1/ Timed stops are a special kind of stop loss I use in day trading. I learned it in #forex, but it works equally well in #crypto.
The concept is simple. If your trade doesn't hit X% in X hours, you close the trade.
Sounds arbitrary? It isn't. Here is why.
The concept is simple. If your trade doesn't hit X% in X hours, you close the trade.
Sounds arbitrary? It isn't. Here is why.
2/ -- TIME & LOSSES --
You will need to track your trades methodically in order to calculate a timed stop.
If you do, you should analyse your past trades to see if you find a pattern between run time and losses.
There are a few things worth calculating.
You will need to track your trades methodically in order to calculate a timed stop.
If you do, you should analyse your past trades to see if you find a pattern between run time and losses.
There are a few things worth calculating.
3/ -- TIME & LOSSES cont --
How long on average are your wins open for, and how long on average your losses open for.
Traders often find that on average, wins are quicker than losses.
If so, you can calculate the tipping point at which a trade is most likely to be a loser.
How long on average are your wins open for, and how long on average your losses open for.
Traders often find that on average, wins are quicker than losses.
If so, you can calculate the tipping point at which a trade is most likely to be a loser.
4/ -- TIPPING POINT --
The tipping point is a point at which a trade is most likely to lose.
For example, you might find that if a trade is open longer than 5 hours without hitting target it is more likely to hit your stop
There are always some outliers but averages matter.
The tipping point is a point at which a trade is most likely to lose.
For example, you might find that if a trade is open longer than 5 hours without hitting target it is more likely to hit your stop
There are always some outliers but averages matter.
5/ -- TIPPING POINT cont --
If over the course of 100 trades, trades that run longer than 5 hours have a 70% chance if being losers, it makes sense to set a timed stop at 5 hours.
This 5 hour number might not apply to you. For you, it might me 1 hour or 100 hours.
If over the course of 100 trades, trades that run longer than 5 hours have a 70% chance if being losers, it makes sense to set a timed stop at 5 hours.
This 5 hour number might not apply to you. For you, it might me 1 hour or 100 hours.
6/ -- TIPPING POINT cont --
You need to calculate the tipping point based on your own data.
This is not arbitrary or a guessing game. You need to look at your actual trades to see if you can find a tipping point.
You need to calculate the tipping point based on your own data.
This is not arbitrary or a guessing game. You need to look at your actual trades to see if you can find a tipping point.
7/ -- GOING DEEP --
You can go even deeper in your data analysis and try to find patterns, like a trade doesn't move 50% of its way to target in 3 hours it has only a 10% chance of working out.
Then you know if a trade hasn't moved 50% of its way to target, it's best to close it
You can go even deeper in your data analysis and try to find patterns, like a trade doesn't move 50% of its way to target in 3 hours it has only a 10% chance of working out.
Then you know if a trade hasn't moved 50% of its way to target, it's best to close it
8/ -- BUT SOMETIMES WINNERS TAKE TIME! --
What's important is averages over 100s of trades. Using a timed stop means you'll close some winners early, but if you avoid more in losses than you miss in winners, it's worthwhile.
Doesn't hurt to calculate it.
What's important is averages over 100s of trades. Using a timed stop means you'll close some winners early, but if you avoid more in losses than you miss in winners, it's worthwhile.
Doesn't hurt to calculate it.
9/ I will share more on day trading in 2022 and share day trades in Discord.
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