Tuesday, November 2, 2010

using stops and OCO for measured risk and return

I'm heading off to bed. Its election night, and its not at all obvious to me what tomorrow will bring w.r.t. the futures and currency markets. I probably should have taken a pass but I liked the setups and placed a trade in each, I'm short EUR/USD and an e-mini.

I'm using an order called "One Cancels Other" (OCO) to place a bracket around each trade. Its actually two orders, a stop loss order and a limit order to take profits. If one executes the other is automatically canceled. That lets you walk away from a trade or, in this case, sleep on it.

It isn't that trading while you sleep is the best way to trade, an automated setup doesn't allow a human override for changing conditions such as a huge pulse that you ride out, but these times are a real opportunity and its a way to capture that, even if I don't get all of it.

No comments:

Post a Comment