Trendstone DevStop v1.0
KaseDev Stops implementation for Trendstone
The Kase DevStops are based on volatility, using TrueRange as a proxy.
The major shortcoming of fixed-value trailing stops is in determining what value to use. Many new traders are advised to risk what they can afford. This is like a Gloucester fisherman standing on a bluff overlooking a raging windtossed ocean and shouting out to the six-foot swells, “Here I come, but my dinghy can only take 18-inch waves!” Like the ocean, the market doesn’t care what an individual user can afford. It is we who have to tailor our approach to the market; we cannot make demands of it.
Kase DevStops bring statistical discipline to exit and stop-loss methodologies. The amount of risk associated with Kase DevStops is calculable ahead of time, so that traders can match the volume and risk per unit to their risk appetites. In addition, because the stops are statistically based, the chance of being stopped out may be estimated ahead of time. Finally, Kase’s research shows the likelihood of hitting subsequent stop levels once an initial stop is hit.
Placing a stop at the warning line, the average TRD means that any two-bar reversal has a 50 percent probability of being stopped out on noise. One standard deviation equates to about a 15 percent chance, two standard deviations about a 2.5 percent chance, and so forth.
The Kase DevStops are based on volatility, using TrueRange as a proxy.
The major shortcoming of fixed-value trailing stops is in determining what value to use. Many new traders are advised to risk what they can afford. This is like a Gloucester fisherman standing on a bluff overlooking a raging windtossed ocean and shouting out to the six-foot swells, “Here I come, but my dinghy can only take 18-inch waves!” Like the ocean, the market doesn’t care what an individual user can afford. It is we who have to tailor our approach to the market; we cannot make demands of it.
Kase DevStops bring statistical discipline to exit and stop-loss methodologies. The amount of risk associated with Kase DevStops is calculable ahead of time, so that traders can match the volume and risk per unit to their risk appetites. In addition, because the stops are statistically based, the chance of being stopped out may be estimated ahead of time. Finally, Kase’s research shows the likelihood of hitting subsequent stop levels once an initial stop is hit.
Placing a stop at the warning line, the average TRD means that any two-bar reversal has a 50 percent probability of being stopped out on noise. One standard deviation equates to about a 15 percent chance, two standard deviations about a 2.5 percent chance, and so forth.
Notes de version:
Better stability in high volatility environments.
Notes de version:
Added a new way to visualize the running stops at the dev3 over a window. It is pretty good to figure out lows and highs
Notes de version:
Improved the algorithm using the lag-free implementation of the moving average.