testing 1,2,3...
Real Fx traders do not use stoploss
- #225
- Oct 24, 2012 2:36am Oct 24, 2012 2:36am
- Joined Mar 2007 | Status: Trader | 8,618 Posts
Guys...I am going to level with you. There is no "system" that will ever consistently make you money. Trading without a stop loss works only when the market is ranging and can kill you pretty quickly when it starts trending away from you. No matter what you do, you will sooner or later have to accept one thing:"The mind can not trade forex!" You are using either past data...support and resistance...or waiting for some news to come out then guess where the market might be headed. This is a very stressful arduous way to trade and sooner or later...
Here is a chart of the weekly Eur/Usd:
We can see three arrows, left to right:
1. the first one points to the low of October 2, 2011 - rejection of 1.3150
2. the second one shows rejection of big round number 1.3
3. the third arrow shows the recent rejection of the level in 1. above which is also an important fibonacci level.
There is a lot more going on in this chart but I'm keeping it simple. Anyone interested in an exercise should look at price behaviour around these same levels in 1994 and 1995, for example.
If you know how to trade then thousands of pips can be won from these levels. The major banks including central banks - i.e. countries - use these historical levels.
Gone to a better place
- #228
- Nov 1, 2012 4:44am Nov 1, 2012 4:44am
- Joined Oct 2012 | Status: Trader | 1,696 Posts
Simplicity is the Ultimate Sophistication.
- #230
- Nov 4, 2012 1:11am Nov 4, 2012 1:11am
- Joined Mar 2011 | Status: I should be on your ignore list | 5,597 Posts
- #234
- Edited 4:03pm Nov 5, 2012 2:01pm | Edited 4:03pm
- Joined Sep 2006 | Status: ... | 8,112 Posts
Unconventional view:
You profit by being net long while price is rising, and net short while it’s falling (vice versa, you lose). Entries and exits are merely ways of adjusting your net position, i.e. long -> flat -> short -> flat, etc.
The more accurately you adjust your position relative to reversals in the market, the more pips you bank. It is both as simple, and as difficult, as that.
Hence using a stoploss per se is not the reason for losses. Lack of knowledge as to when to be in the market, and when to be out of the market, is the reason. In two words, direction and timing.
Conventional view (and very well articulated, IMHO):
FWIW, I see merit in both views; they are not necessarily mutually incompatible. The 'unconventional' view focuses on developing an 'edge' and maximizing gain, to whatever extent that's possible; the 'conventional' view focuses on managing trade risk, one factor that is within the control of the trader.
You profit by being net long while price is rising, and net short while it’s falling (vice versa, you lose). Entries and exits are merely ways of adjusting your net position, i.e. long -> flat -> short -> flat, etc.
The more accurately you adjust your position relative to reversals in the market, the more pips you bank. It is both as simple, and as difficult, as that.
Hence using a stoploss per se is not the reason for losses. Lack of knowledge as to when to be in the market, and when to be out of the market, is the reason. In two words, direction and timing.
Conventional view (and very well articulated, IMHO):
I didn't start using stop loss orders until a few months into trading. That's when I realized it was a big mistake not to use one.
The fact is, anything can happen in the forex market, and no one can accurately predict the price movement all the time. Therefore, I believe stop loss orders are a must.
It also pre-defines the maximum loss you're willing to take on a trade. It's an essential part of risk management, and all good traders are the ones who take risk management very seriously.
- #239
- Nov 7, 2012 2:12pm Nov 7, 2012 2:12pm
- Joined Oct 2012 | Status: Trader | 1,696 Posts
Simplicity is the Ultimate Sophistication.