V.5:4 (148-150): Using Maximum Adverse Excursions for stops by John Sweeney

Using Maximum Adverse Excursions for stops by John Sweeney

So often the key to success is the reverse of what we initially perceive. Young basketball players are fascinated with the shot, never suspecting the game is won with fast feet. Traders focus on winning signals when they should worry about when to admit they were wrong.

Here it is: It's more important to know when your trade is bad than it is to know how to get into it. Said theoretically, "minimize your maximum loss" to win in the long run.

In Stocks & Commodities October 1985 issue, I described how to determine stop placement quantitatively Subsequently, a reader asked for a concrete example, so here I want to show how to use the information on T-bonds.