Trading Without a StopLoss | Page 108 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

MT4 Trading without GAP and without Excel 669 replies

Trading Without a Stoploss--BHILC 52 replies

Set Order without StopLoss / TakeProfit ? 4 replies

Trading without a stoploss 53 replies

MB Trading software, how to place stoploss and target 1 reply

Attachments: Trading Without a StopLoss
Exit Attachments

Trading Without a StopLoss

  • #2,141
  • Edited 6:01pm Jul 29, 2014 5:44pm | Edited 6:01pm
Quoting normtold
{quote} Bob, would you mind telling me what leverage level you trade with?
I have a USA account that is 25:1 and 50:1. I plan on doubling my funds and going down to 20:1 or even 10:1. As my account grows I have been lowering my ratios. I also do not oppose traders with small amounts of capital trading high leverage with sums less than 500-1000 dollars. I call it tuition money where they learn how to trade. At some point you have to learn this business and you will pay tuition. The smaller the amount the cheaper the university of learning. However, when you get to trading large amounts you should get rid of the high leverage and stay as low of leverage as you can and still make money. I try to trade lot sizes that allow me to earn 5-10% a month. That would be in the 2-4 cents per thousand of account. So if I have a 1000 dollar account I would be trading 2 cent lots. 10K account would be 20 cent lots and 50K account would be 50 cent to 1.00 lots. If you go see the guys who trade million dollar accounts you would then get these kind of ratios. Guys who have million dollar accounts will trade 10 dollar lot sizes. They also trade in the 5:1 to 10:1 leverage ratios. The good ones will make 20-40% a year. If you want to hear their side of the story go read this thread of professional traders answering questions. You will see that these guys will teach some, not all, of what I am trying to say. You will also see various philosophies of trading and what goes on behind the scenes. Much of what brokers get blamed for is nothing more than the big bank traders going after a big fish whose SL is too tight. Very interesting read.

http://www.forexfactory.com/showthread.php?t=486128
  • #2,142
  • Jul 29, 2014 5:46pm Jul 29, 2014 5:46pm
Here is a post at another forum where I explained the deceptiveness of high leverage accounts. I hope this makes it clearer to you.

We have had a similar discussion before so let me hit on two issues you have brought up. High leverage deceives you on the amount of funds you have available to trade. You will see the percent of the account put into play is very low with high leverage when in reality you have too much funds committed to lots. Yes you can just use small lots and still use high leverage but when you look at the figures at the bottom you will think you have lots of funds left to trade with when in reality you dont. That is the deception. Now could I trade high leverage and stay with small lots. Yes I could but a critical piece of information is missing when I trade. When I trade at 25:1 I have more of my money in play and the percentage numbers will be much different at the bottom of the screen. I can see the amount of money I have left to put into play is getting smaller and I am committing too much funds in total. So with that warning I quit adding trades or I start closing out trades that arent doing anything. You dont get that information with high leverage until its way too late. You are already a goner. Low leverage I can see my percentage left to play with is reaching the 300% then 200% levels I know I have too many lots in play and I can close some out with out damaging my account balance. With high leverage you get down to that 200% level, you already are cooked and you have to damage your account to close out trades. That is a big deal that very very few traders understand or even consider when trading. I stay out of trouble with my account because I can see that percentage number with low leverage and know its time to clean some junk out. High leverage accounts show you still have funds to play with when in reality you have already strained your account to its limit. You are done but you dont know it yet.

