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PRo/ProFX
When a stop is triggered, the position is closed regardless of the
current status of your trading rules. The price at which the position is
closed is the actual stop price or the specified exit price.
If the price gaps below a stop level on a long position, MetaStock
exits at the open price of the next bar. If no open price is available,
the high price of the next bar is used. Likewise, if the price gaps
above a stop level on a short position, MetaStock Pro exits at the
open price of the next bar. If no open price is available, the low price
of the next bar is used.
Stops automatically take entry and exit commissions into account.
For example, the Maximum Loss stop knows the amount of your
“exit” commission and will attempt to close the position so the
maximum loss will not be exceeded after you pay the exit
commission.
If two stops are triggered on the same bar, the more conservative
stop takes precedence (i.e., the stop that generates the most losses).
The precedence of stops is: Maximum Loss, Breakeven, Trailing,
Profit Target, and Inactivity.
For information on optimizing stops, page 510.
Breakeven
This stop closes an open position when the closed-out value of the
position would fall below the current equity amount (i.e., the equity
amount at the time the current trade was opened). The stop is placed
at the price where the trade could be closed and the proceeds
generated would equal the current equity amount.
To prevent this stop from being executed every time a position is
opened (because commissions ensure there is never a profit when a
trade is first opened), the Breakeven stop is enabled only after the
profit for the trade meets or exceeds the user specified “floor level.”
The value you enter in the Floor Level box depends on the Method
specified (points or percent). The floor level uses the high price for a
long trade and the low price for a short trade.
This stop takes a minimum of two bars to trigger. One bar for the
floor level and another bar for the breakeven amount.
Tip If the floor level is set to zero, the Breakeven stop will become
enabled only after the security’s price increases to the point where
the position could be closed without incurring a loss.
MetaStock 11 Professional
Testing Your Trading Ideas • 511