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Trading Without a StopLoss

  • #681
  • Nov 15, 2013 6:15pm Nov 15, 2013 6:15pm
Quoting shellsnail
{quote} Very true. But it is the same as exiting the trade with a stop-loss (as soon as it became apparent) and reentering when price got to another entry point. The net effect is exactly the same. So I don't see how your approach is any different if you are simple hedging on the same pair.
My sense of direction is not as strong as yours. So I remain open to all directions. If all directions are possible, then it makes sense to keep rather than discard trades facing those directions.
  • #682
  • Nov 15, 2013 6:49pm Nov 15, 2013 6:49pm
Quoting BeginnerJoe
{quote} My sense of direction is not as strong as yours. So I remain open to all directions. If all directions are possible, then it makes sense to keep rather than discard trades facing those directions.
http://www.forexfactory.com/showthre...t=57639&page=3

Bull makes money, Bears make money, Pigs get slaughtered.

You see, when bulls are making money, Bears are not.
When bears are making money bulls cannot.
But the one who's trying to catch both buses will sooner be dead. Crossing the road from one bus stand to another,
Because he could be at the north stand when the south bus comes, or the south stand when the north bus comes.
or mostly in the middle of the road, when both bus comes.
Build good relationships with others.
  • #683
  • Nov 15, 2013 8:34pm Nov 15, 2013 8:34pm
Quoting dare123
Good-day All, I choose to stop trading with stoploss. I now trade without stoploss. What do you think about trading without stoploss? and if you are currently trading this way or you have traded this way before, kindly share your expirience.
If I had been using stop losses correctly from the beginning, instead of seeking every way possible to avoid them, I would literally be counting my millions by now instead of counting my regrets.
  • #684
  • Nov 15, 2013 9:17pm Nov 15, 2013 9:17pm
I do what I can. I'm a helpful kind of guy.
Congratulations ScalaFX for coming out of the closet!
  • #685
  • Edited 9:49pm Nov 15, 2013 9:35pm | Edited 9:49pm
  •  Owl
  • | Joined Dec 2012 | Status: FX Siphoner Of Symphonies | 435 Posts
Quoting nubcake
I do what I can. I'm a helpful kind of guy.

....I see you!!!...I hear you!!!...you sly fox you!!!...lol
One Must Use A Noble Rapier To Pierce The Veil Of Mystery
  • #686
  • Nov 15, 2013 9:56pm Nov 15, 2013 9:56pm
Hey Nubs...Good to see ya.

All you Brijon and Nanningboob proteges should listen to Nubs you actually might learn something useful.. If your brain is actually functioning that is , which btw is highly questionable.
Markets are Mirrors,,Mastery of craft is mastery of self
  • #687
  • Nov 15, 2013 10:25pm Nov 15, 2013 10:25pm
Hey blue. Was just passing-by recently but got the itch, and some people just ask for it. Who am I to deny them?

It makes me wonder what a thread would be like labelled "Trading Without Risk Management (aka how to be reckless with your dumb money)".
Congratulations ScalaFX for coming out of the closet!
  • #688
  • Nov 16, 2013 12:18am Nov 16, 2013 12:18am
Quoting nubcake
{quote} A supermarket opens knowing they can move product for a profit.
I would disagree here. They cannot know. They also rely on patterns from the past. Supermarkets discount when actual sales fall short and take loss early rather than keeping something on shelves forever until it spoils.
  • #689
  • Edited 7:13am Nov 16, 2013 3:46am | Edited 7:13am
Quoting grin
{quote} I would disagree here. They cannot know. They also rely on patterns from the past. Supermarkets discount when actual sales fall short and take loss early rather than keeping something on shelves forever until it spoils.
Don't worry. I have carried some forex for 3 months. They didn't spoil and good as new. I do nothing with them until they come into season. I see no reason to discount them while I still have room for them in my warehouse. I keep telling people this is a business and not some kind of casino bet where I have to decide if it's a win or loss after 5 seconds of bringing something into stock. To succeed in this business, people really have to know how the cycle of supply and demand works. I aim to buy when supplies are plenty and cheap. Then sell when demands are high and expensive.
  • #690
  • Nov 16, 2013 6:25am Nov 16, 2013 6:25am
Because of the spread, everybody opens a trade at a loss. Sometimes it moves so quickly into profit you don't see the loss printed. Well and good.
Sometimes you have to wait a bar or two and it comes into profit. Well and good. Sometimes it takes longer than a day or two, if your stop loss is low enough, it is not touched, than the Price Action goes back into profit. Well and good.

