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Stop loss, or reverse trend point?

  • #1
  • First Post: Oct 28, 2006 4:13am Oct 28, 2006 4:13am
Hi,

As I noticed that the stop loss points I use, are almost everytime the reverse points of the trend , I wonder if some of you use stop points as reverse points to 'reverse' your trade and ride it in the other way ?

I looked my trades of the last periods, and I saw that almost everytime,all stop loss points my system gives, are also the reverse points of the trend.
This means that from 150-200 pips a week, if you use your stop points as a 'reverse point' (which must be put in a strategic position ofcourse), basically you are going to ride all the trades of the week to make also 300-400 pips a week.
This is an implemantation I will discuss and I will modify the system to add also this possibility and see if what I am saying will double our pips.

Why give up and consider the stop loss only a mistake ?

Thanks
  • #2
  • Oct 28, 2006 7:28am Oct 28, 2006 7:28am
Quoting trucco
Hi,

As I noticed that the stop loss points I use, are almost everytime the reverse points of the trend , I wonder if some of you use stop points as reverse points to 'reverse' your trade and ride it in the other way ?

I looked my trades of the last periods, and I saw that almost everytime,all stop loss points my system gives, are also the reverse points of the trend.
This means that from 150-200 pips a week, if you use your stop points as a 'reverse point' (which must be put in a strategic position ofcourse), basically you are going to ride all the trades of the week to make also 300-400 pips a week.
This is an implemantation I will discuss and I will modify the system to add also this possibility and see if what I am saying will double our pips.

Why give up and consider the stop loss only a mistake ?

Thanks
You are seeing a consistnent corrollation. I think you absolutely have to investigate the strategy. Why not consider the techniques you use to choose your stops as being possible entries? Ya, gotta love anything that works.
Profit is where readiness meets Opportunity
  • #3
  • Oct 28, 2006 7:41am Oct 28, 2006 7:41am
I think this is an error from your side...A stop loss point is a point which proves you to be wrong about the direction of the market...Thus if your stop loss points prove to be the reversing points, you are placing your stops incorrectly...


Thanks,

Nader
  • #4
  • Oct 28, 2006 8:17am Oct 28, 2006 8:17am
Quoting narafa
I think this is an error from your side...A stop loss point is a point which proves you to be wrong about the direction of the market...Thus if your stop loss points prove to be the reversing points, you are placing your stops incorrectly...


Thanks,

Nader
Hi Narafa,

I dont get you.

A stop point is a point put in a level where you know is a high probability non-coming-back level. So if you are stopped out, is because a valid reason.
If you put a stop just 30 pips from you entry point, without any idea of why you put there, what stop is it ?
If its not placed in a strategic point, then it means that you risk to be stopped out without any valid reason...

My trade entry point are always strategic entry points. I enter a trade (when I respect my system signals..) in a point close to a decisive direction in one way or the other (Im not talking about easy supports nd resistance).

I almost never enter in trades in the middle of the water. So my stop loss are also adjusted in 'high probability' reverse points.

The system we use gives regulary many pips a week, but now I was testing with reversing the trade at the stop loss points and this is going to give 40% of pips more then before !
  • #5
  • Oct 28, 2006 8:24am Oct 28, 2006 8:24am
Quoting FXopportunist
You are seeing a consistnent corrollation. I think you absolutely have to investigate the strategy. Why not consider the techniques you use to choose your stops as being possible entries? Ya, gotta love anything that works.
Thanks FXopportunist. Good point Im doing it
  • #6
  • Oct 28, 2006 10:16am Oct 28, 2006 10:16am
Quoting narafa
I think this is an error from your side...A stop loss point is a point which proves you to be wrong about the direction of the market...Thus if your stop loss points prove to be the reversing points, you are placing your stops incorrectly...


Thanks,

Nader
how long you been trading nader?????

that statement is irrational,
  • #7
  • Oct 28, 2006 11:33am Oct 28, 2006 11:33am
Quoting trucco
Hi,

As I noticed that the stop loss points I use, are almost everytime the reverse points of the trend , I wonder if some of you use stop points as reverse points to 'reverse' your trade and ride it in the other way ?

I looked my trades of the last periods, and I saw that almost everytime,all stop loss points my system gives, are also the reverse points of the trend.
This means that from 150-200 pips a week, if you use your stop points as a 'reverse point' (which must be put in a strategic position ofcourse), basically you are going to ride all the trades of the week to make also 300-400 pips a week.
This is an implemantation I will discuss and I will modify the system to add also this possibility and see if what I am saying will double our pips.

Why give up and consider the stop loss only a mistake ?

