When the fill occurs we will adjust the stop to maintain the same percentage stop Dan initially laid out.
For example on this trade Dan had a 25% stop. The parameters are $34.00 or better with stop at $25.5. That works out to $34.00 – $25.5 = $8.50. $8.50 / $34.00 = 25%
We were filled at 33.73 so we want to adjust or stop to maintain that originally 25% $33.73 x .25 = $8.43. $33.73 – $8.43 = $25.3 our new stop.
We don’t want an artificially tight stop if we get a good fill so we always adjust the stop to reflect the fill we received (by maintaing the original stop percentage, 25% in this case).
why
the change in stop?
When the fill occurs we will adjust the stop to maintain the same percentage stop Dan initially laid out.
For example on this trade Dan had a 25% stop. The parameters are $34.00 or better with stop at $25.5. That works out to $34.00 – $25.5 = $8.50. $8.50 / $34.00 = 25%
We were filled at 33.73 so we want to adjust or stop to maintain that originally 25% $33.73 x .25 = $8.43. $33.73 – $8.43 = $25.3 our new stop.
We don’t want an artificially tight stop if we get a good fill so we always adjust the stop to reflect the fill we received (by maintaing the original stop percentage, 25% in this case).
Hope that helps.
Josh
Thanks Josh for a clear explanation
Raf