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Trading without stop-losses

  • #101
  • Mar 24, 2011 10:01am Mar 24, 2011 10:01am
I find it annoying when traders think their way is the only way to trade. I may be a newb but you only need eyeballs to realize there are infinite ways to trade. THERE IS NO RIGHT OR WRONG WAY AS LONG AS IT MAKES YOU MONEY. I look at it more as an art than a science... After trying many systems I finally found one that works for me. I call it 'Dynamic Range Trading'. Ive altered it to not use HARD STOPS but instead my SL and TP are always the same... at the opposite end of the range. That may be in profit or loss it doesnt matter, once it reaches the other end Im out. And of course the range changes based on market conditions. It works for me and thats all that matters. So if stop losses work for you SWEET, but there are other ways!
  • #102
  • Mar 24, 2011 12:00pm Mar 24, 2011 12:00pm
Quoting Flava
I find it annoying when traders think their way is the only way to trade. I may be a newb but you only need eyeballs to realize there are infinite ways to trade. THERE IS NO RIGHT OR WRONG WAY AS LONG AS IT MAKES YOU MONEY. I look at it more as an art than a science... After trying many systems I finally found one that works for me. I call it 'Dynamic Range Trading'. Ive altered it to not use HARD STOPS but instead my SL and TP are always the same... at the opposite end of the range. That may be in profit or loss it doesnt matter, once it reaches...
If you get out when market reaches the other end, then it is still a stop loss, no matter how you put it. You may have variable stops according to market conditions, but from what you explained, it pretty much sounds like you are employing stop losses too.

a hard stop doesn't mean that it is not flexible, it just means that you have predifined conditions for your stops. Once price hits a certain level you are out. That is a hard stop.

and yes, there are infinite ways to trade, but only a handful that actually make you money LONG-TERM.
  • #103
  • Mar 24, 2011 11:44pm Mar 24, 2011 11:44pm
Stoplosses per se aren't mandatory, but if you don't have a predetermined way of exiting losses, then you must consider the fact that your loss on any one trade is potentially unlimited, meaning that you're always just one 'black swan' event away from ruin. Then it becomes a question of what the farthest distance that markets can possibly trend is, and how much drawdown you're able, or willing, to endure.
  • #104
  • Mar 25, 2011 12:11am Mar 25, 2011 12:11am
Quoting fuadu
Hi everyone,

Currently I trade without using stop loss. I set take profit 30 pips. My strategy is defence. It is just like soccer, if you have good defence, nobody can score goal. Your MM is crucial. Never trade more than 1 percent OF your equity.

Let it float, rules of nature what ever go up, must come down and vice versa. Take at look at month TF and measure what is the highest drop in price ? From there you will know how much cushioning you needed to sustain that loss temporily. When the price goes up it will hit 30 pips take profit.

Now...
Supposing you'd bought EURUSD at 1.5130 on Dec 3, 2009. By June 4, 2010 price had fallen more than 3,000 pips, without ever reaching your TP of 30 pips. If 1% of your account equates to 30 pips, you would have lost your entire account.

Conversely, if (like you say) your 1% is based on the worst monthly move (say 1,400 pips for the Euro), then the 30 pip TP is only going to result in a 0.021% gain in your account. In the above example, price still hasn't reached your target, almost 16 months later. A return of 0.02% in more than 12 months is hardly worthwhile. And the trade continues to show a loss after all this time.

I know that this is a worst case example, but even in a more typical situation your strategy leaves you wide open to large losses (relative to the potential return) that could last for many days, or even weeks.
  • #105
  • Mar 25, 2011 3:49am Mar 25, 2011 3:49am
Playing without stop loss is unacceptable for me. If you will have some problem with electricity (power off), internet connection or broker connection you can be easly wiped out of the market. Cuting your loses and transaprency of trading with Stop Loss and Take Profit is crucial for me and I can't imagine any other way.
I saw multiple scenarios in my friends accounts, that they have blown their accounts because of playing without Stop Loss.
I do no recommend that
  • #106
  • Mar 26, 2011 9:52am Mar 26, 2011 9:52am
Quoting Xaron
To become successful you need at least one edge.

1st: Drop this stupid risk/reward stuff. It's pretty useless.
2nd: Use low leverage (and no, 10:1 isn't low. Use 1:1 or even below)
3rd: Don't use tight stops ever (the tighter the stops you need more precise entries which is very hard to reach due to the high noise in the lower timeframes)
4th: Entries are rather unimportant, the exit is where the money is made. Funny enough, most systems here care about the entry.
5th: Scale in and out. Why just using one entry with one stop and one target?...
Replying belatedly.......