The second issue is swap costs are the same, or the interest rate is the same whether you have high/low leverage. That also is a big deception. WHY? Because the interest rate maybe the same but the amount you borrowing is far different. If I put 400,000K in play with my 1000 dollars 400:1 leverage or I can only play 25K into play with 25:1 leverage, the interest or swap is the same but the amount you are paying compared to me is a BIG BIG difference. 10% interest on 400K over one year is 40,000 dollars. 10% interest on 25K over one year is 2500 dollars. You will pay 16X more money in interest trading the same size lots and trades that I do but you will not make anywhere near as much money as I do. Interest costs will eat up your profit from that 1000 dollar account. Again this is an area very very few traders comprehend or understand. The idea is swaps are the same so it makes no difference is very faulty logic. It shows that the trader doesnt understand the amount of money he is borrowing and the cost of borrowing that money to trade with. All he is thinking is the interest rate is the same so it doesnt matter. Well it does and long term you are really making less than you would with a lower leverage account.
Well I hope I explained this good enough to understand. I tried my best.
  • #2,143
  • Jul 29, 2014 5:59pm Jul 29, 2014 5:59pm
Quoting Bilstein
A conversation between my wife and I: See, the way I look at it is.. Well, think of all these people across the world on these Forex forums. They all want to be wealthy, they all want to run successful businesses through trading. Everyone thinks they're a bad-ass, everyone thinks they're on some amazing, ideological journey toward "financial enlightenment". But here's the thing, if I gave you a million dollars to start a cleaning business (my wife runs a large cleaning company) - how long do you think you could stay in business if no one ever paid...
Well said.
  • #2,144
  • Jul 29, 2014 7:37pm Jul 29, 2014 7:37pm
Quoting nanningbob
Here is a post at another forum where I explained the deceptiveness of high leverage accounts. I hope this makes it clearer to you. We have had a similar discussion before so let me hit on two issues you have brought up. High leverage deceives you on the amount of funds you have available to trade. You will see the percent of the account put into play is very low with high leverage when in reality you have too much funds committed to lots. Yes you can just use small lots and still use high leverage but when you look at the figures at the bottom...
I think you have explained it well. If trading AUDUSD as an example I would conclude it would currently be good to use a high leverage account for longs and low leverage for shorts, at least in relation to the swap effects.
Hope for the best, prepare for the worst.
  • #2,145
  • Jul 29, 2014 8:47pm Jul 29, 2014 8:47pm
Quoting nanningbob
The second issue is swap costs are the same, or the interest rate is the same whether you have high/low leverage. That also is a big deception. WHY? Because the interest rate maybe the same but the amount you borrowing is far different. If I put 400,000K in play with my 1000 dollars 400:1 leverage or I can only play 25K into play with 25:1 leverage, the interest or swap is the same but the amount you are paying compared to me is a BIG BIG difference. 10% interest on 400K over one year is 40,000 dollars. 10% interest on 25K over one year is 2500...
Very good points, particularly with respect to swaps. In short, respect the swaps. Some trades have a relatively small swap; others are particularly onerous if you are trading a pair in a direction where negative swap is in play. Great examples of these are Aussie and Kiwi crosses. For example, GBP/NZD is a whopping -6.27 on the buy side; 2.82 on the sell side. AUD/CHF is -4.65 on the sell side; 2.15 on the buy. This is why I only am only looking for the long side of NZD and AUD pairs in particular right now; dealing with the bummer of a negative swap is just one less thing I have to worry about.

While this may naturally mean that I have to stand aside from wading into these pairs for a while because I'm only looking for buy opportunities, there are plenty of other pairs to trade.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,146
  • Jul 29, 2014 8:58pm Jul 29, 2014 8:58pm
Quoting nanningbob
{quote} I have a USA account that is 25:1 and 50:1. I plan on doubling my funds and going down to 20:1 or even 10:1. As my account grows I have been lowering my ratios. I also do not oppose traders with small amounts of capital trading high leverage with sums less than 500-1000 dollars. I call it tuition money where they learn how to trade. At some point you have to learn this business and you will pay tuition. The smaller the amount the cheaper the university of learning. However, when you get to trading large amounts you should get rid of the...
Ironically, my having a 50:1 account is kind of lost on a trader like me. While it is nice to have that possible leverage available (I guess), I haven't approached 10 x equity for all open positions at one time in months. Some call this conservative trading; I call it "not having a heart attack."

