Stoploss and co -simple formulae

rvlv · #1 17th August 2006, 06:44 PM

Three rules to calculate=critical-very very

-----------------------------------------

Three rules to calculate and follow in a plan to swing trade are

1. Initial stoploss, and its cousin Breakeven stoploss
2. Trailing stop,
3. Price target for gainful situation
===================
1.Part-A
Initial CRITICAL stoploss=2% below entry price
Entry 260, say then
Initial stoploss=260 minus 2%=254.8
Part-B
BreakEvenstoploss= Entry price + brokerage (for buy and sell )
If you dont want loss at all, as soon as price moves above entry price,activate BESL

Precaution: Dont keep initial stop as it is.
Move initial stoploss for more gain-less loss,as price moves up.

2. Trailing stoploss= 20DMA-ATR(20)-1
If price rising, then for 20dma=230,ATR=12.4,
trailing stop=216.6

3. PRICE TARGET
MAXIMUM (GAIN )PRICE TO SELL= 5*ATR(20)+20 DMA
IF ATR=12.4, 20DMA=230, then price to sell for highest gain=62+230=292

ATR(20)= AVERAGE TRUE RANGE OVER 20 DAY PERIOD

WHERE TO GET ATR?
use LINK
www.icharts.in

sens_c · #2 4th June 2007, 01:40 AM

Dear Sir,
I have been following these rules for a few weeks now. I have the following doubts -

1. The ATR changes everyday. Should I use the latest ATR for computing Trailing Stop Losses for every day I am in position, or should I use the figure prevailing on entry Date?

2. Should the stop loss be triggered automatically, or should I take manual action based on previous days EOD figures?
-Case in point -
I had a good position in HT Media. I normally put all my stoploss orders ten minutes before market opens (I am using ODIN). This was the situation on this particular day -
Close (27-Apr-07) - 172.60 - Stop Loss for next Day = 169 (~2%)
28-Apr-2007 Open -169, Close -190.65, High -194, Low -169

The Open price was lowest and it went back to the level of ~ 174.00 immediately after opening. However, my position got cut due to the stop loss trigger.

I understand that this is a one off case. But what I was wondering if the following will be a better strategy -
Everyday, I notedown my various stop loss, trailing and targets. After the trading day is over, i.e. closing prices eceived, I check out which of my positions have crossed these levels. And then I sqaue off my positions the next day at opening.
This will be little more risky than what has been suggested by you, but this might be freindlier to the saying - "Cut your losses and let your prfits run!".

Please express your opinion on this. I am truly confused.
Thanks a lot in advance (1. for posting the rules in teh first place, 2. for reading this blah blah!0

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