Protecting a position by using a price stop
is common practice, but the use of TIME
stops can also be helpful to traders.

Like most aspects of trading, using TIME
as a stop-loss point, takes DISCIPLINE on
the trader's part .....

Technical Analysis and Time Stops.

In our traders' Help Days, in Perth,
we have discussed the issue of placing
stops at length and almost all traders
have some difficulty with this issue.

So, don't feel bad when you can't
pull-the-trigger at your
stop loss level - you will get over it.

One suggestion is to use a time stop,
instead of a price stop.

Sure have a price stop in place, but
only use it as a "disaster stop".

Using a time stop is easy. If your market
has NOT MOVED into profit within your
specified time frame - bail out
regardless and don't EVER let profits
turn into losses.

By using such a strategy, coupled with
better timing strategies for entries and
exits, traders can soon develop systems
that they can use continuously, with
confidence.

On exits, it can be as simple as a target
price at the top of a trading channel or
the price at the top of a time cycle
or simply a percentage increase of your
money invested.

100 traders=100 different ideas.

For a good read and POP's three trading
rules, that you may try incorporate into
your own trading plan, try this link:

http://www.futuresmag.com/futuresclassroom/phantom/phantom.html

One other comment about stops and
pulling-the-trigger.That is, the more you
do it, the better you become at executing
them, both at entry and exit times.

If we divide both the price range and the
time frame into quarters, then we can
manage the trade according to the
progress of the rally in terms of time.

This gives us time stops to monitor and
act upon, if the rally is not sustained.

Some traders will subdivide the price
range and the time range even further,
into eighths to fine-tune the management
of their trade.

Time stops can be employed this way in
ANY TRADING TIME FRAME, from intraday 5
minute charts to weekly charts for
position traders.

This is only one method used to employ
time stops.

-----------------------------------

Another method is to use a moving average
as a guide for the placement of stops.

By their very nature, they are a lagging
indicator and will tend to keep us in
trades for too long.

For example,we may use the 89 day
moving average as a point to place our
stops.

Many trading systems have been built on
moving average cross-overs. However,
using moving averages as a means
to place stops, requires some strict
trading rules, in your trading plan,
that need some disciplined action.

Some traders will use multiple moving
averages of different lengths to place
stops and to trigger entries and exits,
according to their trading plan.

---------------------------------------------

Further comment on stops from here, may
not be the conventional view espoused by
those who have written reams and reams
on this subject.

For day-traders, who keep a continuous
watch on the market there should be no
need to set stops at all - except
mentally - using POP's #1 rule.

Day traders, with depth on their live
feed can see stops "being run" every day,
before reversing and trending back
into the original trend.

So why become a statistic? Apply POP's #1
Rule and be out before the stops are hit,
then re-position at a better price,
after the stops have been triggered and
the market is even more in your favour.

Using stops in less volatile markets,
during short-term trades may also result
in "stop running" by the larger traders.

(Grain markets suffer, at times, from
this practice.)

It is very obvious now to the large
traders, where the weak traders will
place their stops, that's why "springs",
"upthrusts" and false breakouts occur at
obvious support and resistance levels.

For position traders, this is not usually
a huge problem, as they have long pockets
and their stops are set wide anyway.

Some commodity traders could not sleep
without placing a stop in any market they
are holding overnight. Those traders
need to look at typical volatility and
brief thrusts past support and resistance
areas. Armed with this knowledge, a
trader may then place "disaster" stops
outside the zones of natural volatility
for that particular market. Make this
part of your research, then incorporate
it into your trading plan, if it makes
you sleep better.

Popular trading systems, like 50%
retracements, A-B-C, 1-2-3, all have
stops placed at obvious levels, just
beyond technical support or resistance.

This makes easy pickings for the big
players - so be out before these stops
get triggered or suffer excess slippage,
while the masses try to bail out.

For day traders it is even more important
to pull-the-trigger early, because once
the rush is on, sometimes you can't even
get through on the phone to place your
order.!!

hope this helps some

paul yogi nipperess

http://easy-trading-tools.00cd.com