no stop loss for stock trades

You don't need a stop loss when trading stocks because unlike forex, you have a fixed amount set on each trade (assuming cash account). So if you take 2% of your equity on a stock trade, you don't need to put any s/l since if the stock goes down to zero, you'll only lose 2% of your equity.

However, you need a stop loss in forex because your 2% only tells you your lot size (how much you'll get/pip) so if you put no stop loss, you'll keep paying the defict/pip.

Basically you don't need a stop loss trading stocks but you do in forex by the reasoning above. Is taht correct? can somebody verify

basically yes....... unless your prepared to pay for your full position. if you buy 10k and have 10k in your account with 1:1 leverage you wouldn't need a stop. if you look on oanda you'll find it gives you a full trade value, like if you trade at £0.01 per pip it may cost you round £100 to fully maintain that position without stops.

it depends,..if u expect a gap, then dont use it (but get out, if u were wrong, even if 2%), if u dont expect a gap, then use it...thats my guess...

The other way to look at forex (if coming from an equity trader's point of view) is that yes you will be risking 2% of your equity and yes in the equity markets you would only lose 2% of your equity if a stock went to zero but if a stock's price doubles, you will see a 2% gain in your account. If a currency ever moved 100% in your favour, by risking 2% of your account equity, you would be waaaaaay further ahead than 2%.

It is a double edged sword. FX is more liquid, more volatile and in my opinion, much more risky than equities.

That being said, I'm never going back to the equities market. FX is much much better.

Cheers

P.S. Don't ever expect a currency to double in value through the duration of a trade!

i disagre that forex is more riskier then stocks,..if u are alowed to trade cfds,..then its preety much the same as trading forex exotics...

Well it's 2% (or whatever risk %) of equity to reach maximum acceptable loss. You could do the same w/ forex, assuming that the lowest a pair could reach is 0, but you would have to double the current exchange rate to see a 2% equity growth. The same is true of stocks, if you trade 2% with no stop loss then you have to see the stock double to reach your 2% return.

An easier way is to set a stop loss of a reasonable level and then base your risk on that. That way you don't have to see such a high return to reach that 2%. Ex: A $30 per share stock could see a 5pt jump and you'd see practically no money if you based your risk allocation on 0. But if you based it on $25/share you'd see your investment double and net a 2% equity return. Of course you probably increase your chance of stopping out a great deal, but as long as your rate of return is sufficient to cover the increased odds you'll turn a net profit over multiple trades.

It's got nothing do with the volatility of the currency markets per sae, it has to do with how much loss is acceptable to you for the rate of return you want to gain. Volatility only comes to play when determining the appropriate stop loss, but there are other factors such as resistance and support and rate of return and even expectancy that need to be factored in.

I always used a stop in equities. Just like in Forex. I used more than 2% for my equity positions though. Stocks can take a dump also and it's good to protect yourself. It's also possible for several of your equity positions to dump at the same time--a receding tide that lowers all boats.

Pretend you got a buy signal for Boeing at A at around $100 and you decide to have a 10% SL of $10 just below B

Then if it drops 10% the stock only has to rise 11% to BE

What would be the point holding after it drops below C? (Ok its obvious looking back in time.I've made millions hindsight trading)

It has now dropped around 30% from the entry to $70 but will need to rise 50% to BE

Lets say it drops to $20 and you buy.The $10 SL is a 50% drop but needs a 100% gain to BE never mind letting it drop to $0

In this climate 50% drops in stocks are quite possible but 100% gains are going to be thin on the ground

[Edit; Re-reading this thread I may be reading your post incorrectly.Are you talking about margin/leverage?If so sorry my misunderstanding]

no, it's cash account.

I just read that Bear Stearns dropped 50% in a single day--this week. If a stock drops even 20% it's a sign of trouble. A stop would have protected you in this case. There's no reason to hand 50% of a position to the market no matter how much or little that position represents of your total account. Of 7000+ plus stocks, why hold a sinker? Even if your positions are small, they are your bullets. Don't fire them off into the air.

Just my opinion, though I do understand your logic.