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Joined Feb 2007
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Status: Small is beautifull
|1,368 Posts
why put stop loss in loosing side? it is better to be used to secure our profit and let the position open and running. and for the oposite side, forget taking profit.( still try to implement it, ) in some market condition it is better this way
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Joined Apr 2007
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Status: Ich habe genug
|551 Posts
It really just is a question of balancing probabilities against what you can afford. If you can be absolutely sure that no bad events will happen - like communications going down for a a day or two, or you won't get hit by a car crossing a street, precisely when you have a moderate bet on that's turning sour, well then, you don't need stop losses. Or if you are absolutely infinitely rich already.
OTOH, the question is how likely is a move that is random (i.e. a false alarm such as a short term stop hunt) likely to trigger your stop as versus a a real change in trend. Most people don't have systems to analyze this (at least on small investor/personal systems). What you can do is make a rough approximation - for example, by putting your stoploss at or outside the 3 std level in a bollinger band, which should get hit accidentally very infrequently, compared to significant changes in trend - though the BB is a pretty sluggish model Right now for $/Cad, for example, I'm using something like setting the Metatrader STD channel at (2*sqrt(2) ~= 2.8) for the stoploss and major TP, and 1/sqrt(2) ( ~= 0.7) for the minor take profit and entry level relative to the trend - using one week length estimating on the 4 or 1 hour charts - if you check yourself (by running the MT STD channel indicator over $/CAD) it's been giving very good signals as to when to get out and in, and my stop loss has yet to be hit. FWIW, I use it as a guide, not on autopilot...
Usually used SL, but not in a situation where I'm totally confident of the movement. After a while, depending on the situation, I'll go 10 to 20+ above breakeven.
And i totally agree with some posts above. We never know when there's going to be some unforeseeable incidents that might prevent us from closing the trade. If it's profitable, it's pure luck. If not, the whole account will go down, unless of course that it's a really small position.
A stop loss should be there to protect you from losing too much capital. If you have too much riding on a trade why not just trade smaller lots? Instead of trading $100,000 (1 lot) currencies just trade $5,000 or less. You will be able to ride out a drawdown and stomach the loss if you have to take it. Too many people lose too much money by trading too large. They want the BIG BUCKS NOW! Trade smaller, save money and be in the game longer. Most people trade forex for several months, blow their account (or accounts) because their trading too much $$$. Then they give up and say its too hard or unfair. They blame everything else except their trading leverage and money management.
