A Close Shave

Over the years I have employed a variety of stop strategies with varying results. I’ve tried wide stops, narrow stops, multiple and partial stops, lazy stops, intelligent stops based on volatility, etc. After having spent a significant amount of time and effort on trying to find the one perfect stop logic I’ve basically boiled it down to this: There is no perfect stop – period. Getting stopped out is an inherent aspect of trading and you should simply recognize it as a transition point between being in and out of the market. Don’t over think it. After all you can always enter again should market conditions warrant a new campaign.

Let me demonstrate. By all accounts my trailing stop was set pretty well given the current MFE in my bonds campaign. Unfortunately stop runners did a pretty good job sniffing out my position and so it was taken to the woodshed yesterday.

And here’s copper which nearly got stopped out but survived by a few ticks – a pretty close shave! Did I do anything differently here? Well, for one I had a better spike low to work with but I would mostly ascribe it to plain old dumb luck. And clearly we’re not out of the woods just yet.

Alright the EUR/USD is looking a bit weak here but I’m going to take a very small long position (i.e. 0.25R) with a stop below 1.11385. I would love to see this one crash and burn but odds have it thus far that this one continues higher.

The AUD/USD is another long for me with again only a small 0.25R position size. My stop here will need to be below the recent spike low, e.g. < 0.742. If you can catch this one a bit lower then good for you – I’ve tried but it seems to be eager to rip higher.

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That’s the beer I was enjoying in ample quantities when I was in Corinthia last week, which is in the South of Austria. Great stuff and I wish I could find some of that here in VLC.

Prost!