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Real Fx traders do not use stoploss

  • #241
  • Nov 8, 2012 1:17pm Nov 8, 2012 1:17pm
Quoting broketrader
Under certain circumstances (low leverage) you can trade without stop loss and it's not gambling at all.

It's more gambling to use high leverage and being forced to set a stop loss.
Its not efficient to trade that way.
  • #242
  • Nov 8, 2012 1:38pm Nov 8, 2012 1:38pm
Quoting silverstar4x
this position has been running for approx three days.
no stop loss used.
maximum leverage and exposure applied.
target equity: n/a
From the charts you posted, it looks very much like you're "averaging down", i.e. adding more positions as your trades go deeper into loss. Almost everybody tries that approach at some point during their learning process.

If price continues to move against you, you have these unpleasant choices:

 

  1. Close all of the positions, with a greater overall loss than if you'd simply opened one position.
  2. Continue to add positions, on the assumption that price will eventually pull back to a point where you can close the whole group, without loss.
  3. Close (or hedge) some of the positions, thereby freezing a partial loss. Hence the other positions must 'work harder' to bring the group, as a whole, back to a breakeven point.

The danger with adding to losing positions is that you're progressively staking more money on the same price move, i.e. every pip price moves against you is now costing (say) $20, $30, $40 etc instead of just the original $10. If you choose option 2, and price never pulls back far enough, you'll eventually be forced to close all of the positions, and then that one price move will have wiped out many of your prior wins, where each pip was worth only $10. In other words, it's like betting BIG on one horse, and small on another, when both have equal chance of winning or losing, AND where the big bet can only ever result in a small win.

Here's something to think about: People trade forex because they believe that price will 'trend' far enough for them to make them money, i.e. once price starts moving in one direction, it will — on balance of probability — continue to do so, at least for a while. To whatever extent that philosophy is valid (and everything else being equal), it follows that:

 

  1. Adding positions while price is moving in your favor means that, on average, you'll win more.
  2. Adding positions while price is moving against you means that, on average, you'll lose more.

  • #243
  • Nov 8, 2012 4:14pm Nov 8, 2012 4:14pm
this position has been running for approx three days.
no stop loss used.
maximum leverage and exposure applied.
position mode: hold

http://i46.tinypic.com/2lmmlv8.gif
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  • #244
  • Nov 8, 2012 4:32pm Nov 8, 2012 4:32pm
a small profit has been taken to offset any daily taxes/spreads/etc.., market will be re-cornered now.

my seven year old says hi to everybody!

http://i49.tinypic.com/50pnjs.gif
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  • #245
  • Nov 8, 2012 6:26pm Nov 8, 2012 6:26pm
step up exposure.

http://i47.tinypic.com/2null61.gif
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  • #246
  • Nov 8, 2012 6:40pm Nov 8, 2012 6:40pm
Quoting silverstar4x
step up exposure.

http://i47.tinypic.com/2null61.gif
in case you missed it... THIS ISN'T A JOURNAL THREAD! stop treating it like it's your own personal journal and go make one.
Congratulations ScalaFX for coming out of the closet!
  • #247
  • Edited 10:13pm Nov 8, 2012 7:41pm | Edited 10:13pm
Quoting nubcake
in case you missed it... THIS ISN'T A JOURNAL THREAD! stop treating it like it's your own personal journal and go make one.
i am so sorry, i stand corrected.

thank you for making this wonderful suggestion, i have taken your suggestion and have started my very own personal journal! my twelve year old says hi to everybody!

god is good.

my personal trading journal: http://www.forexfactory.com/showthread.php?t=394265

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  • #248
  • Nov 8, 2012 11:44pm Nov 8, 2012 11:44pm
I am looking at a trading plan that uses the M5 charts, but that results that the spread will be very close to my SL which will the the previous bar High or Low, and my Entry the Close. I'm not greedy so only looking at a R:R of 1:1 with an imaginary SL, or add it later when the Spread is further away from the SL.

My question is does it affect your TP if you don't use SL, or is the profit purely based on your leverage?