Thanks
It means that you are too aggressive, just give more slack when placing the SL and you will be in the trade automatically for the reversal
  • #8
  • Oct 28, 2006 11:43am Oct 28, 2006 11:43am
Quoting wwwin
It means that you are too aggressive, just give more slack when placing the SL and you will be in the trade automatically for the reversal
Hi,

What is slack ?

If you mean 'space', then Im not into the reversal , but im against the trend if I wait more and more.

The post I have put is more to let think other traders about their stop losses, because I already know that my stop losses are often in reversal strategic points. This was more to help others aswell.

If you noticed in my thread, often I put a level where it worth to start the trade, and if that level is not reached (rarly, based on my system), I dont even enter the trade.

Enter trades in the 'middle of water' is not wise.

I tell this also to myself, because often Im tiesed to enter a trade without following the system signals and rules, and very often I fail when I get into a trade in not strategic points.

If you enter a trade in strategic points, means that your stops are strategic aswell, so I dont see it as an aggressive way

thanks
  • #9
  • Oct 29, 2006 6:19am Oct 29, 2006 6:19am
trucco,

i think what you are talking about here is making your stop loss points into stop and reverse points. i think your idea has merit, especially if you only use it at "strategic points" as you call them. i was playing around with the same idea recently, using key S/R levels. the idea is that if price reaches point X, it will either break through it and keep going, or stop, then turn around in the opposite direction. this is what you are talking about, correct? anyway, i think the key here is identifying exactly what those levels are, and planning trades around them accordingly. i'm very interested in this, as it would require no indicators, and probably not even charts hehe. anyway maybe we could all share our ideas on this.
  • #10
  • Oct 29, 2006 10:02am Oct 29, 2006 10:02am
Quoting trucco
Hi,

As I noticed that the stop loss points I use, are almost everytime the reverse points of the trend , I wonder if some of you use stop points as reverse points to 'reverse' your trade and ride it in the other way ?

I looked my trades of the last periods, and I saw that almost everytime,all stop loss points my system gives, are also the reverse points of the trend.
This means that from 150-200 pips a week, if you use your stop points as a 'reverse point' (which must be put in a strategic position ofcourse), basically you are going to ride all the trades of the week to make also 300-400 pips a week.
This is an implemantation I will discuss and I will modify the system to add also this possibility and see if what I am saying will double our pips.

Why give up and consider the stop loss only a mistake ?

Thanks
The system I'm looking at uses it's entry/exit points as signals for entry into the opposite direction which would in turn close out all open lots going the other way. Because the exits are built into the system I see the stop loss points as nothing more than emergency exit points to protect your account. This would be important in case you either don't catch your reversal signal in time or if the price suddenly shoots past you so quickly that you can't catch it. Think of it as your secondary parachute if you will..

This had me thinking that my RR ratio was terrible because of where my SL points were placed, but in reality I guess it's not so bad because the system is determining the stop points dynamically. Not sure how you would calculate that in such a case.

J
  • #11
  • Edited 11:05am Oct 29, 2006 10:46am | Edited 11:05am
Hi Natgo, Jloweder

Thanks for contribution.

yes, basically Im saying what you say Natgo.


In a general way this system let you enter only if key levels are reached, otherwise is telling you not to enter a trade. This price level is a 'strategic point' where things, with a high probability, will go one way or the other way. Im not talking about static supp/res, but about some key levels that this system shows.
What I want now to implement is to reverse at the stop level and use it as a reverse entry level
  • #12
  • Oct 29, 2006 12:54pm Oct 29, 2006 12:54pm
Quoting trucco
I almost never enter in trades in the middle of the water. So my stop loss are also adjusted in 'high probability' reverse points.
Quoting donb01
how long you been trading nader?????
that statement is irrational,
Hi guys,
I think what nader said is totally true, and the reason why you think it is not the case, is because you are confusing stops with limits, it's the limits that should be put in a probable reversal point, but not the stops, because reversal points in the opposite way of your trade is your way, let me explain by an example:

you buy cable at 1.8960 and you put a stoploss at 1.8930, if you think that 1.8930 is a reversal point, you think that the price will go down until 1.8930 and reverse to the upward, so you placed the stop in the wrong place, the right place would be 1.8930 + some room(i.e 1.8925).

however, the limit point should be 1.8930 if you went short at at 1.8960, and you think it's a reversal point.

I hope i made things more clear.
thanks
Trading is a long and a short story.
  • #13
  • Oct 29, 2006 1:17pm Oct 29, 2006 1:17pm
I do not think I am getting off the subject but has anybody seen a use from the Open orders Open positions information from www.fxtrade.com (Oanda)
If you go to their website and hit Trading Resources left side of page. They links to Open Orders and Open positions for different currencies. They give you a cumulative and a non-cumulative view. The non-cumulative view seems more informative. Was wondering if this could be hlepful in establish stops, limit, resistence, supports, buy and sell.

