The Daily Market Forecast... move stop?

Wednesday’s Blog Results: The short never triggered and the long was a… problem. Here’s why. The blog arrives around 8AM ET and a whole lot can happen between then and the open. The suggested long was invalid at the open as price dropped well below after the economic news. 

The team had a level that ran for 13.75 points, but price was very spiky all the way, so the gain really depended on how they managed their trailing stop, if any (see chart above).

Quick Tip: Stops… move or not?

You’ve heard both, I’m guessing. I know very successful traders that have opposing views on this subject. It’s no surprise that you heard conflicting advice.

The correct answer is not simple, though. You must take it in context. You need to know their trading style and risk tolerance to truly understand their answer.

Trader A enters momentum moves and adds to her position as price goes in her direction. She trails her stop based on chart features and volatility.

Trader B trades a reversal strategy that anticipates a turning point relatively far away. He understands the spiky nature of his asset and chooses to give it room by not adjusting his stop. He is focused on reaching his target.

Who is correct? Both. For their own style.

What’s correct for you? Now you know it depends on your style and risk tolerance. Which means the answer may vary depending on which strategy you’re trading at the time.

Today’s Best S&P Futures Turning Points (Plenty can change by the open, be aware:

Short Level: Sell 4497.50 stop 4503.25 (same as yesterday).

Long Level: Buy 4399.00 stop 4393.25.

Trade well,

Mike Siewruk

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