January 3, 2008
Arbitrary But Consistent (ABC) Stop Management (Part II)
Following up on the original Arbitrary But Consistent (ABC) Stop Management post, we can see that the IWO short has now fallen to 3x the initial risk amount and another “down” bar has formed on the daily. I suggest moving the stop to above the high of this down bar at 84.05.
Assuming you risked $500 on this trade, you’d now be sitting on about $1500 of paper gains, and would have locked in around $750 of that gain using this new stop level. Of course you are free to apply a sophisticated, scientific, and rigorously-tested stop method instead. :-)
Cat: | Time: 11:12 am (utc+8)
March 7th, 2008 at 11:16 am
Why is the bar with a high of 84.23 a “down” bar? Its high is higher than the high of the previous bar. Its low is lower than the low of the previous bar.
Your definition in the previous post: a down bar is a bar that makes an *equal or lower high* and *a lower low* than the previous bar.
Also, if the trade is long, does that mean we should be using “up” bars?
March 7th, 2008 at 11:39 am
meh: Look closely. This is an intraday 15-minute chart. The daily bar that has 84.23 as the high is one that makes an equal or lower high and a lower low, i.e. a down bar.
Yes, for long trades the logic is reversed and you trail below up bars.
March 7th, 2008 at 11:45 am
Sorry I must be misunderstanding something.
“The daily bar that has 84.23 as the high is one that makes and equal or lower high and a lower low”
Lower high than which bar? Lower low than which bar?
What is meant by “previous” bar? I am looking at the same chart above, and is the bar just before the bar with high if 84.23 the “previous bar”?
March 7th, 2008 at 11:56 am
meh: You are confused by the intraday chart … the chart above is composed of *15 minute bars* … you will have to stretch your mind to compress it into a daily bar OR you can look at the daily chart at Yahoo or whatever charting service you use.