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Drawdown or Stop Loss

  • #1
  • First Post: Sep 17, 2007 7:21am Sep 17, 2007 7:21am
Guys I want peoples opinion on the pros/cons in regards to...

1. Not using a Stop Loss and holding the trades but most likely lead to big drawdowns.

2. Use a Stop Loss and take a hit when the Trend goes against you?

I've got a Expert that does quite well in ranging markets but gets all twisted in a up trend. High floating loss and low remaining margin.

But in general trading terms, manual or automated, which do you prefer?
  • #2
  • Sep 17, 2007 7:32am Sep 17, 2007 7:32am
Quoting Superion
Guys I want peoples opinion on the pros/cons in regards to...

1. Not using a Stop Loss and holding the trades but most likely lead to big drawdowns.

...........................

Hi Superion,

The "emotional" pain of holding large (and increasing) drawdowns far, far far exceeds the "financial" pain. It is emotionally devastating !!!!

The first question you should be asking yourself is "why should I put myself through the pain of suffering from large drawdowns?????"

The second question is "Is there a smarter way to prevent the pain???"



.
  • #3
  • Sep 17, 2007 7:39am Sep 17, 2007 7:39am
You have to use stops. It only takes one bad trade to kill you. The Robinhood EA is a great example.

From collective2:
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  • #4
  • Sep 17, 2007 6:01pm Sep 17, 2007 6:01pm
stop loss, no doubt about that. drawndowns will get you killed, and drawdowns inflict emotional distress. just try it and you'll see. no, really, try it. you will see that sl is the best option. be disciplined, take losses, and minimize them by using risk and money management
Twitter: @forexpokerpro
  • #5
  • Sep 17, 2007 6:14pm Sep 17, 2007 6:14pm
you could also consider a timed stop loss... you exit a trade if it doesn't go in your direction for a specific time period.
  • #6
  • Sep 17, 2007 6:40pm Sep 17, 2007 6:40pm
When I saw the thread I immediatley thought of Jacko and now I see he's already been here. This idea is from his thread, but not his exact wording:
Why not set a 100 point stop loss ( or whatever amount suits your method) and if you get stopped out sit tight and see if the trend resumes. If it does, reenter at the point your stop took you out. Give the pullback sufficient room before you reenter to avoid getting chopped up.
Read his thread for more detail.
Back to the original question--I always use a stoploss. Why stand on the tracks when you see the train coming?
  • #7
  • Sep 17, 2007 6:56pm Sep 17, 2007 6:56pm
No doubt about it, stop losses are crucial. Unless you are trading VERY VERY long term, have a huge account and can handle thousands of pips drawdown, over a long time (even years), then you need stop losses!!
  • #8
  • Sep 17, 2007 7:19pm Sep 17, 2007 7:19pm
i was using no SL, it was good, but bring lots of pain, and little profit, i only can use small leverage and "slow" pair like usd/jpy.

finally i cracked up, and devastate everything.
i now use SL, i mean, wait until it is positive and put +1 pip SL, learning scalping like entry to put a longer position. mostly it still hit SL and i only trade top & bottom .


ps: never afraid of SL, just enter again on better price, you won't lose a thing
  • #9
  • Sep 17, 2007 7:21pm Sep 17, 2007 7:21pm
I must agree.. Always use stops. Losses are part of trading and will inevitably happen at some point. You need to keep losses small, never risk large losses and let profits run..
  • #10
  • Sep 17, 2007 7:36pm Sep 17, 2007 7:36pm
what about hedging or go on opposite direction and TP on both sides when it starts to reverse again... or if it continues then stop out with fixed loss (when you enter the hedge) ?

just a thought...
Pipology 101 student
  • #11
  • Sep 22, 2007 5:02am Sep 22, 2007 5:02am
I've traded up to now without a stoploss but after taking a bit of a hit have re-evaluated. Use a stop loss and taking a hit without eating into your profits allows survival.

I'm working with another programmer on another method to get you out of trouble. And no its not hedging but a fully functional bail out system using margin levels.

Thanks for the comments guys...
  • #12
  • Sep 22, 2007 9:36am Sep 22, 2007 9:36am
Quoting Superion
I've traded up to now without a stoploss but after taking a bit of a hit have re-evaluated. Use a stop loss and taking a hit without eating into your profits allows survival.

