Hello.
As far as stop loss goes Bill Williams actually gives you quite few options in the complete Profitunity (Chaos) Trading System - but that uses a Divergent Bar for entry, and AO and Fractals to add to positions using a 'reverse pyramid' strategy i.e. open with 1 lot and on the next signal add your maximum e.g. 4 lots then on the next signal 2 lots and so on and so forth until you get stopped out (the theory being that your first trade is the most risky so only 1 lot on opening).
In the complete system he says to trail a stop equal to the difference between the value of the furtherest of the last two fractals in the opposite direction and your opening price. In earlier 'versions' of the system he suggests that you make your stop loss equal to the low or high (depending on whether you are going long or short) of the past three to five bars so I am just using this. On moves like the Dow on my chart though - that can be a HUGE stop - so make sure you have enough margin.
Actually - on that subject - shoud we start a Profitunity (Chaos) Trading System thread and follow it through together. It's a good system and - like I've said before - Bill Williams and J. Welles Wilder developed most of the sort of 'defacto' standard indicators that I'm sure most of use from time to time - so they have my vote - especially Bill Williams and his daughter!
Regards,
Dale.
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