I received a question about my 3-stop strategy, and I thought it’d be helpful to elaborate on the rationale behind it. The core principle is to reduce your losses well before a trade hits the full stop—ideally keeping them far below -1R. There are many creative ways to periodically scale down size in newly executed position that may not seem to be working. If your full-time job is aligned with U.S. market hours and you don’t have the flexibility to actively monitor your trades prior to the market close, the 3-stop strategy can be a game changer, capping most losses around -0.67R. The same benefit applies to those of us in the Asia-Pacific region, where market timing presents similar challenges. If I were to have the luxury of being present consistently prior to market close, (consistently is the key word), i will definitely do a 50% size down of newly executed trade on day #0 not showing any unrealized profit, on top of my 3 stop strategy. This will greatly reduce eventual R loss much further than -0.67R. You need to build a strategy that aligns with your lifestyle for long term sustainability, and most importantly longevity. From there, you refine and strengthen your edge—not the other way around. This is a major reason why many struggle to sustain day trading over time, it requires a whole new level of energy, focus and commitment to the market. big respect to @BrianLeeTrades for this. I highlighted this in pointer 5 previously in the thread below. "5. Learn to size down losses before your trade hit the eventual stops. I spoke alot about selling partial in sequential manner of 33% size out from 33% below entry, and further 33% size out from 33% to stop loss. I can control my average losses within 0.8R because of this even with slippages and spread. This is a metrics anyone can improve and I largely focus to improve on."
I received a question about my 3-stop strategy, and I thought it’d be helpful to elaborate on the rationale behind it. The core principle is to reduce your losses well before a trade hits the full stop—ideally keeping them far below -1R. There are many creative ways to periodically scale down size in newly executed position that may not seem to be working. If your full-time job is aligned with U.S. market hours and you don’t have the flexibility to actively monitor your trades prior to the market close, the 3-stop strategy can be a game changer, capping most losses around -0.67R. The same benefit applies to those of us in the Asia-Pacific region, where market timing presents similar challenges. If I were to have the luxury of being present consistently prior to market close, (consistently is the key word), i will definitely do a 50% size down of newly executed trade on day #0 not showing any unrealized profit, on top of my 3 stop strategy. This will greatly reduce eventual R loss much further than -0.67R. You need to build a strategy that aligns with your lifestyle for long term sustainability, and most importantly longevity. From there, you refine and strengthen your edge—not the other way around. This is a major reason why many struggle to sustain day trading over time, it requires a whole new level of energy, focus and commitment to the market. big respect to @BrianLeeTrades for this. I highlighted this in pointer 5 previously in the thread below. "5. Learn to size down losses before your trade hit the eventual stops. I spoke alot about selling partial in sequential manner of 33% size out from 33% below entry, and further 33% size out from 33% to stop loss. I can control my average losses within 0.8R because of this even with slippages and spread. This is a metrics anyone can improve and I largely focus to improve on."
@jfsrevg Hi Jeff, do you apply your 3-stop-loss (3SL) strategy to every setup or only to EP ? Because it seems like if we use 3SL on regular stocks with ADR around 3-7%, there’s a very high chance we’ll get stopped out on the first 1/3 stop almost every time we enter a trade.