why do you think using stop losses is a must ? (explain) | Forex Factory

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why do you think using stop losses is a must ? (explain)

  • #1
  • First Post: Nov 22, 2020 2:37pm Nov 22, 2020 2:37pm
I'm not asking for stats or anything... just share your thoughts about stop losses... why they are important to you.
  • #2
  • Nov 22, 2020 3:10pm Nov 22, 2020 3:10pm
isn't it better to diversify to hedge risk and use no leverage ?
is it good to start small and exploit massive compound interest ?

why closing a position in loss is the best way to make money ?
  • #3
  • Nov 22, 2020 3:34pm Nov 22, 2020 3:34pm
Depends on what strategy you use. Most traders will say you need to use Stop loss (SL). I am scalper with very less money in my trading account which I am cool to lose. so I do not use SL But I try to take trades that I feel that are sure to hit my profit. I scalp for like 2 pips with 1000x leverage. Crazy, Degen trading style on Heikin Ashi charts, That too on a 1 minute chart. You get rich or get rekt.
  • #4
  • Nov 22, 2020 3:52pm Nov 22, 2020 3:52pm
Quoting HeyYou
isn't it better to diversify to hedge risk and use no leverage ? is it good to start small and exploit massive compound interest ? why closing a position in loss is the best way to make money ?

Not all moves retrace sufficiently to escape a loss.

Nursing a losing position to a win through averaging down and hoping for a reversal has huge opportunity cost compared to simply taking a small loss and moving on to the next trade.
  • #5
  • Nov 22, 2020 3:59pm Nov 22, 2020 3:59pm
Quoting Seneca pilot
{quote} Not all moves retrace sufficiently to escape a loss. Nursing a losing position to a win through averaging down and hoping for a reversal has huge opportunity cost compared to simply taking a small loss and moving on to the next trade.
I was talking about hedging not averaging down a position... trading several instruments ...
  • #6
  • Nov 22, 2020 4:38pm Nov 22, 2020 4:38pm
Hedging w/o SL. Here, in 95% of the time, the buys are above the sells...
Attached Image(s) (click to enlarge)
Click to Enlarge Name: tp96_graph_hedge_01.png Size: 393 KB
Click to Enlarge Name: tp84_graph_hedge_01.png Size: 389 KB
Click to Enlarge Name: tp48_graph_LD_TP48_merge_ExtTr_(hedge).png Size: 351 KB
Click to Enlarge Name: tp48_graph_LD_TP48_merge_ExtTr+OaMN_(hedge).png Size: 359 KB
Click to Enlarge Name: tp60_graph_hedge.png Size: 401 KB
Maadik Hugiis. IQ 69.
  • #7
  • Nov 22, 2020 6:05pm Nov 22, 2020 6:05pm
why closing a position in loss is the best way to make money ?
-----

Because of risk management. You need to be consistent. If you're randomly cutting trades - this one lost $200, that one lost $350.. that one lost $1k. After a month of random ups and downs, how much did you lose? If you can't answer that fairly quick then your risk management is out and your chances of seeing consistent profit is much lower.
If, however, you (1) know that for each trade, you're putting your stop at the best possible place, ie. If it goes any further then the trade is invalidated and can be considered a buy instead of a sell or vice versa. and (2), you know that you're risking say 1% on each of those trades. Then, you know that those 3 lost trades earlier could equal a total of 3%. It's simply a case of basic money management and without it you're in an uphill battle.
  • #8
  • Nov 23, 2020 1:54pm Nov 23, 2020 1:54pm
Quoting Octapad
why closing a position in loss is the best way to make money ? ----- Because of risk management. You need to be consistent. If you're randomly cutting trades - this one lost $200, that one lost $350.. that one lost $1k. After a month of random ups and downs, how much did you lose? If you can't answer that fairly quick then your risk management is out and your chances of seeing consistent profit is much lower. If, however, you (1) know that for each trade, you're putting your stop at the best possible place, ie. If it goes any further then the trade...

you can be inconsistent and win big. you can use no sl and be consistent, who said it's not possible ? you can use a sl and lose money consistently..
  • #9
  • Nov 23, 2020 1:56pm Nov 23, 2020 1:56pm
Quoting MoneyZilla
Hedging w/o SL. Here, in 95% of the time, the buys are above the sells... {image} {image} {image} {image} {image}
lol, that's some serious compounding !
  • #10
  • Last Post: Dec 9, 2020 10:07am Dec 9, 2020 10:07am
Quoting MoneyZilla
Hedging w/o SL. Here, in 95% of the time, the buys are above the sells... {image} {image} {image} {image} {image}
OMG
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