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jdesey, your question of where to place a stop on the mini S&P contract is a very good one and one Ive been asked many times. First there is NO simple answer that applies every day. Some days when market volatility is low you can work a tight stop of a point or two depending on your entry point (ex if the make t is bumping up a previous resistance area). However on days like we had last week in the S&P you would get stop out quite often right away as the volatility was incredible. So to try to give you something to consider try to factor in the Implied Volatility of the at the money put and calls. When that number is high use a wider stop loss level. Also when the day starts check the overnight market and see what the high low was overnight. If it was fairly tight (ie 4 or 5 points) you could consider working tighter stops. With respect to stops, in order to to prevent getting stopped out too often try not to have positions on right before economic releases. The S&P will spike one way and then go the other purposely to take out the small stop orders. best of luck in your trading
Can you help answer these questions from other members on NexusFi?
Basically I use Mikes theory of setting your stop to the point that a trade would no longer be valid.
Additionally I use ATR measurements to try and make sure that I will not be taken out by market chop, and if I am likely to then the trade is invalid and will not be taken.
