There are a few very successful professional traders who subscribe to my services, one in particular a friend of over 25 years. We actually met on an Internet stock market forum, the Prodigy "Hypotheticals" forum in the early 1990's. From time to time we have shared trading ideas and even collaborated on certain trading strategies. He came to town a few weeks ago and shared with me some of what he is doing now (hint: bitcoin), but also showed me how he has adapted Blue Line to fit into his own trade management preferences.
The biggest difference with how he trades the system is he throws out the stop strategies in their entirety. He doesn't use any particular rules for exiting trades, instead relying on what best can be described as his, "gut feel," for how the trade is unfolding. His overall results blows our official results away. My first response was that he's been trading for three decades and of course he has developed that, "gut feel," beyond what any rules can achieve. But then he made a statement that may very well be something that we can integrate into our trading to improve results.
What follows is more of a paraphrase than the actual conversation, and it went on and off for the entire two days he was here in Arizona....and we were sober for most of it. For what it's worth, take a listen:
"Allan, if I have learned nothing else from trading it is that stops don't work, they degrade results, always, and this is true for any system I have ever tried. I don't care when your system stops itself out and although I understand when it does, but your stops have no brains, they are just math.
"Yep, they are just math. But they are there to avoid the occasional disaster and to keep profits from slipping away and for that, they work.
"You can do better. Look at that S&P trade, best trade of the year and you got stopped on a ridiculous spike down on a news headline. The math was there, it was wrong, watching the trade unfold the move the correct move was to do nothing.
"How do I teach something like that to subscribers?"
You don't, because every trade is different. You do learn it, from experience, from taking trade after trade and getting the feel for the game and everyone's feel is different.
In light of the discussion above, please make special note this weekend of the returns in columns labeled "Option Returns" which represents the application of our current stop strategy, and the far right "Max Option Percent" which represents the highest return the current trade has reached since entry.