Depends on your approach. For grid and trend traders, agreed, entries are less important. And your comment about needing an edge, is (IMO) universally applicable.

However, in my case, while I follow your points (2) and (5), the way that I trade, (low risk) entries are critical, which means tight stops and high R:R trades.

I borrowed the chart below from TheSnowman (hope he doesn't mind ). The white lines that I added show how resistance becoming support during an uptrend can be used to SOMETIMES pinpoint amazingly accurate entries. Note how after each support level is used, it gets taken out on the next downmove, after which one of the next lower levels holds good. With a 5 pip SL at each of these levels, losses are trivial, and there's normally a good enough bounce to get the SL to breakeven for a free trade. Then, if one is trading in the direction of a strong longer TF trend, and is willing to hold on long enough to give the trades some time to bloom, some of them turn into 50-500 pips gained for a 5-10 pip initial risk.

The chart I posted is close to a perfect specimen, and in any case, it's not quite as easy as I'm making it sound, LOL. For example, the strategy works best trading certain pairs at certain times of the day, and when there are multiple reasons for price to bounce at a given level. But with a few 20:1 and 30:1 wins, I can afford to be stopped out many times, and still come out well ahead.

The stoploss doesn't have to be your enemy; used in this way, it becomes an aggressive weapon that occasionally delivers high R:R trades. That's a good counter-argument to the thread topic, IMO.

But like I said, it all depends on your approach........... each to their own.
Attached Image (click to enlarge)
Click to Enlarge Name: snowman1.jpg Size: 61 KB
  • #107
  • Mar 26, 2011 4:46pm Mar 26, 2011 4:46pm
If you're monitoring the trade then no reason for a stop loss,if however you're away from the trade then a S/L is essential.

A 2% loss(on balance) is generally the pattern,but it is down to each individual's approach to risk.

I never go above 2%,so ideally,based on 'MY' strategy set your S/L to 2% of your balance.

IF scalping then 2% is way to high.

I must stress these are my 'OPINIONS' only.

Ken
  • #108
  • Mar 26, 2011 11:11pm Mar 26, 2011 11:11pm
NEVER. I NEVER ever use stop losses, EVER. Reason being is I'm a Scalper/Swing trader and found no need or benefit. I only ever use stop losses to secure a big win.. i.e to test the profit or market when i'm already winner of a significant number of pips so that if the stop hits i'm still already profitable.
  • #109
  • Mar 26, 2011 11:50pm Mar 26, 2011 11:50pm
Quoting hanover
Replying belatedly.......

Depends on your approach. For grid and trend traders, agreed, entries are less important. And your comment about needing an edge, is (IMO) universally applicable.

However, in my case, while I follow your points (2) and (5), the way that I trade, (low risk) entries are critical, which means tight stops and high R:R trades.

I borrowed the chart below from TheSnowman (hope he doesn't mind ). The white lines that I added show how resistance...
Are you taking 'touch' trades off those levels or do you wait to see some price action? Do you use a trend filter?

I've slowly been practicing touch trading at those levels with limit orders. I get a lot more sleep now.
Don't wish it were easier, wish you were better. ~ Jim Rohn
  • #110
  • Mar 29, 2011 2:31am Mar 29, 2011 2:31am
Quoting capnn
NEVER. I NEVER ever use stop losses, EVER. Reason being is I'm a Scalper/Swing trader and found no need or benefit. I only ever use stop losses to secure a big win.. i.e to test the profit or market when i'm already winner of a significant number of pips so that if the stop hits i'm still already profitable.
You are talking about trailing stops.

Scalping without stop loss - what if price goes in wrong direction.
  • #111
  • May 12, 2011 11:18pm May 12, 2011 11:18pm
price goes in wrong direction? Not really a big deal it happens a lot, Since I'm there in the present entering and exiting trades when it goes against me i just exit out of the trade right away with only a couple dollar loss then enter in the direction of the move and usually it retraces back if it's a sudden jump or decline. If that's the case then for a couple dollar loss you gain more because you have the chance of scalping in the direction of the movement it shoots towards AND THEN once again an oppurtunity to scalp the retracement (if it does)

like an elastic it shoots up it will shoot down and vice versa i'll
  • #112
  • Edited May 27, 2011 5:27pm May 26, 2011 7:44pm | Edited May 27, 2011 5:27pm
The main question is whether you can get out from losing position. I heard best traders do not have stop losses but have no problem getting out of the market while in losing position, they have mental stop loss. This is very hard to do psychologically and not too many can do this, and this also require a lot of screen time.
  • #113
  • May 26, 2011 11:00pm May 26, 2011 11:00pm
Stop losses are very hard to define especially on a small time frames. What makes them even more difficult is the fact that it takes time before price eventually gains the momentum to reach your TP.

