Trading Without a StopLoss

How do you find the balance between being over leveraged versus under leveraged? I struggle with this question a lot.

I had forgotten what mine was. It is 50:1.

I found out I have mini account, which may be why the choice of pairs is restricted.

Keep your choice of pairs. If you have 50:1 leverage, that works fine.
If you are using a larger leverage, I do not know, I have never gone there.
If you are using a lower leverage move up.
You are essentially borrowing money on the cash in your account to carry your debt load with:

It's zero % interest! (Unless you screw up and let the account go to margin call). Your Uncle probably would not give you that good a deal.

All the other people I know of who would, have gone and left me on this planet.

85 p so far tonight: mostly screamers. I will sleep now a while: when I come back, I will look: those will be pending trades that have gone active and taken profit I will report in pips.

I am curious to know if you scalped at all, and how well you have done with your pending trades. Do this in pips.for my convenience sake.

Wish you all GL for this week. I have started this week with +4 Pips. Now waiting for opportunity.

eu +11
uc +24
gc +28

so far today

Good! I had one pender close (eurcad) and back in with a buy with another pend.
total 110 but I just had a bunch of screamers. The guy posting later, will probably usually have more.

Saw that GBPCAD just crossed m.a.s into optimum buy so I added the buy there

But now I am in trouble: 4 hrs later: no trades went to tp : Gbp went plunging, but not activating the crosses I had neglected to set up to catch a plunge:

My Debtload has increased to 49 % and my margin % below 170%

I went to the gbp crosses: found 3 parents pushing gbpaud down, the MA.s in transition with the fastest one at 45degree angle crossing the middle one.

entered a sell and two overlapping penders, the last for 50 p or so.

the debt load seems to be under control now. Have selected a usdcad trade for closure at loss if need be.

will watch:No news events in the US session slated to rescue me/ get me in further trouble. Typical monday.

Name of this strategy "Increase investment in the trades going your way": it increases that weight makes gainers more important than losers.
When sucessful,avoids having to close anything at loss.

There will be a lesson download at the end of the US session called "Weeding the garden" to cover this:

watching eurjpy bouncing along what is now support at 143.3 or so : I put a buy stop in at 143.4 to be aggressive Condition of MA lead me to expect more up pushes than down: no clear signal from parents:

debt load coming back down, though...good sign.

Note to self: at start of week, get your pending sales on All your windows set up, not just the ones that look most likely.

Since this is a form of hedging, entries can be defensive as well as offensive in effect. Don't get ontological on your self.

I promise to leave y'all alone for 3 hours, now

Hey Rap.

I don't know if I am doing this correctly. I am only buying on black charts and selling on blue charts.

Three hours have gone by so I'm back. The debt load is chasing me but I am out-running it. GbpJpy pender has closed again, giving me some room. 210 p closed in profits have helped,as well. 30 p of that in the pending trades, but I am sure had I gone away some of the screamers would have reached take profit levels as well.

I am glad I felt confident enough to go see my oncolgist. She comes first, of course. Still here, still no reduction of principle, equity steadily climbing.

An interesting morning. If I had to figure it out on the fly, I would have lost principle. That we try to avoid. After all, that is the seed money
if you've heard the term. I weeded the Garden. File coming in detail.

Okay, if you must place fixed stops consider this:
If placement of stops didn't matter, why are so many people
concerned about where they are? Why are there news feeds specifically focused on that? Don't place stops at numbers
ending in 00. Place them at odd numbers where the algorithm will find other stops first.

The strategy of the sheep:
You just have to move fast enough to get another sheep between you and the predator.

and this:
Fixed stop losses are like training wheels. Imagine a professional bike race where they were all using training
wheels...

Ooh, they are not going like that!

269 pips closed today. Current leverage on this account: 4:1. Trades still open: 22.

First: notice that your increase in balance exceeds your increase in debt load. ( the first number on the report line - the last ) You are in net profit for the day, and in good, healthy shape: You could close all your opens even in loss and still emerge a winner.

But why do that? You have several unclosed trades in profit, and the ones showing loss are in windows whose m.a. seem to predict that future pushes will come your way!

Now, The goal is to set it up so that at least two windows will catch a currency going up, and at least two will catch a currency going down.

In actuality in two of your currencies, the Usd, and the Jpy, you have slight imbalances caused by the fact that the currency names sometimes reverse.

AB = -BA so your assignment, should you choose to accept it, is to reverse a window common to the two currencies so they balance out. A way to do this is to refrain from any more entries in USDJPY, wait for the trades to close, as they most likely will before too long. And when the window is clear of entries, reverse the color and bias to blue ,and negative. And this while raking in profits and without any loss to your (virtual) money.

I seem to remember having a similar problem when I first set up my garden. Perhaps I passed the error on to you..

