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How can I be sure that my SL is in the right place?

  • #21
  • Dec 16, 2012 2:08pm Dec 16, 2012 2:08pm
Quoting Kanzler
So are you saying that I have the same chance of my stop being hit if I were to place it below, say, the 1.20 EUR/CHF price as if I were to place it at any other arbitrary location? As context, the 1.20 price is being supported by the swiss national bank, and is just a clearer example of strong support. There are thousands of examples of zones where there are big players waiting, because these zones are relatively easy to spot and everybody has their eyes on them.

And nobody said that this game was in favor of retail traders; this is a competition...
Too many points to edit / comment. But what you are saying is not totally incorrect,
  • #22
  • Dec 16, 2012 2:21pm Dec 16, 2012 2:21pm
Quoting Mingary
Too many points to edit / comment. But what you are saying is not totally incorrect,
I'm not sure how I should take that comment. In any case....why don't you give trading another shot? I took a look at some of your past threads and you don't look like you've given much but indicator trading much of a shot. My personal opinion is that indicators are too reliant on particular conditions in the market to overcome the efficiency. Many of them have huge stop-losses that aren't really necessary either.

Quoting redteamgo
ah, so one of your intraday entry methods is to exploit the algo exploitation of retail traders? i want to hear this one.
No no, I think you misunderstand what I'm saying; I'm saying that the use of computers hasn't really changed anything from 20 years ago except to increase volume and perhaps smooth support/resistance zones some by removing some of the emotion. The traders who write these programs, though, still have to tell the computer under which conditions it's favorable to take a trade, when to profit and when to take a loss. Until the human condition changes we'll still see the same thing we always have.....i.e, support and resistance zones and price action doing its thing. An interesting book you may want to take a peek at is Trading Price Action Reversals by Al Brooks, as he addresses the technology factor.

I also want to disclose right now so there's no confusion that I'm in the same boat as most of you, still trying to become consistently profitable. I don't have the magic answer but I think my experiences are worth sharing because I went through the various phases most aspiring traders do, particularly the search for the holy grail and then a sense of complete despair once I couldn't find it, thinking the market was too efficient to exploit. I took a long break and then came back to it a while ago, and started doing some serious research into price action trading, which entails the strongest horizontal S/R and what price does at those levels. Some of the things, as mentioned before, that happen at these levels cannot simply be attributed to random chance - and that has motivated me to continue improving this method of trading.

Edit: I think this post by hanover is something everybody should read....pure gold.
  • #23
  • Dec 16, 2012 4:49pm Dec 16, 2012 4:49pm
i think that mingary wants to be proven wrong on some level. i think that he considers himself the voice of reason. academia is filled with skeptics. they seem to really enjoy to be as such but in the same time they will never be the creators that push the world forward. it seems that being a skeptic on a forum will be the best thing that happened to him in trading.
  • #24
  • Dec 18, 2012 9:58am Dec 18, 2012 9:58am
Quoting Kanzler
Trading Price Action Reversals by Al Brooks
I wanted to tell you that i bought the digital version of this book after perusing a few chapters. there is actually some good info in there. thanks
Any prices quoted are futures
  • #25
  • Dec 18, 2012 11:24am Dec 18, 2012 11:24am
Quoting redteamgo
I wanted to tell you that i bought the digital version of this book after perusing a few chapters. there is actually some good info in there. thanks
No problem; he goes into a lot of price action based trading and I think that's worth a lot. His reasons for writing the book seem legitimate enough too...I always have to question the motive of any guru or teacher as I think 90% of them are just full of it.
  • #26
  • Dec 19, 2012 3:37pm Dec 19, 2012 3:37pm
Can i find a book on internet about SL? The SL is vital but i dont know how high/low it should be because the price most of the time comes back and that we all say " i knew it", no matter if i trade S/R the SL should be there because the hope dies hard and i keep waiting the price to come back untill it is to late. To trade and to winn it is not to difficult but s.it happens and when it comes the account is gone.
  • #27
  • Dec 19, 2012 4:19pm Dec 19, 2012 4:19pm
Quoting Furdean2
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
If you are trading when a s/r beaks and then you are getting in nice and tight on a retrace/retest of that line, there are two options.

Either just under the previous H/L or using the previous S/R - one is far lower risk exposure, the other it's a lot less likely to hit stops on a regular basis.
  • #28
  • Dec 19, 2012 8:05pm Dec 19, 2012 8:05pm
Q: How can I be sure that my SL is in the right place?
A: Is it really possible to be sure ?

Over the last 3 and a half years I have place stops:

1) One pip in front of the market's turning point WAY TOO MANY TIMES... urrrrrrrrrrrrrrrgh!!!
2) Way too far from where I knew my analysis was incorrect, but stayed with "my plan" taking more pain than necessary...
3) Without remembering to factor in the spread...
4) likely another 100+ incorrect ways

Its no Holy Grail but here's my 2 pips worth:
Trade patterns. There are busloads of patterns that constantly unfold in the charts - all timeframes.

