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Hi everyone,
Either I am a dolt, or I am misunderstanding the use of stops. In MS v10, for example, I set a trailing stop at 10 percent, no floor. This stop invariably closes out my trade the same day it is opened. It makes for great successs since it closes out on the high. So I bumped it up to 40% and I get the same result. If I move the floor to 3 days, it merely waits 3 days and then closes it out. What am I doing wrong?
I think maybe I am either using too small of a trade size ( $5000 entry) or maybe another setting is off (Like I ignore all interest rates and use $10 commissions)
A tutorial on usning stops would be an excellent resource for me, if you know of one..
Blue.
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Blue
The "Trailing" stop in the Enhanced System Tester is actually a "Trailing Profit" stop. It stops you out when you give up the set percentage of PROFIT (a percentage of profits plus trade capital). If you want a genuine percentage trailing stop then you must code it as an indicator or include in the system code. Sorrry to be the bearer of bad news.
Roy
MetaStock Tips & Tools
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Rank: Advanced Member
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Oops. Meant to say "(NOT a percentage of profits plus trade capital, as one might expect)".
Roy
MetaStock Tips & Tools
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Forgive me if I seem naive or uninformed here, but isn't that a useless stop? So what you are saying is that, by example, if I buy $10,000 of XYZ ( let's say it's $50/share) and I set a 25% trailing stop, and it moves down , I'll get stopped out immediately and automatically. If it moves up $1, I'll get stopped out almost as fast because it only needs to fall back to +.75 ( 25% off it's high of $1), which almost always happens. In other words, say a stock makes a 2% gain one day, you are saying that a 25% trailing stop will stop you out on a move of .005 (25%*2%=.005), which on a $50 stock is a 25 cent move lower. This whole secenario is amplified with a cheaper stock, assuming the same %2 gain, a $10 stock would only need to move a nickle to get stopped out. Am I on the right track here? Maybe there is a use that escapes me. Even setting an %80 percent stop would stop me out with a 16 cent move. Trading a stock like SIRI would bankrupt you, getting stopped out every penny.. LOL...
Anyway, seems like a tool I won't use.. So does the formula section have any code for trailing stops that include capital? I'll run over and check.. I am just OK, with the hhvsumllvrefcummovccitrixwill jargon.. Thanks for the advice..
Blue
Eited to add: I almost forgot about the $10 commission!! A trailing stop would never work if you set the commission to anything other than 0, or trade a stock like GOOG or BRK.A!
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Rank: Member
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Joined: 9/22/2006(UTC)
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Blue Eyes:
Here's a bit of code for a trailing stop that I have found useful:
F1:=0.80*Close;
If(F1>=PREV AND LOW>PREV,
F1,
If(Ref(LOW,-1)<Ref(PREV,-1),
Ref(F1,-1),
PREV))
F1 is the function for the trailing stop ... in this case a 20% trailing stop.
If the low of the current bar is above the previous day's stop, and the stop calculated for the current bar is greater than or equal to the stop calculated for the previous bar, the new stop value is used. This has the effect of always raising the stop until it is hit.
However, if the stop is hit, the stop is reset to the lower F1 value on the next bar.
It's hard for me to describe this verbally ... it's easier to understand if you just plug this in on a chart and see how it works.
Shave
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Thanks for the code Shave, sorry it took so long to respond, I just got back from El Salvador. I guess I just didn't expect to have to write the code for that stop. It is just unfathomable to me that the proft stop, trailing stop, mx loss stop that is hardcoded in MS would be each bar. Not very practical for an EOD user.. But I do appreciate the tip!!!!
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