How good are your stops?

Fact: most traders need good stops, but calculation of stops is poorly addressed in the trading literature.

Objective: stops need to be wide enough to let a trade “breathe” but not so wide as to allow excessive losses.

Sounds easy - but to the left of the chart, price volatility is low, while to the right, high; ideal breathing-space will vary over time.

Three vital components in good stop design are:

• a fast filtered line (central green line) from which to build them;
• a measure of local price volatility to assess breathing-space needed;
• a trader’s preferred width multiplier for local price volatility, with the result used to build or hang the stop from the (green) line.

The chart shows stops as if a position were entered on each bar; but LEAPFROG can ratchet them into trail stops to deliver details of new stop orders.

Stops that make market sense, with the information you need to update them, to avoid taking risky trades in highly volatile markets.

Need to know more?

Let LEAPFROG become the wind beneath your trading wings.

Read more about LEAPFROG

Contact Us