Why not let your Looser's ride ???

Hi there,

I admit I am a beginner and just learning with a demo. I have read so far countless books on forex and this wonderfull forum and EVERWHERE it is mentioned that whenever you are faced with a loss, just cut them short and go on.

Well over the past two weeks, I have placed about 13 wrong trades which went against me, and instead of letting the stop loss automatically close my position after a 20 pip loss, I removed the stop loss and just left the trade open.

ALL and I mean ALL of my 13 loosing trade eventually turned into profit as you can see from any chart, the prices keep oscillating up and down, and eventually they will come back down or up again. On one of my trades, I was down almost 300 pips and 30,000$ and after 4 days it turned around and I made 1500$ profit also.

So I know I am wrong somewher, but I just want to know why not sometimes let your loosers just get themselves out of trouble?

Thanking you all in advance.

Mohammad Reza.

Because eventually you will have a trade that will never turn around and just blow your account. Always use a STOP LOSS!

What time frames were you trading?

Sounds like your stops were way too tight. Give yourself more breathing room.

The reason you don't have stained shorts is cause you are on a demo. Do u really think you can do that w/ 30K of your hard earned cash on the line.
Read this:
http://www.page88.co.za/cr/storybesttrade.shtml

At some point you may begin trading real money and won't be able to hold your losses into infinity. The market will find out exactly how much money you have in your account before reversing. Not to mention if you're down $30,000 real dollars it feels a little different.

Why would you be willing to hold a $30,000 loser, but sell your winner ($1500) so cheap? Your risk to reward is backward.


Whoops--mrgreen beat me to it.

I usally trade the 5 min or the 15 minutes timeframe and put in a 20 to 30 pip stop loss.

This is what happened with one of my trades, I was down about 250 pips and sweating like a pig looking at around 25000$ in losses or 80% of my entire account, at this point I did NOT even consider selling anymore and face that huge loss, I just said to myself it will either come back or let it just take my account with it.

That was the only big acception, the other usually turned back at around 50 to 100 pips.

Thanks again.

Mohammad Reza.

Excellent article! Hope the OP reads it.

Hi ya fatboy1234,

You definetely have to get rid of those losing trades quick unless you have bottomless pockets....I am living proof of that as I have lost £1000's in currency trading and I still haven't sorted it out which I am embarrased to say..I traded shares and made large profits there but now currencies is a different kettle of fish and i'm still learning how to get around this beast!

It's not the system i'm using as I feel they are both excellent systems which both will make endless winners for myself but then I let the losers stay and they cost all profits quick smart! (look in the forum for Cornflour and Bagovino systems both brilliant systems I combined them both and tailored them to suit my personality)

As most people have said here....when you have your own money on the line that phsycological mind of yours kicks in and along comes fear and greed!!..You wait for that loser to come back..you then add to that loser more to average out and hope it comes back...oh dear it's going down more....and last of all....oh s***, I should have took that loss earlier as now I've got nothing to trade with....
Obviously sometimes they will come back and you get your money back and some but believe me after a few lucky wins your gonna get burnt!.. and you could think of it this way if you get rid of that loser earlier what's stopping you getting back in at a better price rather than hanging around stressing for it to come back??

What I 100% agree with is you really have to get rid of the losers quick and ride those large winners..which is easier said than done!
Another thing is what ever you do really do follow the trend or fight it at your own peril..the 2 systems above I named are great for this..please look for them and read up on them both..

I hope my ramblings were of help to you :-)

Adrian

Lots of good advice. Nothing further to add. Maybe that you need to use the correct stop for the instrument you're trading. Also, you only have a limited size of an account; when it hits that in loss, you will get a margin call: so do you pile more money into that account or let the broker close all your positions?

"It isn't a loss until you close your position."

All great advise gentelman, you are all correct, I also doubt I could have that much staying power were I On REAL money.

Adrian, thanks for the honest advise I will follow up on those two systems you mentioned.

I guess Money mangements is the area I have to really get into before anything else.

Thanks again.

Mohammad Reza.

I love this thread and I think it brings up a good point. In my opinion the vast majority of traders use either improper money management or to short of stops and usually it's both.

I have a system that I use which is incredibly simple. Most people couldn't use it because they could not stand to look at the losses that I float sometimes for several days. I trade strictly off dailys with 2% of acct balance with 50:1 margin and I use a 1000 pip stop loss on initial trades. Once I am in a winning trade by at least 50 pips I have a trailing stop in place.

There are some finer details but that is the gest of it. Do some of my stoplosses get hit yes but rarely. My goal with this system is 20% a year. On the past 6 months of demo trading with 3 different demo accounts I have earned between 8% to 15%.

I say all that to say I think people are better off to lower their precent of risk and widen their stop losses a little. Just my two pips.

Jackie

Excellent read. Thanks Mr. Green

Problem is most amature traders tend to belive they lost money because they used a stoploss and not using one would have ended in a gain.
Maybe these guys should rather ask themself if the stoploss or the inappropriate use of the stoploss made them lose money.
People are always a little bit to fast with making conclusions like. OK i lost money and I had a stoploss so it's the stoplosse's fault! Logical conclusion don't use on. BING! WRONG!
It's not that easy.
The probablity that losers will never come back and eat your entrie WILL turn 1 with time. The longer you trade the more likely it becomes.
Some people should repeat some things the should've learned in school.