Continuing the last post follow-through...
If you as a trader believe the trending behavior of what you are trading has good odds of continuing to trend beyond what your original goal or objective or target price-- particularly if you only took a swing trade within that trend but now want to try and stay in that position some how, some way-- most experience traders would be forced to use some form of a trailing stop strategy to protect that original position or what is still left open.
A "trailing stop" is one technique traders will attempt to manage that position. The "Limit your losses and protect your gains" rule is essentially want a trailing stop is all about.
The problem with a trailing stop is there are different ways to employ them. Some will trail a percentage price movement trailing stop, some will use a price movement trailing stop. There are many variables needed to check out to determine which technique could be most useful for the market you are trying to trade. Volatility can determine how aggressively you trail a stop. Your goals and objectives or next target(s) you think the trade can technically trade to is also important to think about. Some times "Time decay " issues or issues of trading resources available for managing that position can affect what kind of a trailing stop you would employ on that trade management. Diversification issues can affect how we might trail a stop. How much time do you have to focus on that trade. There are many issues that can go into what is the best type of trailing stop logic that goes into trading.
One technique I have used with DT Profile when trying to trade beyond a target is keeping a small percentage open from that original swing trade of up to 20 to 30% of the original trade depending on how much time is left in the DT
Timing Box calculation for that trade and how much the DT Profile continues to improve after the original entry.
Here is a previous thread example (
http://forums.dynamictrend.com/showthread.php?t=214) of one kind of way to manage trades beyond targets, or to attempt to carry a portion of a normal swing trade beyond a target when you think it has more trend potential. In this example we are using a manually maintained trailing stop where we are trading a portion of that trade beyond a target using a "pivot point" trailing stop technique. (More details and logic explained in that thread.)
Another trailing stop example is show in this thread (
click here to see this one) where we are using a combination of existing room-size trades at that time and managing that position using a trailing stop combination of the higher trade rooms with the lower entry trade room. We manage the original trade the same way here we do a normal swing trade but what we do is try to keep a 20 to 30% open portion of the original position open and later when we got a proper pullback and new trade entry we re-positioned and traded it again and still keeping the original left over position in longer. We got into that trade on the lower room but used the higher room trade logic once we started to exceed the existing trade parameters. Again, some of the details of that example might give you more insights into how we attempted to use a trailing stop in that example. Mostly in this case we managed the trailing stop by using a combination of the technical chart price movement with the DT Profile combination of trades put onto one chart for tracking.
Within a trailing stop you can attempt to use technical tools such as moving average to trail a stop, a Parabolic calculation can be used by some to trail a stop, we can attempt to cross-reference a trade setup with another time frame chart to manage that trailing stop based on technical considerations like pivot point support/resistance issues, and so forth. We can target the group and sector that stock is a part of and if it continues to be a very strong trend supported by the overall group and sector we might us a more conservative wider trailing stop of say 3 to 5 dollars, where we only move the stop on bigger moves as opposed to using an aggressive trailing stop where we want to lock in a profit no matter what and if the trend quickly drops we have a tighter trailing stop to preserve that profit. We can use combinations of trailing stops where 1/2 a position we trail a very tight trailing stop and the other 1/2 of an existing open position we trail a less aggressive trailing stop to where we are willing to stay in a trade longer and are willing to give up some profits to do so. These are some ideas how trailing stops can be employed with trading in general, with DT Profile trades in particular. Again, you scan scroll through the previous older threads and find other examples of how we might trail a stop outside of the normal DT swing trade concept.
I will try to find some more examples, or use some of the recent/current trades in progress that I posted back in February ideas how we can still stay in some of them despite the fact many have run out of their particular room sized defined trade parameters. All this would require a more skilled trader background, and a technical analysis background to be most effective.
There is a very large thread titled "Interesting Setups to look at today" (
http://forums.dynamictrend.com/showthread.php?t=167) Some show how we combined cross-referenced time frames to use technical analysis support/resistance information with a higher room-sized trade setup such as a PA or PB type room. You'd have to scroll back a ways to find those examples because we haven't had a market the past 5 months that has given us many of these types of setups. We currently have been finding some of these techniques have been working well with downtrending groups/sectors such as financial, housing, retail, etc, types of down trending markets that have been going on since last year. Something like this
BID trade shows a trade where I traded beyond a target. and then scaled in
http://forums.dynamictrend.com/showpost....tcount=299. Here is a
Google example. (original
GOOG)
Anyways, just scroll back in that "Interesting Setups" thread and you should be able to find more examples of how we attempted to trade beyond a target at that time.
If time permits I will try to go through some recent Feb/March examples to see if that can help some more..... and will post here as soon as I can get some free time to do so....
One more example is to look at a contrarian trade I took and posted updates in Goodyear (
click here to see GT example)... If you click on the various links involved in that setup it should show the later new trending action how we tried to keep trading this original entry beyond the original target...
Later GT newer trade setup... This trade is more a technical analysis type of trade where we used more Group Rotation to support it as a more viable idea once the buy rotation shows up in a more meaningful way.
To answer your other part of the question I usually try to stay with the original setting as much as possible for managing that trade, but if later ideas can be combined with the original I will attempt to use them in managing whatever is left over of the original trade that was attempted to stay beyond a target.
To answer that last part, it depends. If you get into a new trade and it does not develop totally as defined in the trading parameter and the time box issues in managing that trade, we might just scratch the trade and move on the a later setup. We have been known to leave a very small portion of that trade opened if there still is time left on the original timing boxes used for that setup. We normally do not take a trade or jump in it after it gets beyond the 1st kickout phase box but we may try to incorporate that trade parameter into a later trade setup, particularly if that setup is very similar and at the same price parameter just now a more complex correction say, for example.
jblanc Wrote:What is your doctrine regarding stops strategy:
Would you trail them or not, especially if it is a longer therm deal?
Once the values have changed for a specific deal and the stops are moved farther away from their original values do you advise to adopt the new value or stick to the old one and what if it is he contrary which boils down to the first question?
Is it correct to consider a deal which has disappeared from the respective profile without having reached neither the stop nor its target as cancelled?