Tom
  • #14
  • Oct 29, 2006 1:20pm Oct 29, 2006 1:20pm
Quoting tomhen
I do not think I am getting off the subject but has anybody seen a use from the Open orders Open positions information from www.fxtrade.com (Oanda)
If you go to their website and hit Trading Resources left side of page. They links to Open Orders and Open positions for different currencies. They give you a cumulative and a non-cumulative view. The non-cumulative view seems more informative. Was wondering if this could be hlepful in establish stops, limit, resistence, supports, buy and sell.

Tom
Maybe these links will work
www.fxtrade.com/resources/trastats/order summary.shtm1
www.fxtrade.com/resources/trastats/positions summary.shtm1
  • #15
  • Oct 29, 2006 1:21pm Oct 29, 2006 1:21pm
Quoting tomhen
Maybe these links will work
www.fxtrade.com/resources/trastats/order summary.shtm1
www.fxtrade.com/resources/trastats/positions summary.shtm1
No just tried the links dont work. Have to go to www.fxtrade.com and hit the buttons listed on previous posts. Sorry. Its nice to make things easier.
  • #16
  • Edited 2:44pm Oct 29, 2006 2:18pm | Edited 2:44pm
Quoting spinmypip
Hi guys,
I think what nader said is totally true, and the reason why you think it is not the case, is because you are confusing stops with limits, it's the limits that should be put in a probable reversal point, but not the stops, because reversal points in the opposite way of your trade is your way, let me explain by an example:

you buy cable at 1.8960 and you put a stoploss at 1.8930, if you think that 1.8930 is a reversal point, you think that the price will go down until 1.8930 and reverse to the upward, so you placed the stop in the wrong place, the right place would be 1.8930 + some room(i.e 1.8925).

however, the limit point should be 1.8930 if you went short at at 1.8960, and you think it's a reversal point.

thanks
Hi,

I think we are confusing things

The reversal point is the point you know (you can never know..., you assume) that will change the trend if broken.
So in your example if I go LONG @1.8960 and put stop @ 1.8930/25 I believe (in this example) that once broken down 1.8930/25, the trend changes in SHORT, and my entry point will be then SHORT from 1.8930-40 for example.

But beside this, you must consider that when you enter a trade you must know what you are doing. You cant enter a trade just like this.
You ask yourself why you enter @1.8960 in this example ?

But what do we use the stops for ?
Stops should be used to avoid that you keep loosing money in an open wrong direcction trade. So when you loose money ?
You loose money when you assume that you mistaked direction and the trend will continue against you, thats why you put a stop exactly there.
Am I wrong ?
If Im not wrong, then the stop point you put should be also the reversal point (for you).

I think is more logical to think about where to enter and where to be stopped out (and reverse maybe) then to just enter a trade in 'the middle of the water' and put a random stop of 30 pips.

The take profit point (limit) then is an other issue
  • #17
  • Oct 29, 2006 9:26pm Oct 29, 2006 9:26pm
hi trucco,

hope you don't mind me adding to your answer, but using spinmypip's example, if based on our analysis, we think that 1.8930 will be a potential "reversal point", then the trade we take will look something like this:

B GBPUSD 1.8930, SL 1.8920
then
S GBPUSD 1.8920

this is based on the assumption that price will either bounce off the 1.8930 area, or break down through it and head to the next significant support zone.

Nat
  • #18
  • Oct 29, 2006 9:32pm Oct 29, 2006 9:32pm
IMHO the key here is to enter as close to a "reversal point" as possible, as this would leave us with a fairly tight stop, which if hit, would tell us with reasonable certainty that price is indeed headed the opposite way.

now how do we determine these reversal points?
  • #19
  • Oct 29, 2006 9:50pm Oct 29, 2006 9:50pm
Quoting donb01
how long you been trading nader?????

that statement is irrational,
I think he's trying to say that the stop loss should be before the point of reversal because once the market had turn, the point of reversal is where you should have entered and not just a stop loss point.
  • #20
  • Nov 1, 2006 9:53pm Nov 1, 2006 9:53pm
Quoting trucco
Hi,

I think we are confusing things

The reversal point is the point you know (you can never know..., you assume) that will change the trend if broken.
So in your example if I go LONG @1.8960 and put stop @ 1.8930/25 I believe (in this example) that once broken down 1.8930/25, the trend changes in SHORT, and my entry point will be then SHORT from 1.8930-40 for example.
yeah, it depends on the way you see it.
Trading is a long and a short story.
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