I like the black window, blue window arrangement. It stresses to me that currency pairs seem to react in similar ways, with no need to differentiate how the system treats them, once you decide if they go up, or down.

(Said the minister, "Are you going up or down?")

Check out what I said. These things are confusing and I could be wrong.

See how resilient this bed is? It will makes money all by itself, once you set it up.

All the rest of it is how to improve on it , what to do when things go wrong, and some ideas on how to switch over to the real thing. My parts on those are coming, oh say by five, or maybe eight, e.s.t. for what to do when things go wrong.

Not using stop-loss is a very good thing only if you are too big to fail. If your account is big you can afford to run bad trade for months and even years without affecting anything. The big guys do that and meanwhile they keep trading. I am trading exactly like that on my demo account.

If your account is small- not using stop-loss is a sure way for losing your money. Just a matter of time unless you have the discipline to execute the mental stop-loss you should be placing even before entering a trade...

[quote=Rap Skallion;7330945]{quote} First: notice that your increase in balance exceeds your increase in debt load. ( the first number on the report line - the last )


In other words "Balance – free margin?"

[quote=pullice;7331023] In other words, balance + profit/ loss, for today. This will be the same as the number marked "equity"

Your equity has increased. Make a note of that somewhere (I keep a simple journal in Notepad) and , tomorrow note the increase.

Your profit/loss number will usually be negative in this series. If the number is going toward zero, that is healthiest. If the equity number is increasing, that is okay.

If the profit number is getting larger and larger, and the equity number is getting smaller and smaller, you to need to be alert, and follow a course of action, which I will download in a file later today.

Hi Rap Skallion,

I`m very curious of what your solution is for drawdown controll. I lost some real money a few years ago on Brijon`s Pitbull strategy. After that I started to backtest this theory on Forex Tester2. Actually I backtested months and years and found no solution to controll drawdown the way Brijon wanted to do. I tried my own ideas as well, but haven`t found a solution yet. Sure, your system is a lot different than good old Brijon`s, but now the words "equity" and "drawdown" caught my attention.

Cheers and good luck.

Weeding the garden:
Yes there are weeds to take care of:
There are things to keep an eye on and if you do not do this, sooner or later you will lose your HCS: (Happy Camper status—technical term).
No Stop Loss!:
Many people think this is crazy and will reject my views out of hand for this single reason, and they would be right if I did not have something else in its place. I have four things in its place. One of them is you. Another is the network. The third is the small size of an individual trade. The fourth is the number of trades in play.
First tool: The network:
The fifteen screens are designed so that if a currency is making a move against one of your pairs, it almost certainly will be moving in favor of others of your pairs. Each currency is arranged with five screens pairing it with the others. Two of these screens go in one direction (always) three go in another (always. We trade any particular pair only in one direction).
It can sometimes happen that a currency will trigger a trade in one pair and immediately turn around and plunge the other way. The name of this is frequently called “False Breakout” (ah, remember? If you have been around a while you will have heard of this before). Among the fourteen other screens however, there are at least two others waiting to catch the plunge. On the other hand a false breakout frequently precedes a real one in the same direction: a maneuver usually called “the kiss goodbye”. We will let it do that. Chances for profit abound.
Along the way however we will wind up sooner or later accumulating trades that are not in profit, and do not seem to be going to do so in the near future:
The second tool: You:
If you have done as I told you and taken advantage of the free MT4 trading platform you find in the terminal a line which looks like this:
Balance: 3 494.54 USD Equity 1 820.13 Margin: 890.40 Free margin:929.73 Margin level: 204.42
And over in the far right corner a number in the Profit/Loss column which looks like this:
-1 674.41
That is your debt load: If that number is climbing (toward 0.00) from the last time you looked at it, and your equity is more than half your balance, or if at least your balance is climbing higher faster than your debt load, and your margin level above 160%, you are in good shape. The market is coming back and bringing your losing trades into profit, or at least into less of a loss.
If that number is growing larger (more negative) that is a warning sign. You have essentially four choices:
1. Wait: under many circumstances, this is normal and temporary, especially if some news has occurred which pushes things around (this is a whole other section we will deal with later: Do not considered yourself an accomplished trader till you know about this, what will help you, and what you may want to do about it. The number will simply sashay back down towards zero..
2. If your margin level is 140 or below, you may have to take emergency action and close some trades in loss. Pick ones that are at least 100 pips out. Pick ones that cost the least in dollars per lot size. From these candidates pick the ones that are being pushed the wrong way, or that are in the wrong trend so that you would expect to be even more expensive if you wait. Check your balance among the pairs. Sometimes you may find one pair dominating the debt load. Aim to reduce that pair. Using reasoned judgment, you can reduce your debt load to a comfortable level more cheaply and cleanly. Let your dealer carry as much of the debt load as you are comfortable with.
Be sure to congratulate yourself on your wisdom and prudence in avoiding the dreaded margin call (it is a terrible thing). Try to ignore the fact that luck will frequently have it that the pairs you close will go charging off back towards profit the moment you close. Forrest Gump had a saying for that.
3. If you have room to put on more trades, get more aggressive with the pairs that are going your way. This will increase the weight of the trades going your way and frequently get that pesky number on the right shrinking again the way it ought to. This way is vastly preferred when possible.
4. If you have more money to add, why haven’t you done so already?

