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Trading Without a StopLoss

  • #2,061
  • May 28, 2014 6:03pm May 28, 2014 6:03pm
There is a thread here at FF where previous and past institutional traders talk about trading for the big banks. Some of the things they do and how they trade. It is why there is a crowd here at FF who are vicious in attacking us who have figured it out. Go read the thread if you dont believe me.

Now do you understand why I use large SL or none at all? Why I try to follow the long term trend and stay out of the slaughter houses? Here is the confession of an institutional trader when they see your stops or even if you hide your stops they still will get you from everyone else who places them. I love this stuff.

http://www.forexfactory.com/showthread.php?t=486128

This is what I do when I see other people's stops: I run them.

When I run stops, I don't use stops on those runs, because my targets are usually less than say 20 pips for a short term kill. Some guys go for more, I guess I'm not that greedy. I do use mental stops however in case my runs go sour. That takes discipline which the Banks pay me big bucks for.
When I run stops, trend direction is always at the back of my mind, but not a factor because, as I've implied, my targets are very short term. I don't use technical tools other than my own eyes and price action on the screen.
  • #2,062
  • May 28, 2014 7:31pm May 28, 2014 7:31pm
I'm right there with you. I take a loss only when two of my indicators turn the other way. This makes it so I do not have a definable SL or risk/reward, and it makes sure that a simple spike the other way doesn't necessarily exit me out of the trade -- two specific indicators have to line up before I get out.

I will have SLs at +25 pips, +100 pips, etc after my trade has gone beyond those areas, but that's it.

As I alluded to before, I got where I am by going against conventional wisdom ("ALWAYS set a SL.....ALWAYS have a risk reward of at least ___/____.....Don't rely on indicators, etc etc).

I think spot forex is still very new in the grand scheme of things, and today's "conventional wisdom" will be different 20 years from now. Actually, I hope it isn't.
  • #2,063
  • May 28, 2014 8:07pm May 28, 2014 8:07pm
ive been trading without stop loss for 3 months already.. but i only trade in positive swap only and very small lot size so that i can open multiple trades.. i started this experiment with an account of $200, and now ive got $478.. just maintain a very high margin and youll not get lost
  • #2,064
  • May 29, 2014 1:42am May 29, 2014 1:42am
Quoting ViciousP
I'm right there with you. I take a loss only when two of my indicators turn the other way. This makes it so I do not have a definable SL or risk/reward, and it makes sure that a simple spike the other way doesn't necessarily exit me out of the trade -- two specific indicators have to line up before I get out. I will have SLs at +25 pips, +100 pips, etc after my trade has gone beyond those areas, but that's it. As I alluded to before, I got where I am by going against conventional wisdom ("ALWAYS set a SL.....ALWAYS have a risk reward of at least...

I agree with you. The risk to reward ratio is more of a fantasy in Forex because price jumps up and down so much within a range. I also trade sessions for example price hits its zenith around 2-3 hours into the JPY session, 1 or 2 hours before the USA open during the euro session and 2-3 hours into the USA session. Those are my TP targets. If price doesnt move during those times you can then reload and wait for the next session. There are exception days like FOMC news in the afternoon and JPY bond sales in the afternoon but most of the time whatever a session gives me I take it whether it meets some artificially set target or not. I think a better ratio is winners to losers. If I can keep my winners to losers ratio at 3:1 then covering losing trades is fairly easy too do. When I drop to a win to loss ratio of less then 3:1 then I need to see if I am overtrading and taking on too much risk. If I am nailing it there are times my win percentage is over 80% and when I am really lucky 90%. Losses mean nothing then when you hit that 4:1 to 8:1 win to loss ratio.

Anyway I like your thoughts on waiting for definite confirmation of direction change before taking a loss. Good idea.
  • #2,065
  • Jun 9, 2014 10:20pm Jun 9, 2014 10:20pm
I tend to cycle in and out of the market. If anything, I start the week out placing entry orders that are good for day for everything that meets my criteria. There are usually ten or more set-up's that usually fit the bill. Some of these hit the target price (which is usually less than 20 pips) right away; some do not. The ones that don't, I usually end up adding to during subsequent trading days in the direction of the original trade (a conventional no-no), revising the target price so that it produces a net profit, even if the net pippage is small.

