MarketTrak Question/Comment Message


Posted By: Rick   Date: Thu Apr 22, 2010

Title: 5 % trailing stops

Message:
  Hello: Is a 5% trailing stop trailing stop still recommended? I am a new user of your model, but it seems kind of large considering how tame the market DJIA has been this year.

Response:
  The 5% value came from our optimization program that also determines the long and short position setpoints. This is the value that gives the best rate of return per unit of risk. The value you should use is the one that meets your risk tolerance which may be more or less than the 5%. At times, I will suggest reducing the stop percentage when it looks like the model may be too aggressive.

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