Hi Ohka,
I had done somthing very similar to you in the past. After reading much on stops and thoughts on how to normalize the risk, I think I will go back to exactly what you are describing. I looked up on how to do the ATR method for settings stops and I just don't like it. I realized that price alone will account for volatility and therefore normalize itself automatically.
I realized this is one easy win for simplicity over complexity.
I do have a question for you, I understand you have a mental stop, but isn't that a range? So for example is your risk model such that you will say risk between 2% and 3% and your mental stop has to fall within those parameters?
I had done somthing very similar to you in the past. After reading much on stops and thoughts on how to normalize the risk, I think I will go back to exactly what you are describing. I looked up on how to do the ATR method for settings stops and I just don't like it. I realized that price alone will account for volatility and therefore normalize itself automatically.
I realized this is one easy win for simplicity over complexity.
I do have a question for you, I understand you have a mental stop, but isn't that a range? So for example is your risk model such that you will say risk between 2% and 3% and your mental stop has to fall within those parameters?
DislikedAs to entries & stops:
the stops I put in the market are purely meant to be a last resort in case of an emergeny - events that make it impossible to contact my broker and close my positions.
I close my positions myself, using another set of stops that I do not put in the market.
The closer you can place your entries at a reversal point, the tighter the mental stops can be. If you're good at this, it even allows you to size up your position without risking more than your pre-set limit.
My personal position sizing method is simply "fractional-f", where my effective risk (i.e. effective leverage) is limited by the mental stops I use.
My entries are based on reversals at Fibonacci- and Pivot Point levels and Bolling band extremes, but only so when at the same time MACD/RSI show a divergence with price action.
Currently I'm investigating using Imran's system (here on FF) as an entry confirmation at those price levels...
Happy trading
OhkaIgnored
To be one with the market, you must first be one with yourself.