From what i have seen so far,
the tighter the stop loss you set the more trades you loose.
the wider(with respect to resistance) the more risk:reward ratio you need


My advise to whosoever needs it is this.

what MACD historgram for exit. if the longer bars doesnt form against you direction you trade is still safe. but it is still important to have a good risk:reward ratio. There is nothing as annoying as allowing a trade to take several days worth of profit.
  • #114
  • May 26, 2011 11:12pm May 26, 2011 11:12pm
Quoting joldas
Hello, every one!

i have a question that anyone trade without stop-losses, and successed? Trading without stop-loss can be done? has any opinion, plz comment here? thanks.
Trading without stops is like driving a car without a braking system.
How could you possibly drive to a destination without breaking?
Traffic conditions never stay the same just like the ever changing market conditions.
Imagine an ever accelerating automobile on the road, do you want to try riding on it?
Think about it
  • #115
  • May 27, 2011 1:19am May 27, 2011 1:19am
I think if you are playing on long positions it can very profitable, but keep your hand on your pulse and better to use sl when it will extremely down!
I prefer short positions but sometimes it is going not in my way so i have to wait long time when it will be in "+"
Okay, let's have fun...
  • #116
  • Oct 25, 2011 7:42pm Oct 25, 2011 7:42pm
..has benefitted the doubling my account in two months. I very much also follow the philosophy in regards to the Forex market that, what goes up must come down therefore I definitely consider myself a counter trend trader. I was never profitable before not placing hard stopss and I have read a ton of good literature and had what most would call a fair share of experience in the market just from talking to some traders. Now mind you, everyone has there own way of trading but I definitely think that what it comes down to is if you can follow a plan and reach your goals or targets then that is all that matters.
Trading without a stoploss to me is like getting out of the way of the stop hunters and just playing on others emotions.
All posts are my personal opinion
  • #117
  • Oct 25, 2011 9:23pm Oct 25, 2011 9:23pm
Quoting Rtm
..has benefitted the doubling my account in two months. I very much also follow the philosophy in regards to the Forex market that, what goes up must come down
Yes, but the problem is sometimes it doesn't come down for a very very very very long time and by the time when it did come down, one might not have an account left. But then there is nothing more frustrating than having a nice profit run cut short by stop hunters.

The trick is knowing where really a stop should be set.
Make your losses in demo. Earn your profits live.
  • #118
  • Oct 25, 2011 10:38pm Oct 25, 2011 10:38pm
It is absolutely important to have a SL.

Whether it is a physical stop loss that you place with your broker, or a stop loss that you have in your head is a different story.

No it is not important to have a physical SL if you are sitting infront of your computer screen throughout the whole trade, the more important question is, do you know at what point/price level you are going to close your trade if things go against you.

Before you enter a trade, you need to know where your exit is, otherwise you are bound to fail.

Another point i want to make is, i see many people making the mistake of setting their SL based on a fix % of their capital, in order to follow the 2% rule, which i think is a good rule, except they are approaching it from the wrong side, instead of placing ur stop loss in at a random level so that you only lose 2%, place it at a logical level, and then adjusting your position size to then equal 2% once you hit your SL. This way you give your trade sufficient room to breathe, while controlling your risk at the same time.



Kyle.
  • #119
  • Nov 27, 2011 9:46am Nov 27, 2011 9:46am
i agreed that it depends on what traders u r. if u a day traders that willing to spend hours for a profit, i think a SL wud be a great help. as for scalpers, since the trade only take a short time frame i dont think it matter much.

my 2 cents.
  • #120
  • Dec 1, 2011 2:20pm Dec 1, 2011 2:20pm
I don't use S/L but I have quite a nerve to quit my trades at more or less right times, before I lose my weekly and (mostly) last days profit. works good enough as I rarely have to quit. market is fluid enough - whereas S/L would be hit with the first spike appearing if you close your trades manually you can wait for the price to retrace a bit & overall I think that my losses are not as great as they'd be if I placed S/L every time I open a trade
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