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Trading Without a StopLoss

  • #1,761
  • Mar 25, 2014 7:04pm Mar 25, 2014 7:04pm
Slim will have a field day with this:
The Ratio:
What is the one, first, only thing you need to manage, ignore all else, Key to being a successful trader?
It is not good luck: you cannot manage luck.
It is not the big money you made today: you can lose it all back tomorrow.
It is not a huge balance: just more money to lose.
It is not balance vs. debt load (my mistake for years)
It is not any technical indicator.
It is not the following of teachings of the great traders (though Gann, Wyckoff, etc. make profitable reading).
It is not my precepts, not any system, not even my own:
It is the Ratio:
Ratio = Margin/Balance.
Keep this ratio below 40% and you will succeed, no matter what your method or tactics whatever you use sooner or later you will succeed.
If you cannot keep this ratio below 60% (probably even 50% is no good) no matter what your tactics, indicators, system balance, etc. sooner or later you will lose.
The ratio is the go, no go test of you and your system as a trader.
Keep the ratio below 40% and sooner or later, you will get used to big money days, have a huge and growing account, increase your balance vs. debt load, find that you indicators work for you, and that you will find that you are doing what the gurus, meant for you to do. I think your system then will bear a great deal of similarity to this one, but if it doesn't no matter.

The one exception to this is the use of fixed stop loss every time you trade.

If you use fixed stop loss, This ratio will always look good, terrific. One problem though. It does so at at the cost of your balance. The only ratio a fixed stop loss user need worry about is this month's balance vs. last month's balance.

Conversely in you do not use fixed stop loss Your balance will not vary like that. Which makes it no good as an early indicator. It is possible for your balance to increase right up to the time of margin call.

If you do not use stop loss, the things you do that keep the RATIO below 40%, will result sooner or later in all those other good things.

more on this later.
  • #1,762
  • Mar 25, 2014 11:16pm Mar 25, 2014 11:16pm
Quoting Rap Skallion
Slim will have a field day with tIhis: The Ratio: What is the one, first, only thing you need to manage, ignore all else, Key to being a successful trader? It is not good luck: you cannot manage luck. It is not the big money you made today: you can lose it all back tomorrow. It is not a huge balance: just more money to lose. It is not balance vs. debt load (my mistake for years) It is not any technical indicator. It is not the following of teachings of the great traders (though Gann, Wyckoff, etc. make profitable reading). It is not my precepts,...

Interesting post. The question I would have is what made you decide on the 40% number? Is the product of some kind of scientific method, or is this an arbitrary number based upon anecdotal experience?

Please elaborate on why you chose this number.
If you are good at something, never do it for free--Joker
  • #1,763
  • Mar 26, 2014 6:39am Mar 26, 2014 6:39am
Quoting jmn5611
{quote} Interesting post. The question I would have is what made you decide on the 40% number? Is the product of some kind of scientific method, or is this an arbitrary number based upon anecdotal experience? Please elaborate on why you chose this number.
It has been my experience that when I get too close to 50% I start having problems, refusing trades I would normally be in while waiting for others to close in profit. So those numbers are just guesses. More importantly, is the Margin growing faster than the balance? That is bad. If the balance is growing faster thatn the margin, that's good. These numbers don't sashay around like the others they give you a steadier picture of where you are.

It's much like baseball: in any one at bat, the slugger can strike out, the man not known for his hitting can hit a home run. But if you had your choice, you'd feel better with the slugger at the plate.

You may find over time your numbers to be different. go with those. I have taken to coloring my windows three colors, depending on their M.A conditions.
The black windows have all the m.a.s going my way. The olive drab windows are in transition: I can put pending trades in them set far enough away the the window would have to actually be black by the time it makes that entry. The firebrick windows are going against my interests. I now any trade in them would be questionable. They usually separate themselves so that I have at least four in each category. Most of my money is made in the black windows, of course.

The reason I trade at all in olive ones is one of timing. I tend to like the pairs containing USD and CAD currencies before the US open, The ones containing the AUD and Jpy currencies around 4 p.m.e.s.t (at which time I may clear out pending trades not in those currencies) and late at night after 11, or if like me, you have to get up for the bathroom, 2AM. e.s.t. I favor the Eur, GBP, and CHF pairs. These trades are set up so that if a currency surges one way, it catches entry point of some pairs, If it goes the other, it catches entry on others.

