

Jeffley,
        My house rule regarding stoploss levels is to set my stoploss just 
below the level of the nearest support. In this instance that was 274, and I 
got flicked out. Had it been set just below the NEXT support level (269) that 
would not have happened. Of course this was only apparent with hindsight. At 
this point I could decide that I am setting my stops too tightly, and change my 
rules, or (rather more likely) I could decide that my stop was quite logically 
positioned, and that I will not therefore change my approach. 
 The bottom line here is this. Whether I had set a lower stoploss that was not 
hit, or got flicked out by a higher one, and then got back in - my financial 
situation here is essentially the same. 
 Since about 40% of my trades result in my stoploss being hit, I like to keep 
them tight. I have NO big losses. None. The overall aim here is to have a good 
Average Win/Average Loss ratio. I can't really control the size of my wins - I 
can only take what the market will give me. But I CAN control the size of my 
losses. If you can win more often than you lose, and if your average win is 
bigger than your average loss, you are ahead of the game.
 The more times that a support/resistance level is respected, the more 
significant it becomes. The longer the time period since any particular level 
was respected, the less relevant it is. There is no fixed "use by" date!

       Regards,
                 Phaedrus.

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