In each of these trades, you broker is willing to advance money at leverage, unless you cross the margin when they will shut you down.

Ultimately, everyone will close a trade at loss to avoid margin call , and be able to keep on trading. (Or they just quit).

Barring that reason, every other decision to close a trade at loss is open, more or less, to reasoned debate.

The famous financial House of Nomura sustained losses for years before coming into profit, vindicating their decision to do so.

Two winners of the Nobel prize in economics got together, devised an investment strategy that ultimately proved to be correct, but got wiped out because they did not have funds to sustain them long enough For their strategy to be successful.

The key to being successful in the forex, or anywhere in life, is not only to have the right strategy, but also to have the strength to continue in your endeavor until it proves to be successful.

If I go down in failure, I promise to post that here, so that you may be warned of my error.
Unless I die first, or other act of God. (Oops , I did it again. Sorry)
  • #691
  • Nov 16, 2013 6:41am Nov 16, 2013 6:41am
Quoting Rap Skallion
Because of the spread, everybody opens a trade at a loss. Sometimes it moves so quickly into profit you don't see the loss printed. Well and good. Sometimes you have to wait a bar or two and it comes into profit. Well and good. Sometimes it takes longer than a day or two, if your stop loss is low enough, it is not touched, than the Price Action goes back into profit. Well and good. In each of these trades, you broker is willing to advance money at leverage, unless you cross the margin when they will shut you down. Ultimately, everyone will close...
A method which can take years, just to get into profit, which you then take 4 pips, is never going to make enough money to care about in a million years.
Nothing to it, but to do it!!! Stick to the plan FOOL!!!!
  • #692
  • Nov 16, 2013 7:26am Nov 16, 2013 7:26am
Quoting Rap Skallion
Because of the spread, everybody opens a trade at a loss. Sometimes it moves so quickly into profit you don't see the loss printed. Well and good. Sometimes you have to wait a bar or two and it comes into profit. Well and good. Sometimes it takes longer than a day or two, if your stop loss is low enough, it is not touched, than the Price Action goes back into profit. Well and good. In each of these trades, you broker is willing to advance money at leverage, unless you cross the margin when they will shut you down. Ultimately, everyone will close...
Well these Nobel prize winners were more academic than real business man. They didn't have the experience to do the business and hence failed. Running a business is about maintaining the capacity to to run that business. A real business man would have danced his position to keep the capacity viable. Most people believe positions are fixed and dead like a lump of rock. It isn't, it can be made to dance.
  • #693
  • Nov 16, 2013 7:40am Nov 16, 2013 7:40am
Quoting Turveyd
{quote} A method which can take years, just to get into profit, which you then take 4 pips, is never going to make enough money to care about in a million years.
I agree. That is one problem with many of the schemes which do not use stop loss. When you are sitting around, doing nothing, waiting for a trade to come back into profit, you are not trading, you are dreaming. This temptation is more likely to be damaging than that of catastrophic loss. People instinctively (I should think) avoid catastrophic loss. This waiting around thing is a serious criticism which weighs upon my mind frequently. Not to mention that this state of affairs is obnoxiously boring.
So the question becomes, "how can you operate without a stop loss and still avoid the situation where the losses you are carrying paralyze your ability to act when you should?"
Conversely, if you use a stop loss," how can you operate when the losses to your principle are so great you grow fearful to try another"?

Either way you need a general method that allows you to avoid either situation.