I'm working with another programmer on another method to get you out of trouble. And no its not hedging but a fully functional bail out system using margin levels.

Thanks for the comments guys...
Hi Superion,

??????????

Tell me more about the bail out system....how does it work??


.
  • #13
  • Sep 22, 2007 10:54am Sep 22, 2007 10:54am
1. This is not for me. Pointless to risk everything on one trade. The cons outweigh any "pros" on this one, imo. I used to go to this online trading room where they dont use sl's and the last i heard they have 100% hit rate in profitable trades, but the drawdowns on it were huge! I don't have the steel nerves or the account size to trade like that, no way!

2. Always. There's a level where the set up im trading would have failed and that's where the sl goes. No biggie. If it comes back ill maybe try it again or leave it be for the day.

3. Manual discretionary trading but i do have some rules, definately! It's said that fully automated takes the emotion out, but i dont think that side of it would be a benefit for me personally because id always be worried about a robot taking my trades, lol.


Quoting Superion
Guys I want peoples opinion on the pros/cons in regards to...

1. Not using a Stop Loss and holding the trades but most likely lead to big drawdowns.

2. Use a Stop Loss and take a hit when the Trend goes against you?

I've got a Expert that does quite well in ranging markets but gets all twisted in a up trend. High floating loss and low remaining margin.

But in general trading terms, manual or automated, which do you prefer?
  • #14
  • Sep 22, 2007 11:24am Sep 22, 2007 11:24am
For me stoplosses are an essential part of risk management. When going into a trade and knowing that at worst I will lose only a certain percentage of my account makes it emotionally much easier to "pull the trigger", and also helps to not get emotionally attached to each trade. Of course there is always a trade where the SL was taken out by 1 pip, and then goes back up and hits your TP, and this can be annoying.
  • #15
  • Sep 22, 2007 11:32am Sep 22, 2007 11:32am
Proper stoploss-placement is another pillar of trading, just like entries, targets, money management, time frames, etc. Without a coherent stoploss policy, any strategy is bound to fail.
  • #16
  • Sep 22, 2007 12:07pm Sep 22, 2007 12:07pm
Always use a stoploss no matter what trade your in, this will keep you safe in the forex game.
I always belive that defense is the best way to go, even when you do get stopped out you can always get back in when you see the market give you another signal.

The best part of your stop being hit is that you actually learn from it, and this will make you a better trader.

Don't be affraid of being incorrect! So just set a stoploss.
  • #17
  • Sep 22, 2007 12:13pm Sep 22, 2007 12:13pm
Always use stop-loss, Always.
Trade what you see, not what you think.
  • #18
  • Sep 22, 2007 2:56pm Sep 22, 2007 2:56pm
Pls can anyone kindly enlite me on how to download NORTH FINANCE, though initialy i have done it b4 but it was wrong installed, when i wanted to Re-download it was not download .Please wht can i do to this?

Waiting for your reply soon,
Thnx
Samson.
  • #19
  • Sep 23, 2007 2:57am Sep 23, 2007 2:57am
Quoting jacko
Hi Superion,

??????????

Tell me more about the bail out system....how does it work??


.
We have'nt yet coded it but have the algorithm and theory in place. We'll need to test it thoroughly before we reach a final conclusion if useful.
-----

Samson are you talking about NF MT4 download link? It's here http://www.northfinance.com/mt4setup.exe as the site has been updated.
  • #20
  • Sep 23, 2007 11:00pm Sep 23, 2007 11:00pm
superion
trade without stops or trading with stops,i myself dont always use stop orders but that will depend on my gearing, i normally is not geared more than 3 times but when i trade without stop my lotsize will be 1:1 of my equity max so if trading euro i can take 200 or even 300 pips down and thats a risk of 2 and 3 percent of total equity. 11/9 2001 market dropped 600 pips in no time so ya that would have been a loss of 6 percent of equity, but if i have been geared heavy and my stop loss level wasnt triggered i would probably have blown up the entire account. I have been reading my brokers documents and stop loss level is not garanteed, most of time they will but there can be circumstances where they will not work.

revoke
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