InVivo Universal Stop: The Smarter Stop
Stops cannot be eyeballed. A trader that places stops arbitrarily or uses stops calculated incorrectly is destined to always exit too early and miss the home run, or exit too late after a change of trend.
If you make a bad trade and you have money management you are really not in much trouble. However, if you miss a good trade there is nowhere to turn. If you miss good trades with any regularity you’re finished. — William Eckhardt
InVivo Universal Stops can be used in two ways:
They establish the appropriate price to exit a trade.
They can also establish the appropriate price to enter a trade.
Stops must be placed strategically, yet nearly all commercially available stops have serious flaws.
Many systematic traders spend the majority of their time searching for good places to initiate. It just seems to be part of human nature to focus on the most hopeful point of the trading cycle. Our research indicated that liquidations are vastly more important than initiations. If you initiate purely randomly, you do surprisingly well with a good liquidation criterion. — William Eckhardt
In Engineering Better Bollinger Bands and Thoughts on the Kase Dev-Stop, I demonstrated how InVivo Universal Stops accurately reflect volatility and range. This is a must, because we never, ever place stops based on what we can afford to lose. Stops must be placed where they ought to be, and we reduce our trading size as required to manage risk to the account. This is our definitive edge.
There may be many moving parts, but make no mistake, the stop is the backbone of any trading system or method. In fact, InVivo Universal Stops is the heart of TrueBlue, the trading system I use to trade my own money.
Lifetime License: $50
InVivo Universal Stops is an indicator. It is a must-have for any trader. The indicator can be applied to tick, volume, intraday and daily charts.
Our trading tools are available ONLY for TradeStation 8.x and eSignal, software that we actually use. We won’t be making them for any other platform in the foreseeable future.
After using the indicator, you may wish to incorporate InVivo Universal Stops into your own trading strategies. For traders fluent in TradeStation EasyLanguage, InVivo Stops are available as a function for $295. The stops form the heart of PowerTools for eSignal.
Using InVivo Universal Stops
InVivo Universal Stops are engineered to reflect actual volatility and range, providing users with a real edge over other so-called volatility-based indicators or bands.
Used alone, InVivo Universal Stops is known as a stop and reverse system, that is, it is always in the market long or short. In practice, traders qualify trades by imposing additional conditions such as a time filter, trend filter, a moving average filter, etc. In addition, they must also decide on the amount of leverage to use and calculate the position size based on the foregoing.
Use InVivo Universal Stops according to the following two rules:
- BUY RULE: A *close* above a blue dot is buy signal.
- SELL RULE: A *close* below a pink dot is a sell signal.
While the math behind InVivo Universal Stops is complex, using this indicator is easy as 1-2-3. InVivo Universal Stops shows you the exactly where your stop should be at all times.
Food for Thought
William Eckhardt once said that trading is not rocket science. Yet for most, success is elusive because one or more of the critical elements is missing:
- Identify appropriate trading candidates;
- Trade a basket of the qualified candidates;
- Implement position sizing to limit exposure and risk;
- Follow the buy and sell signals;
- Avoid countertrend trading; and most of all,
- DO NOT USE INSANE LEVERAGE.
Yes, success starts with a signal, but it’s just the beginning. There are a lot of moving parts, and losing all your money is guaranteed when the pieces are not in place. Even if I gave away my system for free, it would be useless. It’s just a matter of time before disaster strikes.
Do yourself a favor. Before you trade, read Own The Zone. It’s free. If you really want to know what I know, take the award-winning The Ultimate Trading Course.
If you like financial entertainment, I won’t stop you. If you are trading Forex at 1:100 or can barely make intraday margin for e-mini futures, pray for a miracle that you will succeed where hedge funds failed.
If you want something that actually works as part of a well-balanced trading program, use a good software platform and see what you can learn by playing with the InVivo Universal Stops indicator for TradeStation 8.x or eSignal 10.x.