More generally, if you do not use stop losses, How do you manage you debt in a reasonable fashion?
  • #694
  • Nov 16, 2013 7:49am Nov 16, 2013 7:49am
Quoting BeginnerJoe
{quote} Well these Nobel prize winners were more academic than real business man. They didn't have the experience to do the business and hence failed. Running a business is about maintaining the capacity to to run that business. A real business man would have danced his position to keep the capacity viable. Most people believe positions are fixed and dead like a lump of rock. It isn't, it can be made to dance.
Essentially that is why Nomura succeeded and the professors failed.

a Quote comes to mind - I believe from Pascal- "Mother Nature is the best teacher -- too bad She kills all Her pupils!".

You call yourself a beginner, Joe, but I wonder if that is not really in the sense that we are all beginners....
  • #695
  • Nov 16, 2013 8:11am Nov 16, 2013 8:11am
Quoting Kyle_Vee
Whether you set a stop loss on your actual order or whether you have one set in your mind, the important thing is that you are very clear on your exit strategy.
I believe that the most importance is to have exit strategy (either by TP or SL) before any entry.
  • #696
  • Nov 16, 2013 8:21am Nov 16, 2013 8:21am
In the 1920s or so their was a famous analyst who compare the action of a market to a Drunkard's Walk.
The Drunkard's Walk
Should he go up the street or down the street? He didn't know. So he took out a coin and flipped it. It came down heads, so he staggered up the street a couple of steps. Then he forgot which direction. So he took out the coin and flipped it. It came down tails so he staggered down the street a couple of steps.
Repeat this pattern ad infinitum and you will have the basic pattern the market exhibits.
- Typical Mathematician.
Those who studied probabilities, worked out that, given the coin was fair and the drunkard tireless, there wasn't a place on the street he wouldn't eventually visit, and not a place on the street to which he would not come back to.

If you name one place "Rich", and another place "Broke", he would eventually visit both places. And tales abound of traders who have gone with him to both places.

The question is Which place will he get to first?

Now put a fly in the ointment. Supposing the coin was not fair? Supposing that if you tossed it twenty times it consistently came out eleven heads to nine tails instead of ten heads to ten tails?

Yes he will get to both places eventually. But he is likely to get up the street first and will visit it more often than when he goes down the street.

The trick is to get a sense of which way the coin favors, heads or tails, and bet that way.

Now if you bet all your money on a single toss of the coin, a single toss of the coin is all you are likely to get.
If you bet five percent of your money on heads on each toss, odds are that you will come out ahead.

Many people tend to bet on heads on one toss, see it come down tails, and bet tails on the next. That is trading without a reasoned plan, and leads to a sure loss.

Does this analogy help you?
  • #697
  • Nov 16, 2013 10:00am Nov 16, 2013 10:00am
Quoting Rap Skallion
In the 1920s or so their was a famous analyst who compare the action of a market to a Drunkard's Walk. The Drunkard's Walk Should he go up the street or down the street? He didn't know. So he took out a coin and flipped it. It came down heads, so he staggered up the street a couple of steps. Then he forgot which direction. So he took out the coin and flipped it. It came down tails so he staggered down the street a couple of steps. Repeat this pattern ad infinitum and you will have the basic pattern the market exhibits. - Typical Mathematician. Those...

This is a good analogy. AND IN SOME WAYS SUPPORTS A NO STOP LOSS STRATIGY.