I also like the "tuition money" concept. Best to make mistakes with the smallest amount of risk capital on the line as possible. I think my first year of trading forex resulted with my only paying a net of $100 with trying various things out (which I'm glad for). But I went the other way, trading with the smallest lot possible; left me a lot of room to make huge mistakes -- a 1K lot trade can go massively wrong before it leaves a dent ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,147
  • Jul 30, 2014 1:24am Jul 30, 2014 1:24am
Quoting dab
{quote} I think you have explained it well. If trading AUDUSD as an example I would conclude it would currently be good to use a high leverage account for longs and low leverage for shorts, at least in relation to the swap effects.
As my account got bigger I started learning and understand the swap costs. Like you I will basically only long aud and nzd pairs unless I know clearly the fundamentals behind a short. So as I lower my leverage ratio swap becomes less and less of an issue. So these things are good to know if you plan on staying in this business long term.
  • #2,148
  • Jul 30, 2014 3:07am Jul 30, 2014 3:07am
Quoting nanningbob
{quote} I have a USA account that is 25:1 and 50:1. I plan on doubling my funds and going down to 20:1 or even 10:1. As my account grows I have been lowering my ratios. I also do not oppose traders with small amounts of capital trading high leverage with sums less than 500-1000 dollars. I call it tuition money where they learn how to trade. At some point you have to learn this business and you will pay tuition. The smaller the amount the cheaper the university of learning. However, when you get to trading large amounts you should get rid of the...
No words left to speak, this is what long term success in trading is all about, newbies listen and learn, brokers, specially market makers are out there to get your money, follow this advice and you will come out winners.
Master Your Setup, Master Your self. (NQoos)
  • #2,149
  • Jul 30, 2014 3:13am Jul 30, 2014 3:13am
Quoting ZebraSquirl
{quote} Ironically, my having a 50:1 account is kind of lost on a trader like me. While it is nice to have that possible leverage available (I guess), I haven't approached 10 x equity for all open positions at one time in months. Some call this conservative trading; I call it "not having a heart attack." I also like the "tuition money" concept. Best to make mistakes with the smallest amount of risk capital on the line as possible. I think my first year of trading forex resulted with my only paying a net of $100 with trying various things out (which...
Wise words, i will call it the professional way of doing trading business, this is how beginners should start trading and pay their tuition until they grasp all the necessary information to become successful in this business.

Bravo.
Master Your Setup, Master Your self. (NQoos)
  • #2,150
  • Jul 30, 2014 8:32am Jul 30, 2014 8:32am
Quoting nanningbob
{quote} I have a USA account that is 25:1 and 50:1. I plan on doubling my funds and going down to 20:1 or even 10:1. As my account grows I have been lowering my ratios. I also do not oppose traders with small amounts of capital trading high leverage with sums less than 500-1000 dollars. I call it tuition money where they learn how to trade. At some point you have to learn this business and you will pay tuition. The smaller the amount the cheaper the university of learning. However, when you get to trading large amounts you should get rid of the...
Spot on Bob! Way too many small account traders over leveraging to the hilt and swinging for the fences with 20 pip stops. Been trading very successfully for almost 2 years full-time for a living and NEVER use SL. Have a very large ($300k+) account and trade 3 Lots as standard trade. Use a lot of cross correlation hedging to balance the carry. Great thread and good to see others not following the herd!
  • #2,151
  • Jul 30, 2014 8:38am Jul 30, 2014 8:38am
Quoting yazzie
{quote} Spot on Bob! Way too many small account traders over leveraging to the hilt and swinging for the fences with 20 pip stops. Been trading very successfully for almost 2 years full-time for a living and NEVER use SL. Have a very large ($300k+) account and trade 3 Lots as standard trade. Use a lot of cross correlation hedging to balance the carry. Great thread and good to see others not following the herd!
Im with you on this! Similar position myself except I trade smaller usually firing more bullets though just to give me mroe flexibility.
All posts are my personal opinion
  • #2,152
  • Jul 30, 2014 10:15am Jul 30, 2014 10:15am
Diversifying your account across dozens of pairs - even exotics - with small lots and low leverage gives you more control of your total position. For example:

1K lots across 30 pairs is essentially a 30K lot in a single pair. After initiating the total position, there's many ways you can manage it without a stoploss. I mean, a 1,000 point loss in any of the pairs would only be a $100.00 loss (with the exception of the exotics) per position as your majors typically have a tick value of at least 0.90 to 1.1. In the event of a total loss it's still only $3,000.00 - if even that. But since each pair is dynamic and you're dealing with positive and negative correlations, it's not like you're going to initiate all 30 positions and be down $3,000.00 the next day. Also, who's going to let a single trade go against them 1,000 points?

After initiating the position, it's really up to you how you manage it. Personally, I use a very simple time-filter for bad trades (an "expiration date" if you will) along side a percentage of equity - but that's me. You can add to winning positions and cut losers super short if you want. Given the fact that none of us really knows when a big trend is beginning, ending, or whether or not it will continue, the simplest approach, for me at least, has just been to always be in the market. Since I don't trust the stupid thing, I typically cash out winners and re-enter at the end of every day but, again, that's just me. It blows my mind how fast winning and losing trades can switch sides in a given day, especially on heavy news days; winners become losers, losers become winners, some return to break-even. There's a little more "manual labor" in trading this way but I'll tell you what; it's a whole lot better than farting around, waiting, looking for that perfect setup, and toiling over a myriad of data just to come to one decision.

I mean, total position size, pairs involved, and increment size is completely up to you. Can you use stoplosses? Of course you can. Are you going to burn your equity if you don't? Well, that depends on capitalization. If you're trading with $100 - probably, lol.
  • #2,153
  • Jul 30, 2014 10:39am Jul 30, 2014 10:39am
Quoting Bilstein
Diversifying your account across dozens of pairs - even exotics - with small lots and low leverage gives you more control of your total position. For example: 1K lots across 30 pairs is essentially a 30K lot in a single pair. After initiating the total position, there's many ways you can manage it without a stoploss. I mean, a 1,000 point loss in any of the pairs would only be a $100.00 loss (with the exception of the exotics) per position as your majors typically have a tick value of at least 0.90 to 1.1. In the event of a total loss it's still...
Great post!
I always enjoy you're "2 cents"..............
Markets are not efficient, rather they are effective - Jones
  • #2,154
  • Jul 30, 2014 6:33pm Jul 30, 2014 6:33pm
Quoting Bilstein
Diversifying your account across dozens of pairs - even exotics - with small lots and low leverage gives you more control of your total position. For example: 1K lots across 30 pairs is essentially a 30K lot in a single pair. After initiating the total position, there's many ways you can manage it without a stoploss. I mean, a 1,000 point loss in any of the pairs would only be a $100.00 loss (with the exception of the exotics) per position as your majors typically have a tick value of at least 0.90 to 1.1. In the event of a total loss it's still...
YUP, you make sure any trade or group of trades cant take you down. Live to trade another day is a very good motto.

If you can make 100% in a week you can lose 100% in a week. If you try to make 10% a month you also can lose 10% in a month. The difference is, in one your account is gone in a week, the other it takes 10 months to lose your account. If you are so bad of a trader you lose 10 months in a row then get out. If you are like me and only have 1-3 losing months in a year, you can be successful. That is so important in this business.
  • #2,155
  • Edited 11:34am Jul 31, 2014 6:58am | Edited 11:34am
I put traders into four categories, any of which can make
money, but none of which will dependably make money using
another categorie's techniques.

One: traders are either good at managing breakouts, or good at
managing reversals.