Find one or two that make sense and trade just those.

Pattern trading allows us the opportunity to trade with specific rules - rules that should help us know when our analytical work is wrong. Patterns give us a price level/zone that assists us to know when we are incorrect. Placing the SL above that zone is the right spot, its at a point that, if breached, our pattern was incorrect - time to exit the market.
Remain flexible as the market changes unexpectedly - and it will - if you see a change that warrants an early exit... be flexible with that change.

One more recommendation:
Learn Elliot Wave, Fibonacci and Harmonic Patterns...
And learn it from someone who knows their sh*t - someone that takes the time to make sure you know it too...
There are some fabulous teachers out there, but they are few and far between....

Happy Trading
  • #29
  • Dec 19, 2012 10:00pm Dec 19, 2012 10:00pm
for me in forex there is no right(perfect) SL. it must be fix and balance between SL and TP. 1:1, 2:1, 1:2 3:1, 1:3. it depends on ur faith to ur trading technic.
  • #30
  • Dec 20, 2012 3:40am Dec 20, 2012 3:40am
Hi all:
If you want to live of this bussiness the next 20 years then dont put stop loss orders.
Stop loss orders give brokers all information they needs to execute orders and modificate prices and spreads based in matematics algorithms that gives him security gains.
You must determine previously level risk you are assuming in every trade in accordance with your account balance and close a trade when this level is reached but not show brokers your stop loss price.
You cant fishing sharks with a fishing rod. When you put a stop loss orders you are doing it.
Regards.
That which you give to others, life will return it in spades
  • #31
  • Dec 20, 2012 3:57am Dec 20, 2012 3:57am
Quoting Jaquemate
Hi all:
If you want to live of this bussiness the next 20 years then dont put stop loss orders.
`
Whereas I do not use stoploss orders, I must warn that trading without stop loss is very dangerous if you do not know what you are doing. Pls use stop loss if you are new to forex or are not fully convinced you understand forex- your account will live longer meanwhile.

Though there are many strategies in forex, I think strategies that espounge SL (at least the conventional SL) will do better than otherwise.

Still a word of caution, insert a hard, though remote, stoploss just in case.
  • #32
  • Dec 20, 2012 3:59am Dec 20, 2012 3:59am
Quoting mfoste1
Place stops in the place where you would LEAST expect price to go.
Words of Wisdom, simple but loaded.

King.
  • #33
  • Dec 20, 2012 4:20am Dec 20, 2012 4:20am
Quoting kingsurfer
`
Whereas I do not use stoploss orders, I must warn that trading without stop loss is very dangerous if you do not know what you are doing. Pls use stop loss if you are new to forex or are not fully convinced you understand forex- your account will live longer meanwhile.

Though there are many strategies in forex, I think strategies that espounge SL (at least the conventional SL) will do better than otherwise.

Still a word of caution, insert a hard, though remote, stoploss just in case.
Dont put stop orders is not dangerous. Dangerous is dont know what are you doing. Im not saying that you enter a position and forget. If you are infront computer.... Why gives brokers the information to that price you are willing to close a trade?.
If you dont know what are doing the problem is no stop loss.... you blow your account more early or more late.
Dont give easy money to brokers.
Its my personal experience.
Regards.
That which you give to others, life will return it in spades
  • #34
  • Dec 20, 2012 3:54pm Dec 20, 2012 3:54pm
Quoting Jaquemate
Hi all:
If you want to live of this bussiness the next 20 years then dont put stop loss orders.
Stop loss orders give brokers all information they needs to execute orders and modificate prices and spreads based in matematics algorithms that gives him security gains.
You must determine previously level risk you are assuming in every trade in accordance with your account balance and close a trade when this level is reached but not show brokers your stop loss price.
You cant fishing sharks with a fishing rod. When you put a stop loss orders you...
The pain is to strong when u have to close the trade like that.
  • #35
  • Dec 21, 2012 12:48am Dec 21, 2012 12:48am
Quoting Furdean2
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
Ask yourself a simple question;

At which price will I deem myself to be wrong?
Time hides Nothing
  • #36
  • Dec 21, 2012 6:34am Dec 21, 2012 6:34am
Quoting Furdean2
Im trying to find a way to see wich is the best place where to place the SL when u trade at support and resistance. I need some help. The question is always if the price comes back and the SL was in the right place?
As a rule you should risk not more than 2% of your account balance. So when you enter a trade you can calculate your lotsize and place your SL in accordance with this rule. Also your lotsize and SL depends on the timeframe you are trading. As a rule you need a wider SL when you trade the higher timeframes and a narrower SL when you trade the smaller timeframes. when you want to know how to calculate lot sizes you have a look at: http://www.forexpeacearmy.com/forex-...heckpoint.html Also the next chapters will give you a lot of information.
it all comes back to planning your trade and trading your plan
  • #37
  • Dec 21, 2012 1:46pm Dec 21, 2012 1:46pm
Quoting Jaquemate
Dont put stop orders is not dangerous. Dangerous is dont know what are you doing. Im not saying that you enter a position and forget. If you are infront computer.... Why gives brokers the information to that price you are willing to close a trade?.
If you dont know what are doing the problem is no stop loss.... you blow your account more early or more late.
Dont give easy money to brokers.
Its my personal experience.
Regards.
I'm going to call this as it is - foolhardy advice. Stop losses are a staple of trading and if you don't use them you're exposing yourself to unlimited risk with every trade, whether you think so or not. It only takes one black swan event to destroy you. Contrary to popular belief, your broker really isn't out to get you; instead, consistently losing traders just want someone else to blame for their own failures.
  • #38
  • Dec 21, 2012 2:28pm Dec 21, 2012 2:28pm
Quoting Kanzler
I'm going to call this as it is - foolhardy advice. Stop losses are a staple of trading and if you don't use them you're exposing yourself to unlimited risk with every trade, whether you think so or not. It only takes one black swan event to destroy you. Contrary to popular belief, your broker really isn't out to get you; instead, consistently losing traders just want someone else to blame for their own failures.

