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Trading Without a StopLoss

  • #1,781
  • Apr 9, 2014 2:34am Apr 9, 2014 2:34am
Quoting jmn5611
{quote} I have decided to stop trading against the swap.
I am moving in that direction myself. More pushes in general go with the more prosperous currency than against, and thus with the swap rather than against.
The cost is lost opportunity, but under most circumstances that opportunity carries more downside than others, and should be avoided.

At my level of trading, many swaps are invisible: One can go for days without seeing a tariff, or an advantage.
Most of the time the windows I color black and get aggressive in do not go against the swap.
  • #1,782
  • Apr 9, 2014 3:41am Apr 9, 2014 3:41am
Quoting Rap Skallion
{quote} I am moving in that direction myself. More pushes in general go with the more prosperous currency than against, and thus with the swap rather than against. The cost is lost opportunity, but under most circumstances that opportunity carries more downside than others, and should be avoided. At my level of trading, many swaps are invisible: One can go for days without seeing a tariff, or an advantage. Most of the time the windows I color black and get aggressive in do not go against the swap.
Once you start building a lot of positions against the swap, it starts to add up. This was one of the biggest grievances in the millipede thread. The solution is to not trade against the swap. Even if your positions are directly under water, you will mitigate some of the damage by earning positive swap. I have consolidated my accounts, and will be trading long only going forward.

This still enables me to trade many pairs, but, if you look at the screens, you will see that chf pairs go in one direction, all other pairs go in the other, and jpy pairs are a bit of a wild card, but tend to go with the chf pairs.

In any event, long only, from now on.
If you are good at something, never do it for free--Joker
  • #1,783
  • Edited Apr 10, 2014 12:02am Apr 9, 2014 5:42am | Edited Apr 10, 2014 12:02am
Quoting jmn5611
{quote} Once you start building a lot of positions against the swap, it starts to add up. This was one of the biggest grievances in the millipede thread. The solution is to not trade against the swap. Even if your positions are directly under water, you will mitigate some of the damage by earning positive swap. I have consolidated my accounts, and will be trading long only going forward. This still enables me to trade many pairs, but, if you look at the screens, you will see that chf pairs go in one direction, all other pairs go in the other, and...
I have gone long only AUD (still shorts xxxaud) and short only CHF. Long and short on the other four currencies I trade, but suspending any trade there that is negative swap. We'll see how well that plays:
It does change the shape of my forex garden somewhat. This will bring increased forcus on the losing trades that grow the debt load fastest.

Thank you for your guidance: This is more in compliance with "push theory"

Investigation of the other three currencies shows I can still catch them if they move up or down, which is as that should be because of the direction of their swaps vary.
In order to reach full strength I must bring the balance up high enough to pay for that move, else I shall have to reduce my lot size. Reluctant to do that, right now, so I have suspended pending trades in five windows. I have my eye on the tax man. I can keep myself out of profit while improving my setup, without adding money to it, all with ersatz federal subsidy. ( he knows this will not last that long. I can see him lick his chops as he waits for me).

My health seems to be holding under the new regime, and I hope to see these changes vindicated.
  • #1,784
  • Apr 9, 2014 9:28am Apr 9, 2014 9:28am
Quoting Rap Skallion
{quote} I am moving in that direction myself. More pushes in general go with the more prosperous currency than against, and thus with the swap rather than against. The cost is lost opportunity, but under most circumstances that opportunity carries more downside than others, and should be avoided. At my level of trading, many swaps are invisible: One can go for days without seeing a tariff, or an advantage. Most of the time the windows I color black and get aggressive in do not go against the swap.
When you guys refer to going against the swap does that mean hedging with another account in the opposite direction of your original trade ?
  • #1,785
  • Apr 9, 2014 11:32am Apr 9, 2014 11:32am
Quoting freundr
{quote} When you guys refer to going against the swap does that mean hedging with another account in the opposite direction of your original trade ?
Every position you hold is subject to rollover (or swap) if held overnight. Some positions will pay rollover and others will charge it. When you take an "inventory management" style to trading, you're holding several positions in different pairs at the same time, for extended periods of time thus exposing you to either being charged rollover, or rollover being paid to you. For example:

Current Rollover for FXCM:


Symbol Roll S Roll B
EUR/USD -0.18 0.09
USD/JPY -0.24 0.12
GBP/USD -0.45 0.21
USD/CHF -0.24 0.12
EUR/CHF -0.39 0.18
AUD/USD -2.58 1.2
USD/CAD 0.42 -0.96
NZD/USD -2.52 1.2
EUR/GBP 0.09 -0.27
EUR/JPY -0.39 0.18
GBP/JPY -0.99 0.45
CHF/JPY -0.03 -0.03