Two: Traders are either good at managing many pairs in a
diversified portfolio without a fixed stoploss, or they are good
at managing larger positions amongst fewer pairs using fixed
stoplosses to protect their security.

I place myself firmly in the category of trading a wide
diversity of pairs, co-balanced, without the need for a fixed
stoploss.

I acknowledge that there are people in the other three
categories who make good money. It's just that I find myself
with the happiest results staying in this category.
The other categories: 1. trading breakouts with large positions,
fairly few pairs, and fixed stoplosses.
2. trading trend reversals with large positions, relatively few
pairs, and fixed stoplosses.
3. trading trend reversals, with smaller positions, many pairs,
and no fixed stoplosses.

I think most traders of experience can recognize themselves in
one of these categories. Their thinking would go "I seem to fit
category x, but with these differences".

I submit that the tactics used by traders most profitably in one
of these categories, would not work well in the long run,
hindering profits, increasing risk, etc. by traders in another
one of these categories.

This is necessarily very crude, highly theoretical, and as apt
to be misleading as is it to be enlightening, but at least it
is a start.
Any improvements in this viewpoint are highly welcome.
  • #2,156
  • Jul 31, 2014 8:03am Jul 31, 2014 8:03am
iam new to trading may i know from any one pls how these jobless claims impact on tradings especially on commodities.
  • #2,157
  • Jul 31, 2014 10:59am Jul 31, 2014 10:59am
Weekly report:
IBFX is going to enforce FIFO rules on Aug 3d. This kills my balance by some 15% but not my equity.

Is Oanda going to do the same thing, or are they going to have a work around?

Else two, possibly three accounts with Oanda is under consideration.

Income tax will subsudize the loss of balance, in that I would have had to pay taxes on the balance.

My margin % is now up over 600%: I shall be running fewer trades, and larger ones. But for now, no fixed stop loss.

I fear this will put a crimp on my profitability.
I can only scalp those pairs which have no other trades in process...

My equity remained the same, of course. My account is thus more stable, but less profitable that it was before. Hence the increase in trade size: If the number of trades is halved, and the size doubled, profits should be the same; just more "grainy.

Up to this I was doing okay.

Oanda looks more and more attractive to me, and ibfx less and less.

%change in equity:4
%change in balance:-20
%change in P/L:-80% (good)
Margin Level %: 644.50(room for larger entries)
no of weeks since last taking a loss:0
no of trades open:19
  • #2,158
  • Edited 9:51am Aug 1, 2014 9:19am | Edited 9:51am
with 40% increase in lot size ( due to adjustment to FIFO) I expect increase in p/l to be similar:
in the meantime that increase will "Hide" any increase in equity until the lower lot sizes begin to clear out ( or be cleared out)

My balance is back on the road to increasing again, thanks to news-driven events this Friday.
Once the lower size deals clear out, P/L will stabilize again.

I intend to let my margin % decrease to 400% before reigning in the expansion.

In general I can trade two entries in a single pair, and have the profit from the lower pair compensate for any losses in the upper pair when I close both out.

I have already increased balance 4% (equivalent of 140% per annum).
equity has to follow as long as I don't overextend myself.

Of course, NFP had a lot to do with this.
  • #2,159
  • Aug 1, 2014 9:43am Aug 1, 2014 9:43am
Stop Loss, below / above, EMA 144 and 169 periods is quite powerful, always managing risk their relationship profitability
  • #2,160
  • Aug 1, 2014 9:59am Aug 1, 2014 9:59am
Quoting JimFXtrader
Stop Loss, below / above, EMA 144 and 169 periods is quite powerful, always managing risk their relationship profitability

Possibly: but I think a no stop loss method to be more so, given that you stay with long term trend, and have methodology in place to terminate losing trades in a reasonable fashion.
My use of moving averages is quite different from that you propose. I would anticipate your stop losses would not be often executed or an actual part of the rest of your strategy.
Cheers, Rap
0 traders viewing now