Thanx in advance.
  • #249
  • Nov 12, 2012 2:11am Nov 12, 2012 2:11am
Quoting broketrader
Under certain circumstances (low leverage) you can trade without stop loss and it's not gambling at all.
It's more gambling to use high leverage and being forced to set a stop loss.
It's true about high leverage. But why should we choose the only one - high leverage+SL or low leverage wo SL. I mean that's all surely depends on your strategy. If you are risky guy with high aim that's ok. But a lot of people just want to earn with minimum risk.
Just my 2cents
  • #250
  • Nov 16, 2012 8:14pm Nov 16, 2012 8:14pm
i profited approx twenty five percent this previous week and i did not use a stop loss. it has been suggested that a stop loss must be used when trading speculatively but that a stop loss is not needed when trading a properly designed arbitrage system. there are several types of arbitrage, each type has its pros and cons.

Inserted Video
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  • #251
  • Nov 17, 2012 2:29pm Nov 17, 2012 2:29pm
Quoting silverstar4x
a stop loss is not needed when trading a properly designed arbitrage system
Stoploss is a risk management tool, and arbitrage (by its very definition) offers profit at no risk. So, what you're ultimately saying is that risk management is not needed when there's no risk involved. That's self evident.

The problem is that there are very few arbitrage opportunities available to the retail FX trader. The best that TA based systems can offer is some kind of an edge.

But at least the guy in your video was comparing apples to apples.
And it offered a simple explanation of how supply and demand affects prices.
  • #252
  • Edited 1:07am Nov 18, 2012 12:45am | Edited 1:07am
Quoting hanover
Stoploss is a risk management tool, and arbitrage (by its very definition) offers profit at no risk. So, what you're ultimately saying is that risk management is not needed when there's no risk involved. That's self evident.

The problem is that there are very few arbitrage opportunities available to the retail FX trader. The best that TA based systems can offer is some kind of an edge.

But at least the guy in your video was comparing apples to apples.
And it offered a simple explanation of how supply and demand affects prices.
hanover,

the video is not mine, it is a generic youtube video that provides a basic tutorial regarding arbitrage and i thought that others might enjoy watching it.

it is my opinion that there are pretty much always going to be arbitrageable opportunities in any marketplace, the problem arises due to the difficulty that is involved in properly calculating said opportunities. the arbitrage opportunity that you are referring to is most likely that old textbook example of triangular arbitrage, which has been more than beaten like an old horse and therefore i can appreciate your opinion that there are few opportunities in arbitrage, but this is just not always the case...
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  • #253
  • Nov 18, 2012 2:24am Nov 18, 2012 2:24am
Quoting silverstar4x
hanover,

the video is not mine, it is a generic youtube video that provides a basic tutorial regarding arbitrage and i thought that others might enjoy watching it.

it is my opinion that there are pretty much always going to be arbitrageable opportunities in any marketplace, the problem arises due to the difficulty that is involved in properly calculating said opportunities. the arbitrage opportunity that you are referring to is most likely that old textbook example of triangular arbitrage, which has been more than beaten like an old horse and...
OK then, can you list some examples, that are available to the retail FX trader...... keeping in mind that arbitrage means guaranteed profit with zero risk?
  • #254
  • Nov 18, 2012 12:04pm Nov 18, 2012 12:04pm
Quoting hanover
OK then, can you list some examples, that are available to the retail FX trader...... keeping in mind that arbitrage means guaranteed profit with zero risk?
1) i am not suggesting that arbitrage is without risk.

2) guaranteed profit does not mean zero risk and it does not mean no work is required.

3) a stop loss is not the only risk management tool that i have in my trader's tool box..

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  • #255
  • Nov 18, 2012 12:49pm Nov 18, 2012 12:49pm
Quoting silverstar4x
1) i am not suggesting that arbitrage is without risk.

2) guaranteed profit does not mean zero risk and it does not mean no work is required.

3) a stop loss is not the only risk management tool that i have in my trader's tool box..

you are wrong...Hanover is right

ARBITRAGE is zero risk by definition
AVT INVENIAM VIAM AVT FACIAM
  • #256
  • Nov 18, 2012 2:03pm Nov 18, 2012 2:03pm
Quoting silverstar4x
1) i am not suggesting that arbitrage is without risk.
2) guaranteed profit does not mean zero risk and it does not mean no work is required.
I'll give you an example of (sports) arbitrage.