I totally agree with you Kanzler. I have seen a very experienced trader lose everything within a couple of seconds, just because he did not use a stop-loss. This was a million dollar account. He never recovered from this blow. Lost his family and finally his life.
So please everybody: use a stop-loss, don't risk more than 2% of your account balance. When you lose, you always have 98% left to trade and you will have a chance to recover from that loss. And if you are winning move your stop-loss up to break even as soon as you reach 70% of your profit target !!!
it all comes back to planning your trade and trading your plan
  • #39
  • Dec 21, 2012 3:30pm Dec 21, 2012 3:30pm
Ok. I think that my english level can not express correctly. I dont say that you dont have a stop loss. I say that if you are infront computer you dont need put a stop loss order. In an extreme situacion i sure you that nothing guaranted your bunkrupty. Ive seen in past.
Im going to talk about my experience and the experience of one of my costumer.
My experience: 16.03.2012 i was put several stop orders in several JPY crosses at open orders. Safety?.... Yes?....Sure?...
I see how price go down strong below orders and orders arent execute.
My costumer experience: He lost 100.000€ the same day and he was put stop loss orders too.
It has been 9 months and my costumer continue claim to broker.
We are talking about real money.
If a "black swan" happens stop orders could be dont execute. Stop orders dont guaranted when a black swan happens.
If a friend lost millions dollar its possible that problem is not the stop, is the overexposure.
You say that my experience is foolhardy advice. Ok. Statistics say that year to year 95% of traders loses their money and most use fixed stop loss orders.........
But you advice they that must continue using stop loss orders.... Ok. There is no problem. Your stop loss order executed is my money.
The main problem is not stop loss orders. The main problem is the overexposure and inapropiate leverage.
95% traders losses their money year by year by year and most they are doing the same one, two..... times only cause 5% traders that supposedly are the winners say to other what they must to do to win........curious.
In that group are you?.
Im not trade paper.
Im dont put stop loss orders when i am infront computer.
I only put stop loss orders when im not infront computer.
I dont overexposure.
I dont inapropiaty leverage.
Im not in a broker account all money i have. I have in a broker account all money i can loss without problem.
I repeat... This post is not and advice. Its my experience in forex.
If you think that you only way is the way to success..... Ok. perfect.
I prefer respect you but you must respect my.
There is so much much much much people in this bussiness that lives of this bussiness but dont of trading.
Im not here for it. I never pay 1€ for learn nothing. I no need it. Nobody could learn me paying. I can show what im doing for free only by the satisfaction of help people. Thats all.
I dont seek controversy but my experience is truth and thats all....
Regards.
That which you give to others, life will return it in spades
  • #40
  • Dec 21, 2012 3:58pm Dec 21, 2012 3:58pm
Quoting Jaquemate
Ok. I think that my english level can not express correctly. I dont say that you dont have a stop loss. I say that if you are infront computer you dont need put a stop loss order. In an extreme situacion i sure you that nothing guaranted your bunkrupty. Ive seen in past.
Im going to talk about my experience and the experience of one of my costumer.
My experience: 16.03.2012 i was put several stop orders in several JPY crosses at open orders. Safety?.... Yes?....Sure?...
I see how price go down strong below orders and orders arent execute.
My costumer...
I respect that you are experienced but I think that the problem with stop losses are not stop losses, but traders placing them at places that they have no real reason to be. And let's be fair - 95% of traders lose money for a lot more reasons than this; in fact, it may very well be the opposite problem - they let losses continue to run while allowing emotion to play guide. Stops should, as have said before, be where the market is telling you that the reason for entering is wrong. There is no disadvantage to using a stop order if you are placing them objectively; I think it all comes back to planning your trade and trading your plan.

True, stop loss orders don't guarantee that you get filled at exactly that level. With larger orders slippage is a very real possibility, and is actually likely (FXCM put together some data on the types of orders most likely to experience positive or negative slippage). Kind of common sense stuff, though, and by the time you try to manually cover you're likely far worse off than had you just put in the automatic limit.
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