If you are uncomfortable and panicky about no stop loss you can always add a stop loss 300-500 pips back. I believe it will cost you, but you should still be able to make it long enough to see that you do not really need it if you follow this next rule: Or when you set up your pending trades, put the SL right at current market price. If it crosses the line of resistance and then re-crosses and comes to that price, You have a false break- out. A stop loss there will not normally eat into your bottom line too much.
The third tool: Lot size.
Bet .02 lots a trade per thousand dollars of balance, plus .01 lot.

This assumes you have at least a thousand dollars of balance. If not, there are adaptations of the method which will help you get experience in the method, while you scarf up the money. I will discuss them in a lesson which will discuss my ideas about how to go from a Demo account to the real world.
Violate that rule at your own risk. Violate it and a stop loss will not be enough of a measure to save you. At 3500 dollars balance I play with .08 lot and figure on making 40% per year return on investment, lowball estimate. If you can beat that reliably, get out of the forex and into whatever that is. Fair warning: This system will not work if you go lot size higher than that per entry. Your balance will not carry your debt load.
At this point, 3/4ths of the way through february, I have made 2600 pips.( at .08 mini lots, that is 8 cents a pip, or $208.00. To make more money, I need only increase the size of my lots, and to do that, I need more balance. That’s not easy when you are on Social Security. Compounding is a wonderful thing though. My future is bright, as long as I can survive this cancer.
Another Tool: Number of trades in play.
There is another tool I use to keep down debt load creep. It is very simple: I keep count of the number of trades I have in play on any pair. (You would be surprised how easily, when managing 15 screens you can let one pair grab an inordinate share of the load). When I see that happening, I put text on the screen, a big yellow “NO” goes on that screen. No more entries may be made in that pair until at least one trade closes in profit and things get back in balance. If I have to close out a trade in loss, a trade in loss in this pair has preference, (other things equal) so that I can get the pair back into play. The pair stays on the screen so I can see its role as a parent pair in judging others.
Conversely, I will find some pairs that are low in number of entries in play. These are the ones making me money at the time. They have a nasty habit of closing on me in profit and not making more money. These are the ones I get more aggressive with when price action is going their way.

If you see a real need to put a stop loss in your trade, it is probably because you are trading a lot size too large not to. You can do that, and with skill (and luck) sometimes be successful, I suppose. I tried and did not like the results.


PPS. : I wrote this section earlier of, course. Today (read my posts) I got myself in trouble and used option three to get back out.
My debt load has increased some 300 dollars but my principle has increased 100 dollars more. Sooner or later the GBP will come charging back (it is the most volatile currency in the world) and my debt load will shrink ( as it has time and again).
The Next lesson, I will upload tomorrow, will be titled "Reaping the Crop" . We will discuss my view of Moving averages and what to do with them, and terms like "screamers", and "nekkid trades".

I think it will be more fun than this last. By enhancing your pending grid with a few manual techniques, you can find yourself running away from that nasty debt load until, in exhaustion it quits on you and goes the other way.

Take a look at the pairs on the Monthly charts. Is there a single pair among these fifteen that has not been where it is before?
It will go there again. The wave, the nature of the beast.

That sounds good. Is your P/L in pips less than 269? You did better than I by far. (I never said I was a super trader: only that I believe I have cobbled together a super system).

I don't know exactly what you mean be "current leverage on this account:4:1". Is that the maximum your broker will give you? Have you chosen this somehow?
Forgive my ignorance. Message me if you wish to keep it private.

Many of my screens have the two fast moving averages interweaving, and some of them have them very close together. Usually this indicates indecision in the market. I would relay a lot more on the parent child chart in this type of situation.

Or does that mean take very aggressive stances to catch the coming big move either way. The wisdom is that moving averages do not stay together long. Apparently they do not like each other

Interesting. We shall see. My prayers for the families of that Malaysian Airliner.

No, my float is around breakeven.......

My broker allows 50:1, so all of my positions total currently 4:1. That is how much leverage I am using to maintain my positions. The key to trading this way for me is to keep the margin man way while collecting pips for the wave motion of the market.

That was a very very good post Rap, everything a newbie would need, except the patience and discipline for this kind of trading.