Small but significant issue here and one that I'm 100% certain faces every member on this board.
I have a rule that creates a lay bet with an offset bet which stops out after a certain number of downward ticks (for the sake of argument, say 10-12 ticks). It all works great and it will happily be trending away on a slow upward trajectory (thus fulfilling my plan). However, in many instances, the market will go into a huge oscillation and run thro my stop loss and then swiftly head back up to its original trend pattern.
This is extremely frustrating as the intention is still intact but the stop-loss has been triggered by this chaotic churn and thus a profitable trade has been reduced to a loss. How does one maintain best practice (by keeping a sensible stop-loss), whilst at the same time avoiding the market shenanigans that claw every corner in order to trigger punters stop losses (I'm certain this is in part a ploy by bigger players).
In short, how do I protect against temporary churn but at the same time, keep my stop loss in place without sacrificing my intended staking plan.
Market Chaos and churn
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marksmeets302
- Posts: 527
- Joined: Thu Dec 10, 2009 4:37 pm
You could use "mental" stops, where you don't pass your stop to betangel but instead watch if your stop is violated for an x amount of time.
I don't agree with your view that big players run stops, but have no evidence to back this up. Maybe some of the bigger players here can confirm or deny.
I don't agree with your view that big players run stops, but have no evidence to back this up. Maybe some of the bigger players here can confirm or deny.
mark - I can't substantiate my theory, but am certain that it exists to an extent. I like your time based approach and it would be *nice* to be able to reliably use this (I guess historic relative odds) and STILL trigger it on the cusp of the mechanical stop loss trigger that would have been placed normally in the market. The only obstacle to this plan is that my stop loss isn't cash based (i.e. it varies from trade to trade) and thus the offset bet takes this into account at the time of placement. If I could grok what the bet was placed at, then maybe I could work it in a slightly different way. interesting tho...marksmeets302 wrote:You could use "mental" stops, where you don't pass your stop to betangel but instead watch if your stop is violated for an x amount of time.
I don't agree with your view that big players run stops, but have no evidence to back this up. Maybe some of the bigger players here can confirm or deny.
I don't use arbitrary stop values. They tend to decrease your strike rate. I accidentally once switch off a stop loss on a strategy and improved it!marksmeets302 wrote:I don't agree with your view that big players run stops, but have no evidence to back this up. Maybe some of the bigger players here can confirm or deny.
https://www.youtube.com/watch?v=D_XG61V1UXk
I think this is where I'm arriving at alas - i.e. the notion that a stop loss (as a hard baked feature) can limit your gains and indeed propagate losses that were artificially present for a FLEETING MOMENT. What you've just said really illuminates a corner that was always lurking i.e :
Thanks
I'm gonna nuance that thinking and see where it takes things..Euler wrote:Really trading is all about balancing out your profits and losses rather than limiting either. Though some strategies do limit losses by default.
Thanks