Quote Originally Posted by sesorensen View Post
Billy,
I have three questions re your discretionary trading:

1. In your Cluster Strength comment for IWM on 1. December 2011 you mention that “I place my initial stop for 666 shares just under the first support cluster”. You also mention a “massive floor support confluence from WR2 (72.26), MPP (72.00), YPP (71.84) and QPP (71.25)”

From your IWM chart illustration the “just under” first cluster support would be between 71.90 and 72.00. This is about 1.55% below entry point. I assume that identifying the “just below” for the first cluster support level of the TNA will then be 3x1,55%=4.65% below 43.77, which is about 41.75. Is that a correct assessment of a TNA initial stop price “just below” first support cluster?
I actually opted for an initial leverage stop reference at 71.80 because it was below the strongest support of YPP (71.84). That 71.84 stop was 1.83% away from the 73.14 reference entry level.
Converting for TNA, the stop was 43.77 – (3x1.84% =5.50%) = 41.36.
Note that I will only enter a hard stop order at 41.36 if I can’t be present at my desk. I will normally monitor the price/volume/TICK/RT 20DMF behavior of IWM at the yearly pivot (71.84) and sell TNA only once I see evidence that IWM is failing as support.

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2. One may also experience a lower high and a lower low scenario after a limit buy entry. Would you always stick to your initial stop (“just under the first support cluster”) or may exit if a lower-high, lower-low scenario occurs before hitting the initial stop? [/QUOTE]

That scenario happens quite often. As long as the robots daily settings remain on a buy signal, I will stick to my initial leverage stop and wait for the first higher low and higher highs on 30-minute bar charts.

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3. You also mention that these are discretionary guidelines as they apply to the current situation. Would you already now be able to hint other types of guidance applied for other market conditions? If not, we would all be very pleased to have you presenting them as they emerge. Thanks a lot. best Sorensen[/QUOTE]

Yes, this is my favorite technique for choppy market/high volatility conditions only. The leveraged positions stopped out at a profit can often be re-entered at the recommended robot limit price. Sometimes several days in a row. Now, if volatility declines for long enough, and gaps/choppiness calm down, I would switch to trend-following or mean-reversion leverage risk management techniques. I think it is best that we wait for practical real-time opportunities to discuss these.
Billy