Usually, since I put one pender beyond a support line and one below the resistance line in a different window the distance is such that both are not engaged.

I have been toying with the idea of opening a new account, with the same windows, but mirror image biases. Thus you would be hedging the same pairs, and also their correlative partners. ... still a bit much at this time. Will let you know, though.
  • #1,764
  • Mar 26, 2014 6:08pm Mar 26, 2014 6:08pm
Hi
This maybe not right place
I am new here
How much slippage is acceptable?
  • #1,765
  • Mar 26, 2014 6:32pm Mar 26, 2014 6:32pm
Quoting Rap Skallion
Slim will have a field day with this: The Ratio: What is the one, first, only thing you need to manage, ignore all else, Key to being a successful trader? It is not good luck: you cannot manage luck. It is not the big money you made today: you can lose it all back tomorrow. It is not a huge balance: just more money to lose. It is not balance vs. debt load (my mistake for years) It is not any technical indicator. It is not the following of teachings of the great traders (though Gann, Wyckoff, etc. make profitable reading). It is not my precepts,...
if you define the ration in relation to the margin it should be also related to the leverage or am I missing anything ?

40% based on which leverage ? 50 - 100 or 500
  • #1,766
  • Mar 26, 2014 7:10pm Mar 26, 2014 7:10pm
Quoting EternalNewB
{quote} if you define the ration in relation to the margin it should be also related to the leverage or am I missing anything ? 40% based on which leverage ? 50 - 100 or 500
Yes it should. I use a leverage of 50%. AT my lot size of .08 this costs me 16$ in margin /trade. Frankly, I have not worked out what the effects of increased leverage would have on a trade.

Also bear in mind, this is only an indicator: While using it is profitable, don't become completely insensitive to anything else that is happening.

There is an interesting back-door relationship between Take -profit and Margin. For a given amount of money, you need twice as many trades at twenty five pips take profit as you do at fifty pips take profit. I set my tp at fifty, but that may not be suitable for you. I pass by my screen often enough that I catch a trade going into profit. When I see that, I open the close window, and watch. If the trade is coming back down out of profit, I close immediately. If the trace is going my way, I wait for it to stop making me money and then I close. Then I immediately open the entry window, usually finding the price sashaying back against profit. While it does that, I take a quick check of my indicators, which usually tell me the trade is still a go. When the sashay is done, and the price is again headed in my direction, I get back in, at a lower price, usually.

Someone away from the screen too long may find that fifty pips is too far out, that price can come up, flirt with the TP. and then go back out of profit without making you any money (I hate it when that happens.)

If you are fond of using reward/risk ratios( how do you do that without fixed stoploss) bear in mind that conditions change. That if you take profit before you hit the target point, your risk for that trade immediately falls to zero. The load on your margin is decreased by one trade. Your balance/margin ratio improves by one trade.
  • #1,767
  • Mar 27, 2014 5:54am Mar 27, 2014 5:54am
It is very risky trading without any stop loss, on bad move may lead to a huge loss in your account or if you had used too much high lot, then you may lose your entire account. So alway place a stop loss in every of your trade.
  • #1,768
  • Mar 27, 2014 6:12am Mar 27, 2014 6:12am
Quoting tradeboy
It is very risky trading without any stop loss, on bad move may lead to a huge loss in your account or if you had used too much high lot, then you may lose your entire account. So alway place a stop loss in every of your trade.

well it really depends on your account size vs lot size. I trade without stop loss, I don't make big money but increase my account.

Mind you I don't mean I never close losing trades I do, and often, but it is just when I feel I have to, almost always I get a better deal then where my SL would have been
  • #1,769
  • Mar 27, 2014 7:04am Mar 27, 2014 7:04am
Quoting Befickeelp
Hi This maybe not right place I am new here How much slippage is acceptable?
That depends upon when you are trying to enter the market. Most of the time slippage should be a matter of pippettes.
When a currency is surging because of a surprise news event, and the spread has expanded, you can expect a lot of slippage because the market is having trouble trying the find traders willing to take the other side. Of course, if you do take the other side the response will be instant, and not necessarily a good sign...

If you find slippage to become a significant factor in your trading, You should consider switching to a different broker. A large house, like OANDA tends to be able to find more banks willing to take your trade sooner.

