Strategy Central

[kenwong]

MVPSignalSystem: Drawdowns, Stop Limit Orders

Hi Steve,

I've been using stop limit orders quite a bit lately and they have helped me limit my losses. The biggest losses I've experienced in the last several months were when I didn't use them. Actually, those losses were when I decided to just ride Drewster's signals - with no stop limit order in place - and got caught up in signals that turned out to be losers.

But yesterday, I had a good long entry that did get taken out when my stop limit order got hit - that would have made me good money as price ended up much higher later in the day. Similar to what you wrote below , I missed getting back in and missed the ride up.

Usually I enter in full positions meaning that whatever size position I take, that will be my only position until I sell. However, today I've got 2 buy limit orders set to trigger at support levels (I've estimated on my own) below the opening price. If the higher priced entry gets filled, I figure the fact that it was a support level means price could rebound higher from there. If I'm wrong, then my losses will be halved because I only have a half position deployed. If price then drops to the lower buy limit price, then the odds of price rebounding from there should be even stronger - which would then help offset the losses from the first order that was filled earlier.

These orders are based on the idea your MVP signals remain long and the market will continue to have an upside bias - until you issue a trend change signal to the downside.

Incidentally, I'm trading QQQQ and have estimated the following to be today's support levels: 53.15 & 52.81. These support levels are based on the daily chart.

Ken


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Posted by: mvpsignalsystem
In reply to: ps213 who wrote msg# 16873
Date:9/30/2007 12:02:37 PM
Post #16874 of 16939

Despite a lot of efforts, I've never found a way to step off an original mvp buy that drew down and also get back on and not miss the ride up. To put it another way, its a lot easier to eyeball a chart and speculate on coulda-woulda, than it is to encode exactly what you would do. Anything that I have coded, got you out at X, but could cost you Y when things reversed. And the cost profit is everything because each of these signals which had a large drawdown 'during' the trade, ended with a profit. Draws that big only come during events that big: subprime meltdown, LTCM meltdown, Asian Tiger collapse, and nasdaq bear mkt. Ironically, mvp's biggest years were during the nasdaq bear, because the program can and does short

To date, no original buy in this version has ever failed to end with a profit.

The completed trades drawdowns are very tame in comparison, if you look at some of the system