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Happy New Year everyone! Let's hope it's a good one 🙂
I'm reading Gary Dayton's book Trade Mindfully, and in it he uses the term "crowding stops" which I've not heard before. Can anyone explain what that means? Thanks in advance!
All the best,
Brian
Hi Brian,
It means tightening protective stops closer than where they objectively should be because of the trader's fear of being wrong or of losing money. This can cause good trades to be stopped out prematurely.
Hi Brian,
This term originally comes up in Richard Wyckoff's 1932 blockbuster:
This was before they had computers and I have the original signed copy that was made on a typewriter that was passed down to me from my grandfather who used to trade next to Jesse Livermore.
Just kidding, I Googled it. But it's interesting to see how trading terminology gets reused over decades of trading.
Thanks gentlemen, appreciate the help. One would think it should have been obvious to me as I've done that repeatedly myself (until I read AB's books). Your clarifications are helpful 🙂
and here's an example where it's acceptable to use a crowded stop.
cheers