For me, the only "bad" trade is usually the one that I have to hold longer than I would like to (which is more than a couple days). When I start to feel uncomfortable with the amount of exposure I have out there (something approaching 10 times equity), I generally stop adding new set-up's and focus on getting out of the so-called "bad" trades I have left. Naturally, sometimes one of the legs of the bad trades is going to be a loss, but this is ordinarily offset by subsequent additional positions whose entry point was more favorable to the direction of the trade. On one level, I don't see the point in taking a loss with an SL if I'm basically correct as to the direction of movement, but my timing is only (in the scheme of things) slightly off. I am generally satisfied with my guesses as to the direction of movement. Frankly, certain market analysts' tendency to engage in overly busy charting to point out a given set-up is maddening.

I would like to know how exactly how these institutional traders are faring in this market. Naturally, they may be in a position to wait for large, rewarding movement over a several week period, but that would drive me bonkers. My sitting in a position for more than a week makes me itchy ... .

Always glad to hear from fellow followers of the SL-Free Movement ... .

Woody the Zebra Squirrel!
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,066
  • Jun 9, 2014 10:42pm Jun 9, 2014 10:42pm
Quoting nanningbob
This is what I do when I see other people's stops: I run them. When I run stops, I don't use stops on those runs, because my targets are usually less than say 20 pips for a short term kill. Some guys go for more, I guess I'm not that greedy. I do use mental stops however in case my runs go sour. That takes discipline which the Banks pay me big bucks for. When I run stops, trend direction is always at the back of my mind, but not a factor because, as I've implied, my targets are very short term. I don't use technical tools other than my own eyes...
Love this stuff also.

Kinda reminds me of my equity day trading days. Standard fare to look at bid/ask order queue, large bid/ask blocks and then slip in a trade on either side so that your trade executes first; taking advantage of gaps between a big retail position and the next order; looking at the order queue and the size of orders to see if a cascade is setting up and such. I wouldn't put it past a large retail op setting up a cascade in the right market conditions in order to gain an advantage as to a position they took; I'm sure their quants can more than easily calculate under what circumstances it might be advantageous to do this ... .

It is the Zebra Squirrel's motto to "hide your nuts so that others can't get at them."

Woody the Zebra Squirrel
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,067
  • Jun 10, 2014 2:27am Jun 10, 2014 2:27am
Quoting nanningbob
There is a thread here at FF where previous and past institutional traders talk about trading for the big banks. Some of the things they do and how they trade. It is why there is a crowd here at FF who are vicious in attacking us who have figured it out. Go read the thread if you dont believe me. Now do you understand why I use large SL or none at all? Why I try to follow the long term trend and stay out of the slaughter houses? Here is the confession of an institutional trader when they see your stops or even if you hide your...
I doubt very much "they" know Forex Factory even exists. If such a creature even exists that's making big bucks in the forex, I doubt it's lurking here to keep an eye on those $200 account holders.
  • #2,068
  • Jun 10, 2014 11:25am Jun 10, 2014 11:25am
In order to avoid making large losses, many traders use tight stop-losses, but this often results in multiple small losses that can quickly add up and ruin a trading account. Often, trades that start out badly eventually become profitable, if the trade is just given some time.
  • #2,069
  • Jun 11, 2014 1:44am Jun 11, 2014 1:44am
yes, we must avoid a large loss with stop loss. this is a great way to us to minimize the loss. but i don't know about the other trader who not using stop loss in trade
  • #2,070
  • Jun 11, 2014 3:54am Jun 11, 2014 3:54am
How about a time stop loss instead of a fixed SL..if the trade is still in negative after 24h close it with a loss? Maybe some pre emptive fixed SL far away just for those special scenarios when market crashes or something like that
  • #2,071
  • Jun 11, 2014 9:22am Jun 11, 2014 9:22am
On my opinion stop loss is one of the best tools on Forex. It is extremely important to control your risks and not to let the market destroy your deposit. Of course it's pretty tempting to wait until the price returns to the point when you've entered the trade. And it might even work for some period of time. But finally a trend against you will ruin all your previous successful trades.
  • #2,072
  • Jun 11, 2014 9:33am Jun 11, 2014 9:33am
There are many who use this approach. I suspect 3 days would be more adequate to give a pair time to recover into profit. In any one day, there seems to be a shift where a pair just stalls, or goes the wrong way. If your equity is growing, and you have room in your margin enough for comfort, what's the hurry, though?

The longer you wait for a trade before you close it in loss, the sooner it would have moved back into profit had you not closed it.

That is pretty certain.

How about this? The better things are going for you, the longer you can wait to close in loss. The worse things are going for you, closing in loss quicker can lighten your load and make you able to deal with things more profitably.

