Are stops not used if one chooses to follow the COT model? Is it just a matter of flipping when the commercials do?

Dave

Dave,

The COT signals give you an edge in market direction. Beyond that, I have urged everone to develop their own approach. Some are using stops. Some are not. Just be aware that even though the biggest loss that has been taken from following the COT signals is not large (10% to 12% in 1998), there have been intra-trade drawdowns of 15% to 20%. Stops could be an excellent way to protect yourself from these kind of drawdowns. Just make sure that you have a plan to re-enter the market if you should get stopped out of your position.

Larry

Thanks for the reply.

Dave

Any suggestions on how to get back in once you have stopped out?

Len,

I have no particular suggestions, except that you find an entry approach that fits your style. You will never find one that is always the best for all markets and all circumstances. Just pick a few entry strategies or indicators and learn how to use them. And then just like a golfer who chooses a different club for different situations, choose the one that fits the particular situation.

Just some of the clubs that you may want in your bag could include support and resistance, trendlines, chart pattern analysis, moving averages, MACD, ADX, Bollinger Bands, Stochastics, RSI, Parabolic SAR, MACD histogram divergences. 2B reversals, and I could go on and on.

I think a person can make money being a 100% mechanical trader. But I think if you want to trade in the big leagues, you have to learn to use some discretion.

Larry