"Roll S" is the rollover for holding a sell position overnight. "Roll B" is the rollover for holding a buy position overnight. As you can see, most of these pairs charge you rollover for holding sell positions overnight. Trading "against the swap" would be holding mostly sell positions (in the pairs listed). Trading "with the swap" would be holding mostly buy positions (in the pairs listed). When you're holding a lot of inventory for long periods of time, trades that go into the the negative and charge you rollover are kind of a double-whammy scenario. So, holding losing positions that at least pay rollover is a little more beneficial.
  • #1,786
  • Apr 9, 2014 11:58am Apr 9, 2014 11:58am
Thanks Bilstein, I did a google search on the topic but it didn't seem relevant to what was being discussed above.
  • #1,787
  • Apr 9, 2014 12:08pm Apr 9, 2014 12:08pm
Yeah, what Rap is saying he's doing is ensuring the majority of his inventory is long because a lot of pairs are paying rollover to hold buy position. These payments are applied directly to your balance so, by holding them all, your balance is going up a little every day and offsetting bits of your inventory that are going against you. If you manage your inventory correctly, and cycle out losing positions over time - as opposed to all at once - you give yourself time to stay ahead of booked losses. I mean, it's almost an art form. I've been trading like this for a long time. Not the exact same way Rap trades, I maintain a rather large account so my risk model is significantly different. I've been following this thread for a while now and was hesitant to participate because I know, to most, trading without a stop loss is a cardinal sin. In reality, when you have the capital, and trade the proper lot sizes, you don't need charts at all, your terminal window becomes your chart and you manage inventory with an accounting perspective; focusing on the capital as opposed to an array of charts and indicators.
  • #1,788
  • Apr 9, 2014 12:34pm Apr 9, 2014 12:34pm
Quoting Bilstein
Yeah, what Rap is saying he's doing is ensuring the majority of his inventory is long because a lot of pairs are paying rollover to hold buy position. These payments are applied directly to your balance so, by holding them all, your balance is going up a little every day and offsetting bits of your inventory that are going against you. If you manage your inventory correctly, and cycle out losing positions over time - as opposed to all at once - you give yourself time to stay ahead of booked losses. I mean, it's almost an art form. I've been trading...
Thank you for your input: It's true that the first thing I do when I come the screen is look at the Terminal window. Charts become largely things to play with once the action has slowed. (They do give you perspective).
If the charts show me that a pair is going against me, and likely to get worse for some time, I am likely to close that entry regardless of the swap. Thought now, there will not be occasions for the swap to be negative.

And when a central bank announces a change in interest, or tapering, or quantitative easing in such a way that it goes against me, I do not wait for the market to show negative results. I start closing down right then. That may take some experience to judge it, but the way to look at it is not to go against the central banks.
  • #1,789
  • Apr 9, 2014 12:46pm Apr 9, 2014 12:46pm
Quoting Rap Skallion
{quote} Thank you for your input: It's true that the first thing I do when I come the screen is look at the Terminal window. Charts become largely things to play with once the action has slowed. (They do give you perspective). If the charts show me that a pair is going against me, and likely to get worse for some time, I am likely to close that entry regardless of the swap. Thought now, there will not be occasions for the swap to be negative. And when a central bank announces a change in interest, or tapering, or quantitative easing in...
I use a time and percentage of equity model to book losses. If a trade doesn't turn positive in 3 days or it turns into a loss equivalent to 0.07% of equity, I book the loss and re-enter in the same direction. I also tie my total "debt load" to 1% of balance. Since most (if not every) pairs can move against you, I have a "backup" risk plan so all of my inventory can only lose me that 1%-5% at most. I change this parameter every 3 months relative to performance of the account and overall market sentiment. I'm holding a shorts in a few pairs but most of my inventory has been skewed to the buy side as well because of the positive rollovers.
  • #1,790
  • Apr 9, 2014 3:35pm Apr 9, 2014 3:35pm
Quoting Bilstein
{quote} I use a time and percentage of equity model to book losses. If a trade doesn't turn positive in 3 days or it turns into a loss equivalent to 0.07% of equity, I book the loss and re-enter in the same direction. I also tie my total "debt load" to 1% of balance. Since most (if not every) pairs can move against you, I have a "backup" risk plan so all of my inventory can only lose me that 1%-5% at most. I change this parameter every 3 months relative to performance of the account and overall market sentiment. I'm holding a shorts in a few pairs...
Thank you for your helpful posts, Bilstein.