If you are looking for free instruction, let me suggest IBFX.COM : (of course they advocate setting a fixed stop loss with every trade, and I think there is a better way). You do not have to open an account with them in order to take advantage of their instruction. Are there gurus out there worth taking the money from your balance to pay for them? Probably not until you get a five figure balance in your account and can pay for the likes of Gann and Wyckoff. Until then you are stuck with the likes of me.
  • #1,770
  • Mar 27, 2014 7:24am Mar 27, 2014 7:24am
Quoting EternalNewB
{quote} well it really depends on your account size vs lot size. I trade without stop loss, I don't make big money but increase my account. Mind you I don't mean I never close losing trades I do, and often, but it is just when I feel I have to, almost always I get a better deal then where my SL would have been
One thing to bear in mind: if you set a fixed stop loss at the beginning of the trade, conditions are always changing, and the level at which you stop out might not be appropriate at the time it comes to be.
Another thing to bear in mind: if you do not use stop loss, then you should have a plan considering when, where, and how you cut your losses when you need to.
-As EternalNewB seems to have here.
  • #1,771
  • Apr 2, 2014 11:38pm Apr 2, 2014 11:38pm
Quoting Rap Skallion
Slim will have a field day with this: The Ratio: What is the one, first, only thing you need to manage, ignore all else, Key to being a successful trader? It is not good luck: you cannot manage luck. It is not the big money you made today: you can lose it all back tomorrow. It is not a huge balance: just more money to lose. It is not balance vs. debt load (my mistake for years) It is not any technical indicator. It is not the following of teachings of the great traders (though Gann, Wyckoff, etc. make profitable reading). It is not my precepts,...
Serious miss use of terms here: the term should be Equity , not balance. Margin call happens when margin equals equity... The 40% number is reflected as a number of 2.50 Margin level: If you cannot get your margin level up around 2.00, your account is not healthy. You should be looking to decrease the number of your trades ( preferably in profit, if necessary in loss, no new trades. no overlapping ones, etc. Your own austerity program.) till you get there.
  • #1,772
  • Apr 3, 2014 11:03am Apr 3, 2014 11:03am
Quoting Rap Skallion
{quote} Serious miss use of terms here: the term should be Equity , not balance. Margin call happens when margin equals equity... The 40% number is reflected as a number of 2.50 Margin level: If you cannot get your margin level up around 2.00, your account is not healthy. You should be looking to decrease the number of your trades ( preferably in profit, if necessary in loss, no new trades. no overlapping ones, etc. Your own austerity program.) till you get there.
Glad to see you posting again Rap. What are the most trades you have had open before you needed to trim back?
If you are good at something, never do it for free--Joker
  • #1,773
  • Apr 3, 2014 12:33pm Apr 3, 2014 12:33pm
Quoting jmn5611
{quote} Glad to see you posting again Rap. What are the most trades you have had open before you needed to trim back?
I have had as many as 80 trades open, but my equity was higher then.... I have never had a margin call, am wondering if I should provoke one. Just do not like the idea.Started getting warnings around 80, and backed off. Currently at 66 trades open. This give me a margin level of 1.55%, as far out on thin ice as I dare to go. But I won't start new pending trades out here. I only put in ones behind the ones I have active on the black windows, and take them off when the window goes olive.
I can get much more aggressive when the level is above 2.00%.

The market always takes me back above there when I pull in my horns, always.

I need to be more like Wyckoff in my selectivity I believe. I am working, almost done, on a complete draft of the system: It really is ridiculously simple, in action, and tremendously forgiving of mistakes. When done I will mail it to you and others. You can "beta-test" it.

Somebody I didn't even know was watching me has put me on ignore for my lapse in use of terms. Meh, so be it, Some people think it is a put-on, this old age thing: let them suspect. I have no intention of proving them wrong just yet. I will try to be more regular with my postings as I adjust to my new chemo.

I hope that people can see that it doesn't really take a genius to use a system like this. It is almost entirely a matter of common sense.

I should get back to my writing during this quiet part of the day.

