STOPS & Stop Close Only

Moore Research Center, Inc.

  • Increase font size
  • Default font size
  • Decrease font size

STOPS & Stop Close Only

E-mail Print

1. Where can I find suggested spread stops?

The listing of specific stops for all open positions is also always available in the Spread Action Report:
MRCI Protective Stops are also listed on the bottom right hand corner of all our spread strategy detail tables.
Simply click on the 4-digit strategy # to see the strategy detail table.

2. I am new at spread trading I was wondering where you set your STOPS?

MRCI calculates a protective stop on each spread it publishes as 130% of the "average profit" generated by that strategy. Thus, if a given spread strategy has averaged a profit of $1,000 over its 15-year history, MRCI would publish a protective stop that risks $1,300 from entry.

That 130% may seem a bit arbitrary; but, several years ago, MRCI ran some optimization programs to try to find at what level, if exceeded, a spread exhibited much smaller odds of returning to profitability versus staying within it.  As much as anything, it is an effort to encourage traders to use some kind of protective stop or other money-management device that helps them avoid "just letting it go."

3. I am new to Spread trading, how can I place "Stop Close Only" orders?

Few markets accept Stop-close Only orders --- and probably none for spreads.  We simply mean that our hypothetical spread positions are considered to be stopped out if the spread closes adversely from the entry in the equity amount of the published Protective Stop.  Not many spreads have a true bid/ask during a trading day, so we always go by settlement prices --- hence, the stop-close only.

STOPS are also always tracked on a CLOSE only basis and lastly for tracking purposes only, we never use the electronic or overnight markets. For more info please visit:

4. What do you believe is the most efficient and economical way to exit a spread that has hit a stop?

For the most part, exiting a spread 20-30-minutes after the next opening can give you a decent fill.  The spread often will "relax" a bit the next morning as some of those on the other side of the trade may be taking profits and some who are out but consider the spread a bargain and want to get in may assume a new position.
There are the occasional nasty exceptions, however, when the spread can really explode.  That tends to happen more often in markets such as the currencies, so one has to be careful.

5. Is there a recommended stop for seasonal trades?

MRCI only publishes & tracks STOPS for our spread strategies. Traders are advised to use protective stops on spreads because BOTH sides of the spread can move against one's position.

MRCI decided several years back to "let the seasonal strategies run" so that traders could see how they turned out.  For another reason, determining an appropriate protective stop in a far more volatile trading environment is far more difficult. HOWEVER, IN ALL CASES WE ENCOURAGE TRADERS TO USE APPROPRIATE MONEY-MANAGEMENT TECHNIQUES --- it is just that we do not presume to know what best those may be for any other individual.

6. Are the STOPS calculated the same for Jerry Toepke's Weekly Spread Commentary?

Yes, the stops published for the WSC are the same as those for MRCI Online.

Last Updated on Tuesday, 10 June 2014 08:13  

Subscribe Today

Subscribe Today

Subscribe to our FREE Newsletters



Do you trade Cocoa, Coffee, Cotton, OJ or Sugar? If so, MRCI has a brand new 2014 SOFTS Report just for you!

You hear about prices for crude oil and for gold.  But what about some of the more exotic commodities, the so-called softs? Did you know that world sugar prices three years ago reached 30-year highs at 36 cents/pound --- but are now trading below 18 cents?  Will that present an opportunity?  If so, what kind --- and when?  What about other agriculture commodities --- cocoa, coffee, orange juice, and cotton?  Did you know cocoa prices as recently as 2011 reached a more than three-decade high at over 3800 dollars/metric ton, then traded down to 2000, and are now again testing 3000?  Is THAT an opportunity?  And what about King Cotton?  Did you know that in 2011 cotton prices exceeded $2.20/pound --- about twice as high as it had ever traded in at least the last 40 years, then plunged to $0.70, and now --- before the new crop is fully planted --- is poised to test $1.00?  Increased volatility in all these markets means increased opportunity ---but only for those familiar with these markets. Historically, when is the best time to buy? To hold? To sell?  Perhaps 83 seasonal and spread strategies can help with year-round trading ideas!!!