One thing does come to mind. How then from an accounting perspective do you take into account taking profit?
Remember, Red. Hope is a good thing, maybe the best of things...
  • #1,791
  • Apr 9, 2014 3:41pm Apr 9, 2014 3:41pm
Quoting Bilstein
{quote} I use a time and percentage of equity model to book losses. If a trade doesn't turn positive in 3 days or it turns into a loss equivalent to 0.07% of equity, I book the loss and re-enter in the same direction. I also tie my total "debt load" to 1% of balance. Since most (if not every) pairs can move against you, I have a "backup" risk plan so all of my inventory can only lose me that 1%-5% at most. I change this parameter every 3 months relative to performance of the account and overall market sentiment. I'm holding a shorts in a few pairs...
Just to let you know what I think of you: I have subscribed to you.
  • #1,792
  • Apr 9, 2014 4:41pm Apr 9, 2014 4:41pm
Quoting ForexFury
{quote} Thank you for your helpful posts, Bilstein. One thing does come to mind. How then from an accounting perspective do you take into account taking profit?
I close any trades that are profitable by the end of the day. Although, sometimes I get impatient and do it earlier (around 5PM), I try to book gains at 8PM EST. That's when a new daily candle opens for me (on my side of the planet) so I typically cycle my inventories in one fell swoop. Anything that is in profit gets booked. Losing trades will float but within my time and capital risk parameters. I'm not Jesus so, I do still do my share of looking at charts. But nothing more than a simple line chart with a grid; major lines every 1,000 points, minor lines every 250. I also keep my eyes on correlation tables because sometimes, I mix my inventory up a bit. When I started doing it, I legitimately just bought every major pair. I don't do exotics because the spreads suck and they're prone to some stupidly serious movements. But basically, I bought every pair that had AUD, CHF, JPY, GBP, NZD, EUR, CAD, or USD in the pair from there, I just managed it. You'll have days where a lot of the pairs go against you but, never a day where they all go against you. You're always adding something to your balance via profits and swaps. From there, you just cut losses off slowly. This keeps your balance healthy. Add in a little basic analysis and you can mix the inventory up.

I went through my period where I tried every different strategy under the forums. Picking highs and lows is for showoffs. It leaves too much on the table. Basically, all you need to know is up or down - how much will the close change from the open? That's all that matters. My initial thought, when I started, was that if I buy AND sell these pairs, there's a lot of variability. Pairs moving in opposite directions leaves a higher chance of every trade going against you so, I just picked one direction and went that way. It's also nice to not care at all when rate decisions or NFP comes rolling across the wire. I've sat and watched those numbers go crazy and yeah, sometimes it's scary stuff but, when you're going the same direction on everything some pairs go sour, others go very well. At the end of the day, cash out the ones that go well, manage the ones that don't. It's simple in concept but it does require a deal of focus. Admittedly, at first, I looked at it as an easy way to get out of actually having to "pick" pairs and prices and in a way, it allows for that. But you can't just not pay attention to it, lol.
  • #1,793
  • Apr 9, 2014 5:13pm Apr 9, 2014 5:13pm
Quoting Bilstein
{quote} Every position you hold is subject to rollover (or swap) if held overnight. Some positions will pay rollover and others will charge it. When you take an "inventory management" style to trading, you're holding several positions in different pairs at the same time, for extended periods of time thus exposing you to either being charged rollover, or rollover being paid to you. For example: Current Rollover for FXCM: Symbol Roll S Roll B EUR/USD -0.18 0.09 USD/JPY -0.24 0.12 GBP/USD -0.45 0.21 USD/CHF -0.24 0.12 EUR/CHF -0.39 0.18 AUD/USD -2.58...
That's great info, Bilstein

Quoting freundr
Thanks Bilstein, I did a google search on the topic but it didn't seem relevant to what was being discussed above.
Freundr, you might be able to find more info if you search for "carry trade".