Remember to get fat by picking on only the very very best plums of the day. You cannot do that by trading two pairs.
  • #1,774
  • Apr 3, 2014 5:46pm Apr 3, 2014 5:46pm
Quoting Rap Skallion
{quote} I have had as many as 80 trades open, but my equity was higher then.... I have never had a margin call, am wondering if I should provoke one. Just do not like the idea.Started getting warnings around 80, and backed off. Currently at 66 trades open. This give me a margin level of 1.55%, as far out on thin ice as I dare to go. But I won't start new pending trades out here. I only put in ones behind the ones I have active on the black windows, and take them off when the window goes olive. I can get much more aggressive when the level is above...
I'm carrying 67 trades now. No danger of a margin call, currently about 14% of margin. So that tells me good things.

As far as people believing whether or not you are old, or old and sick, that is world we live in today. If you do not have much time left, consider yourself fortunate, as far as I can tell, it is only going to get worse. People like Twee, who have to run large forums full of immature men are to be commended. As far as people putting you on ignore, consider it their loss.
If you are good at something, never do it for free--Joker
  • #1,775
  • Apr 4, 2014 6:59pm Apr 4, 2014 6:59pm
Thank you for your kind words. Sounds to me like you can get very much more aggressive in your trading and get away with it I will have time to write, this weekend.
I had to be away from screen the whole NFP day! Suffered withdrawal symptoms while riding across state and back. Canada had the great news, but gbpaud made me tons of pips, while I was away. Speaks well for the system. For my own talents as a trader, not so much -- when you do better by stepping away from the screen...

If I hadn't done it myself so much for so long, I would find it hard to see why anybody could lose sizable money in the forex.

Just who out there is going to believe that!
The real question isn't how old I am or how good I am at making money doing this. The real question is whether or not you can make money doing the same, or similar system.

Each new breath is sweeter than the last!
  • #1,776
  • Apr 4, 2014 7:55pm Apr 4, 2014 7:55pm
Enjoying this ongoing thread and hearing new ideas and perspectives from Rap and others. I trade with a very different methodology (time and procedure) but you have given me good food for thought...and 67 trades going at the same time ? Wow, how do you keep track ?
  • #1,777
  • Apr 6, 2014 11:21am Apr 6, 2014 11:21am
Quoting freundr
Enjoying this ongoing thread and hearing new ideas and perspectives from Rap and others. I trade with a very different methodology (time and procedure) but you have given me good food for thought...and 67 trades going at the same time ? Wow, how do you keep track ?
I will answer for myself on this:
You don't always succeed!

I try to keep count of what is open and where, but then sometimes I miss a golden opportunity I normally would have taken. Case in point: I failed to put in trades to catch the USDJPY which made a nice run in my direction and (woulda shoulda) would have made me a nice penny if I had caught it: So I shall have to review my procedures to make surer This won't happen again!

It's like asking a shepherd how many sheep should he have in his flock. If he has only three sheep, He's not much of a shepherd is he?

I did do all right anyway, but there seems always to be room for improvement.
  • #1,778
  • Apr 6, 2014 12:30pm Apr 6, 2014 12:30pm
Attached File(s)
File Type: docx Part 1.docx   18 KB | 386 downloads


I submit that you, being a reasonable person, would find it hard put to make a system based upon the understandings contained in the document above, and not find a way to make it profitable.
  • #1,779
  • Apr 8, 2014 10:26pm Apr 8, 2014 10:26pm
Quoting Rap Skallion
{file} I submit that you, being a reasonable person, would find it hard put to make a system based upon the understandings contained in the document above, and not find a way to make it profitable.
There will come a time when you will wish to close a trade at a loss. I suggest you close the trades that will lose the most, first. They are those which have all the moving averages pointing away from profit. Now these may or may not be the ones with the most losing money. In fact those may well be heading back your way right now, and may only be better later. And they may or may not be the ones cheapest to close, which may be the very ones that go into profit for you tomorrow. Close the ones that will do you the most good for your cost...
  • #1,780
  • Apr 9, 2014 1:20am Apr 9, 2014 1:20am
Quoting Rap Skallion
{quote} There will come a time when you will wish to close a trade at a loss. I suggest you close the trades that will lose the most, first. They are those which have all the moving averages pointing away from profit. Now these may or may not be the ones with the most losing money. In fact those may well be heading back your way right now, and may only be better later. And they may or may not be the ones cheapest to close, which may be the very ones that go into profit for you tomorrow. Close the ones that will do you the most good for your cost......
I have decided to stop trading against the swap.
If you are good at something, never do it for free--Joker
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