England are playing Brazil at soccer.

Bookmaker #1 offers odds of 4/1 against an England victory, and 5/1 against a draw.
Bookmaker #2 offers odds of 3/1 against a Brazil victory.

Now if I bet £10 on each one of these options, I'm guaranteed to win at least £10, no matter what the outcome of the game is.

Now, if you want to show that arbitrage is available to the retail trader, you need to find an equivalent situation in forex, where you're guaranteed to win, no matter what the market does. I posted one such theoretical possibility here, but I doubt that you'd find it occurring in real life.
  • #257
  • Edited 5:24pm Nov 18, 2012 5:03pm | Edited 5:24pm
Quoting the redlion
you are wrong...Hanover is right

ARBITRAGE is zero risk by definition
please notice that i(and my children) have a live trading(arbitrage) journal here at the forex factory.

link to our journal: http://www.forexfactory.com/showthread.php?t=394265

ps.. we are having a wonderful time trading!

http://i50.tinypic.com/2n9yxhe.jpg
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  • #258
  • Nov 18, 2012 5:13pm Nov 18, 2012 5:13pm
I for one use ARBITRAGE in my trading. Yet I WON'T say it involves 0 risk. When you look at it mathematically YES THAT IS TRUE, but in trading it is sort of different. It depends in the manner in which your using the Arbitrage. I for one use the Arbitrage method while placing pending orders on the daily pivots. Especially on Mondays. Why mondays? Only because you know Mondays tend to be the lowest ranging day. So at most you will have a 2 to 3 pivot retrace or shift for that one day. So if you have enough equity and your leverage adjusted correctly. It can turn into a very profitable system. Yet, I think the BEST traders use stop-loss. Only because they enter their position under the premise that their entry price is the best one.
  • #259
  • Nov 18, 2012 5:43pm Nov 18, 2012 5:43pm
Quoting AmberLynn
I for one use the Arbitrage method while placing pending orders on the daily pivots. Especially on Mondays. Why mondays? Only because you know Mondays tend to be the lowest ranging day. So at most you will have a 2 to 3 pivot retrace or shift for that one day. So if you have enough equity and your leverage adjusted correctly. It can turn into a very profitable system. Yet, I think the BEST traders use stop-loss. Only because they enter their position under the premise that their entry price is the best one.
amberlynn,

please do not confuse speculative/kamikaze/nostoploss trading with a serious round of arbitrage.

when you mentioned the need for *enough equity* that statement immediately disqualifies whatever trading method that you have as not being of the arbitrage family of strategies.

arbitrage is a very serious type of transaction and it involves absolutely no speculation whatsoever.

arbitrage, in my opinion, should have a dictionary definition that is the inverse of the definition of speculate or some other form of the word speculative.

arbitrage refers to a financial transaction that is a "sure deal" and therefore the potential profit can be calculated precisely prior to entering into said transaction.

god loves me.
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  • #260
  • Nov 18, 2012 6:26pm Nov 18, 2012 6:26pm
Quoting silverstar4x
amberlynn,

please do not confuse speculative/kamikaze/nostoploss trading with a serious round of arbitrage.

when you mentioned the need for *enough equity* that statement immediately disqualifies whatever trading method that you have as not being of the arbitrage family of strategies.

arbitrage is a very serious type of transaction and it involves absolutely no speculation whatsoever.

arbitrage, in my opinion, should have a dictionary definition that is the inverse of the definition of speculate or some other form of the word speculative....
Well then for that matter, why even place an arbitrage wager if you can predict the outcome correctly? He who places the arbitrage wager does so based on the increase odds of "As each order is triggered, then your chances of closing the position in profit is also increased" That isn't the same as saying "I WILL PLACE THIS TRADE AND THERE IS NO CHANCE OF ME LOSING ON IT" Yet he uses .01% equity on 10:1 leverage can rest assure he/she will NEVER margin call. Yet that doesn't make his/her wager an arbitrage.
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