Inserted Video
  • #1,794
  • Apr 9, 2014 6:21pm Apr 9, 2014 6:21pm
Quoting Bilstein
{quote} I close any trades that are profitable by the end of the day. Although, sometimes I get impatient and do it earlier (around 5PM), I try to book gains at 8PM EST. That's when a new daily candle opens for me (on my side of the planet) so I typically cycle my inventories in one fell swoop. Anything that is in profit gets booked. Losing trades will float but within my time and capital risk parameters. I'm not Jesus so, I do still do my share of looking at charts. But nothing more than a simple line chart with a grid; major lines every 1,000...
That seems to be a very laid back way to do it. I like to meddle with the pairs that I see in profit: I am not sure that is always the best way to do it. It's just fun for me. Incidentally, you can pick up a days swap in a trade by having it on just before the swap time. (For me, that is 5pm est.) You can take it off right after you get the swap. But why do that? The next trade you enter will have to wait all the way till tomorrow to get the swap money.

Be aware that holding a trade over the weekend when the market is closed will not earn you any swap money.
  • #1,795
  • Apr 9, 2014 6:50pm Apr 9, 2014 6:50pm
Quoting Jason Rogers
{quote} That's great info, Bilstein {quote} Freundr, you might be able to find more info if you search for "carry trade". https://www.youtube.com/watch?v=DwU_6TJxBlc
Thanks for the information Jason !
  • #1,796
  • Edited 8:01pm Apr 9, 2014 6:53pm | Edited 8:01pm
Quoting Rap Skallion
{quote} That seems to be a very laid back way to do it. I like to meddle with the pairs that I see in profit: I am not sure that is always the best way to do it. It's just fun for me. Incidentally, you can pick up a days swap in a trade by having it on just before the swap time. (For me, that is 5pm est.) You can take it off right after you get the swap. But why do that? The next trade you enter will have to wait all the way till tomorrow to get the swap money. Be aware that holding a trade over the weekend when the market is closed will not earn...
Yeah, it is a relatively laid back way to do it. To me, the real fun part about trading this way is how deeply you can customize the method. There's so many different ways to manage the risk, and the inventory. You can do it on just about every time frame, though I wouldn't dare try it on less than an hour. Obviously, if you do it on time frames lower than a day, it takes quite a bit more effort. The way I go about it keeps my thoughts on my capital; my capital is my indicator. As pertains to swaps; I'm literally always in the market. I get paid or charged the swap at 5PM as well, though my broker triples the rollover on Wednesday to cover the weekend. So I'm holding inventory 24/7/365. I can trade relatively large lot sizes but I don't. I keep it reasonably small so I can hold more pairs at one time and that way, even in the worst possible case imaginable, I won't blow my account.
  • #1,797
  • Apr 9, 2014 7:26pm Apr 9, 2014 7:26pm
Quoting Bilstein
{quote} Yeah, it is a relatively laid back way to do it. To me, the real fun part about trading this way is how deeply you can customize the method. There's so many different way to manage the risk, and the inventory. You can do it on just about every time frame, though I wouldn't dare try it on less than an hour. Obviously, if you do it on time frames lower than a day, it takes quite a bit more effort. The way I go about it keeps my thoughts on my capital; my capital is my indicator. As pertains to swaps; I'm literally always in the market. I get...
Good stuff bilstein, glad you had input.
If you are good at something, never do it for free--Joker
  • #1,798
  • Apr 9, 2014 11:57pm Apr 9, 2014 11:57pm
Quoting jmn5611
{quote} Good stuff bilstein, glad you had input.
ditto:

I forgot about the tripling on Wednesday.
  • #1,799
  • Edited 7:45am Apr 10, 2014 4:22am | Edited 7:45am
Tactics, not strategy, but notice how much easier it is when you are not slowed by deciding where to put a fixed stop loss!
How to buy on dips:
You will hear the house advising you to do this occasionally, and sometimes you agree:
Don't buy while it's going down , silly...
Wait for it to approach a line of support and slow then:

Aggressive:
- go down a time scale, watch for it to cross the 8-bar moving average in your direction: now buy. Go back up to your usual time scale.

Want a surer way?
When it gets closer than 10 pips to the S/R line, put in a pending order: buy stop 10 p or so above the line.
If it plunges through the line and keeps going, no harm done. But wait a bit before you remove the buy stop:
It could bounce deep into the line and come back ( this is known as a "bear Trap"), now it's headed your way and you let it enter the buy, with an edge.
  • #1,800
  • Apr 13, 2014 9:43pm Apr 13, 2014 9:43pm
jmn5611 and Rap Skallion: when you say 60+ positions going at the same time, does that include multiple trades in the same pair or all separate and distinct pairs ?
Also curious with that many positions, what % of capital do you guys put in each trade ?
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