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Today’s Best S&P Futures Turning Points: Nothing tradeable today.
Friday’s results: This strategy is on hold.
The World Index: (+100/-100) rises from -43 to +21 in a world of mixed sentiment and low volatility.
Catalysts: Dallas MFG Index @ 10:30. Fed’s Daly @ 14:00.
Quick Tip: Optimal Stops
Limiting losses is critical for success in trading. Stop Loss orders are one important part of your risk management plan.
Where to place your Stop Loss is a personal matter. One common and sensible place is at the price your trade is proven wrong.
Here’s how to optimize your Stop Loss placement: Log the MAE (Maximum Adverse Excursion) for every trade setup, whether you took the trade or not. MAE is simply how far against your entry it went before stopping out or hitting your first profit target.
Obviously, the largest MAE you’ll have is the stop itself. But on all those winning and breakeven trades there is a number it went against but didn’t reach the stop. This is important data. Keep it updated for every trade from now on.
Now you can determine what percentage of the time your trades stop out but more importantly how often they move against your entry and how far.
Here’s an example. In one strategy we trade the data shows that 93% of all trades don’t go beyond 5.75 points MAE. More importantly the 7% of trades that did were net losers as a group. Good to know!
If you’re interested in swing or position trading stocks and/or options, you should watch this training session I recorded recently. I demonstrated two leading indicators of stock price that are unique enough to get you a solid edge. Click here.
Trade Fearlessly,
Mike Siewruk
P.S. Feel free to pass this along to your trading buddies. Share in the wealth!
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