THE THING THAT NEVER GETS CONCIDERED WITH THIS APROACH IS A VERY SIMPLE TRUTH.THAT TRUTH BEING WE HAVE A RESTRICTION.IF THE DRUNK HAD A LIMITED NUMBER OF STEPS FOR THIS JOURNEY HOME HE WOULD NOT VISIT ALL THE LOCATIONS.THIS LIMITATION APLIES TO EVERY PARTICEPENT. THE AVAILABLE FUNDS.THAT RESTRICTION DICTATES WE ARE UNABLE TO AFFORD THE DRUNKEN WALK AND COVERING EVERY POINT .FOR THIS REASON STRATIGIES BASED ON THIS THEORY ARE NOT POSSIBLE. UNTIL YOU REALISE THIS LIMITATION ONE SHOULD BE DEMO TRADING TO DISCOVER IT
  • #698
  • Nov 16, 2013 12:23pm Nov 16, 2013 12:23pm
Quoting diceman555
{quote} This is a good analogy. AND IN SOME WAYS SUPPORTS A NO STOP LOSS STRATIGY. THE THING THAT NEVER GETS CONCIDERED WITH THIS APROACH IS A VERY SIMPLE TRUTH.THAT TRUTH BEING WE HAVE A RESTRICTION.IF THE DRUNK HAD A LIMITED NUMBER OF STEPS FOR THIS JOURNEY HOME HE WOULD NOT VISIT ALL THE LOCATIONS.THIS LIMITATION APLIES TO EVERY PARTICEPENT. THE AVAILABLE FUNDS.THAT RESTRICTION DICTATES WE ARE UNABLE TO AFFORD THE DRUNKEN WALK AND COVERING EVERY POINT .FOR THIS REASON STRATIGIES BASED ON THIS THEORY ARE NOT POSSIBLE. UNTIL YOU REALISE THIS LIMITATION...
Yes. A possibly profitable line of questioning may be "How does market behavior differ from a drunkards walk. "
Isn't more like a group of drunkards? They stand around not knowing which way to go, and a couple start staggering off in one direction (maybe they're the ones with the coins. Seeing them go off , the others take off in the same direction. The lead drunkards, seeing the others coming after, slow down and allow them to catch up. When they are all caught up, they have forgotten in which direction to go, until one of them flips a coin, etc., etc.

Everybody in the forex sooner or later winds up watching everybody else. If you wander off too soon, you look behind you to see the crowd going the other way and you have to double back real quick. If you dawdle about too long, when you take off after the crowd, you bang into it coming back to you. Either one of these results are unfortunate. Sooner or later, if you are fortunate, you get a pretty good feel for where the crowd is going now, and tag along to collect all sorts of goodies.

Now the boys in Hong Kong and Frankfurt may not like themselves referred to as drunkards, but they watch each other all the same. So do the boys in London and New York, and the boys in Sydney and Montreal watch them as well as they do the boys in Seattle, and Washington D.C. Now they are not watching because they like one another, or even trust one another so you can expect the mob action sometimes to get quite intense.

The reasons why the market moves are sometimes no less frivolous than a Drunkard tossing his coin.

But remember, I do not believe that coin to be completely fair...
  • #699
  • Nov 16, 2013 12:25pm Nov 16, 2013 12:25pm
Quoting Rap Skallion
In the 1920s or so their was a famous analyst who compare the action of a market to a Drunkard's Walk. The Drunkard's Walk Should he go up the street or down the street? He didn't know. So he took out a coin and flipped it. It came down heads, so he staggered up the street a couple of steps. Then he forgot which direction. So he took out the coin and flipped it. It came down tails so he staggered down the street a couple of steps. Repeat this pattern ad infinitum and you will have the basic pattern the market exhibits. - Typical Mathematician. Those...
I don't read books. But I am guessing this must be the origins of the random walk theory ? I don't know where I got that term from, but probably from google.

The market does a lot random walking. However, it also does a lot of deliberate walking. Generally, when the market sees free money lying on the ground and the market isn't too distracted or too busy with something, the market will invariably walk deliberately towards the free money and pick it up. In quiet moments, when the market has nothing better to do, it will go from one free money to the next picking them up as if its beer money depends on it. The reason I know this is because I spent a considerable amount of time deliberately tossing small amount of money, sometimes as little as 0.0001 penny (1/1000th), and see if I could get the market to do walking tricks for me, and it could.

So what is this free money I am talking about ? Well, if you buy at 10 and stop at 5, that's free money right there that the market loves. Now it should be apparent why I would suggest people stop leaving free money on the ground because I really have a rational reason for it.

As for whether your analogy helps ? Not much, because the drunkard has quite a habit of picking up free money that he is very much a master in the art, and can do it with his eyes blurry or closed. This makes sense really because he has to have this skill in order to keep himself drunk in the first place.
  • #700
  • Nov 16, 2013 1:31pm Nov 16, 2013 1:31pm
Limited downside, unlimited upside is the key to success.
If you trade with unlimited downside (no stop loss) and run away any time you have small profit (limited upside) you will lose in the long run.
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