Where To Place Stop Orders

The general principle with stops is:" either wide or tight". Anything in the middle gets stopped out. That is why all typical stop methodologies are sub-par (chandelier, parabolic sar, swing stops, support/resistance, asf). Counter intuitive stops, the ones that make one feel uncomfortable, typically are better stop methodologies. The problem however is that stops are very hard to implement and execute. This is especially true for longer time frame trades. Where to place stop orders?

Our quad exit tries to solve this problem. One gets a reward through financing a trade (taking 50% of the position off after initial profits). This allows for a mental relaxed state since now risk is eliminated. One plays with the market’s money from now on. This allows for easier stop placement and execution. You will feel much more comfortable to allow for wider stops (necessary for trade development and taking advantage of possible longer-term trends).

Where to place stop orders, daily chart, silver/US-Dollar 01/22/2020, "stopped out":

Silver in US Dollar, daily chart as of January 22nd, 2020

On the 13th of January we posted in our telegram channel an entry for a long position on Silver. As indicated in our last chart book the aim was to establish a larger time frame long term play, but keeping risk at bay in an expected volatile sideways zone. We were able to take profits the following day to eliminate risk. Counter signals warranted for more partial profit taking on the 20th of January. At this point the stop order was positioned to break even entry levels and shortly after the last part of exposed money got stopped out. This is an example of how an attempt to establish a large time frame positions fails, but failure representing that solid profits are being booked. This allows for further attempts to get positioned while your psychology will support you in these attempts.

Gold/US-Dollar 01/22/2020, daily chart, "gold still in play due to wide stops":

Gold in US Dollar, daily chart as of January 22nd, 2020

The gold position entered at almost the same time shows a similar development with one difference. The final part of the position due to a slightly more bullish tone in the gold market has not been stopped out yet. It might just provide for this opportunity that in addition to shorter term profits the last 25% of exposed capital being attributed to a possibly larger time frame trend with a long-term profit horizon.

Where to place stop orders

When observing masters at work, no matter in what field/profession, the observer is always intimidated with what ease the highly skilled is performing his or her craft. Trading is no different. When stop placement feels cumbersome, it simply means there is rules missing that allow for ease of execution. Mastery in essence is nothing else but having overcome the principle of: "the devil is in the details". Meaning there is more work to be done if there is a lack of ease. Ease stems from having worked out all the kinks. If there is friction, something is just not right. In trading this means there are typically rules missing. Stop placement is not excluded from these principles.

It is this implementation of the quad exit strategy on the daily time frame that allows for longer term positions to be built, to take advantage of monthly and annually time frame trades and trends.

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About the Author: Korbinian Koller

Outstanding abstract reasoning ability and ability to think creatively and originally has led over the last 25 years to extract new principles and a unique way to view the markets resulting in a multitude of various time frame systems, generating high hit rates and outstanding risk reward ratios. Over 20 years of coaching traders with heart & passion, assessing complex situations, troubleshoot and solve problems principle based has led to experience and a professional history of success. Skilled natural teacher and exceptional developer of talent.Avid learner guided by a plan with ability to suppress ego and empower students to share ideas and best practices and to apply principle-based technical/conceptual knowledge to maximize efficiency. 25+ year execution experience (50.000+ trades executed) Trading multiple personal accounts (long and short-and combinations of the two). Amazing market feel complementing mechanical systems discipline for precise and extreme low risk entries while objectively seeing the whole picture. Ability to notice and separate emotional responses from the decision-making process and to stand outside oneself and one’s concerns about images in order to function in terms of larger objectives. Developed exit strategies that compensate both for maximizing profits and psychological ease to allow for continuous flow throughout the whole trading day. In depth knowledge of money management strategies with the experience of multiple 6 sigma events in various markets (futures, stocks, commodities, currencies, bonds) embedded in extreme low risk statistical probability models with smooth equity curves and extensive risk management as well as extensive disaster risk allow for my natural capacity for risk-taking.

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