It is an art. No matter what you do, you could have done better had you done something different.
  • #2,073
  • Jun 12, 2014 12:02pm Jun 12, 2014 12:02pm
Quoting Rap Skallion
There are many who use this approach. I suspect 3 days would be more adequate to give a pair time to recover into profit. In any one day, there seems to be a shift where a pair just stalls, or goes the wrong way. If your equity is growing, and you have room in your margin enough for comfort, what's the hurry, though? The longer you wait for a trade before you close it in loss, the sooner it would have moved back into profit had you not closed it. That is pretty certain. How about this? The better things are going for you, the longer you can wait...
That's kinda funny in that it's so spot on. If a particular trade goes against me, I am usually out after 3-4 days with a net profit (usually by adding additional positions). I am perfectly fine with folks using SL's if they can effectively manage their risk that way. With me, I manage my risk with what I think is an exceptionally small (from what I've heard) equity multiple -- less than .5 times equity (although I actually prefer even smaller). That being said, I usually don't hesitate setting SL's at breakeven if I can do so, especially where I am not seeing the movement I want in the trade or doesn't look like it's going to hit my target. Also, most of the breathing room SL's I used to set were at the daily ATR anyhoo; it is usually so far out that the only time it is going to execute is if something catastrophic occurs. In other words, it is virtually worthless in the vast majority of cases since these kinds of stops are meant to execute in extreme or impulsive swing conditions, many of which are followed by substantial retracements.

There is more than one way to skin a cat; it's just that my way is "prettier." Lol.

Woody the Zebra Squirrel
(Can't believe I found an image of one.)
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,074
  • Jun 12, 2014 12:11pm Jun 12, 2014 12:11pm
... of a Zebra Squirrel, that is, not a skinned cat ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,075
  • Jun 21, 2014 2:49pm Jun 21, 2014 2:49pm
Quoting nanningbob
{quote} If you dont believe me study the COT reports. These are the really big boys. You will notice they are usually between 45-55% range in their buys and sells. You mean to tell me 45% of them are on the wrong side of a trade with a 30 pip SL. Your a fool to believe such a thing. OR do they use a strategy that gives them room for their trades to run. I choose the 2nd. Compare how you trade with how they trade. It is an eye opener and seldom talked about or discussed here or at any other forum. Good luck with your study.
I agree, the COT reports are a great tool for longer term investors. It shows a good picture of the fight between the bulls and the bears. Once I started following the report and became a directional trader i started becoming profitable. I also found the speculators tend to follow the favorable carry trade, while the commercials do the opposite, primarily because they are hedging. I no longer view any trade as it being on the wrong side, but more of being bad timing and look for better entry to add to my positions. The nice part of forex is you can trade the same way as the big boys and you dont need a lot of capital to do so.
  • #2,076
  • Jul 16, 2014 12:35am Jul 16, 2014 12:35am
Still trading "naked ... ."
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,077
  • Jul 16, 2014 7:06am Jul 16, 2014 7:06am
Its ok trading micro lots with out a stop loss but you cant go that way for ever same as you cant trade Forex at small lots consistently for ever sooner or later you will want to make decent money and that requires bigger lots. Bigger lots and you will need a stop no 2 ways about it. Some times you have to know when to bet the farm on a good set up, this will also require a stop. traders that don't use stops probably think they have something others don't, and you don't. This paranoid concept about brokers out to get your stop is a newbie theory, with experience you'll see its not in there best interest and besides no one cares where your stop is as your positions in the market is not so significant.
  • #2,078
  • Jul 16, 2014 7:12am Jul 16, 2014 7:12am
Quoting Philt
Its ok trading micro lots with out a stop loss but you cant go that way for ever same as you cant trade Forex at small lots consistently for ever sooner or later you will want to make decent money and that requires bigger lots. Bigger lots and you will need a stop no 2 ways about it. Some times you have to know when to bet the farm on a good set up, this will also require a stop. traders that don't use stops probably think they have something others don't, and you don't. This paranoid concept about brokers out to get your stop is a newbie theory,...
Try to explain that to someone who is profitable that doesn't use a hard stoploss ever.
All posts are my personal opinion
  • #2,079
  • Jul 16, 2014 8:59am Jul 16, 2014 8:59am
Quoting Rtm
{quote} Try to explain that to someone who is profitable that doesn't use a hard stoploss ever.

I will if I find one.
  • #2,080
  • Jul 16, 2014 9:45am Jul 16, 2014 9:45am
Quoting Danny Maina
trading without a SL should be categorized as an anti trading act. would you mind pasting your trading history here. Danny

Hey Danny, check my history and see what you think about my "antitrading act"
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