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Trading Without a StopLoss

  • #2,181
  • Aug 4, 2014 7:40pm Aug 4, 2014 7:40pm
Quoting MisterSpread
{quote} Guys one of my friends from US was trading with also a broker that applied recently FIFO rule, which in my opinion is BS, so I recommended him another broker company also from US but offshore regulated, if you guys want to try it out ( demo first ) just send me a PM and I will put you in contact with my friend there ( who is also the CEO of the company ). I will not post the company website here because I don't want to get in trouble for commercial/advertising but we can discuss it on skype. Best Regards, VladG
I've kind of adapted to FIFO, for all its warts. I think it has the effect, though, of potentially stopping your trading of a particular pair dead in its tracks, especially if you are like me and want to hold the position open until you have the potential to make it (plus any additions to the position) net profitable. It's far nicer to be able to set the offending open position off to one side and continue to trade a given pair without that position getting in the way or becoming a consideration as to how and when I'll add to the position. I'll naturally consider what to do with it at some point; I just don't want to be forced to deal with it then and there before I can move on ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,182
  • Aug 5, 2014 7:19am Aug 5, 2014 7:19am
Hello to all, This is my first post to this interesting topic .

I think FIFO is invented to block "clever robot algorithms". They do not allow some people to get money from forex. Forex is a zero sum game and there are "others" on the other side of the table that wins %90 percentage.

My experience is if you don't put any stoploss, soon or later you will loose important part of your account balance. There are ways to reduce risk such as taking some part of the profit every week or month but there is no guarantee.

On the other hand, if you are using stoploss, especially below 40pips, these big guys will do everything to trigger your stops, there are many sharp fake bars to do this...

So in order to get money from forex you should be:
1-) Enough distance away from the noise performed by big guys
2-) High percentage entry strategy (at least %70)

But even this is not enough because the total number of profit pips must be larger than the total number of loosing (stopped) pips. While you are trying to get rid of from market noise, you are increasing the stopped pips. If you set it 70pips and you fail in the strategy you should be enough profitable both in number of pips and percentage. As I know, average movement in forex EURUSD is around 50pips. I do not recall where I get this but you can see from the charts easily. You will get 200+ pips somehow in a month but first you should not be stopped either in the begining or in the middle (if you are using trailing stop).

So the question is where to put the stoploss. In my first expert, I tired to make it "dynamic" so that the robot will decide to put the best place to put stops. This dynamic approach worked better however does not solved the issue.

The other solution I've found is to use hedge instead of stoploss. You need to put a few times more lot in the opposite direction and get the profit when both positions gets to positive territory. If it doesn't and market turns in your original position direction you close the hedge order with loss and let the original position continue (by putting stoploss this time).

As you can see there are always trade-offs in all systems and algorithms. The loss should be the part of the system and every system must accept this. However since this is a statistical and a war game, we should think about the best scenario and choose a different method in different situations.

My belief is that the stop must be either between 60 and 80pips or to use a hedge strategy as I explained above. There are several algorithms that opens many hedge positions but they basically fail at one time so if you are willing to perform a hedge strategy you should open one or maximum 2 hedge orders.

For those who opens hedge orders in the opposite of the trend would fail badly end of the day. If hedge will be used it should be opened in the direction of the current market and there should be a clever mechanism to statistically lower the probability of lose. This can be performed by robots much much easier.
If u want to be successful, u must respect one rule: Never lie to yourself.
  • #2,183
  • Aug 5, 2014 8:22am Aug 5, 2014 8:22am
Quoting ZebraSquirl
{quote} I've kind of adapted to FIFO, for all its warts. I think it has the effect, though, of potentially stopping your trading of a particular pair dead in its tracks, especially if you are like me and want to hold the position open until you have the potential to make it (plus any additions to the position) net profitable. It's far nicer to be able to set the offending open position off to one side and continue to trade a given pair without that position getting in the way or becoming a consideration as to how and when I'll add to the position....
I have noticed this little unpleasant tendency: It can be offset somewhat by looking at as many pairs as you can.
  • #2,184
  • Aug 5, 2014 4:29pm Aug 5, 2014 4:29pm
Quoting aed71
My belief is that the stop must be either between 60 and 80pips or to use a hedge strategy as I explained above. There are several algorithms that opens many hedge positions but they basically fail at one time so if you are willing to perform a hedge strategy you should open one or maximum 2 hedge orders. For those who opens hedge orders in the opposite of the trend would fail badly end of the day. If hedge will be used it should be opened in the direction of the current market and there should be a clever mechanism to statistically lower the probability...
Unfortunately, I think that the same legislation that imposed FIFO took away our ability to do hedges.

Nevertheless, there are ways around even this with corresponding pairs. For example, USD/CHF and EUR/USD are so closely correlated that you can hedge a EUR/USD position with an inverse USD/CHF position ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,185
  • Aug 5, 2014 4:56pm Aug 5, 2014 4:56pm
Been enjoying the euro/usd-usd/chf hedge the last couple months.. just let it hang around til its 1% in my favor... start again next day... usually pick up 1-3% a week.
  • #2,186
  • Aug 5, 2014 8:34pm Aug 5, 2014 8:34pm
Thanks to Rap Skallion , nanningbob and hanover for excellent explanation on

  1. NOT USING Stop Loss,
  2. Balancing Orders by 28 Pairs
  3. Using 0.01% of the amount per order ie. 0.01 / $1000
  4. Long duration trading with looking into "ration range" on currency pair


Being a new comer in forex, I spent 20+ hours to read this complete thread and found very information.

I would like to Thank each one sharing there valuable views and time here |

Keep it up, It support people like me who just joined and experimenting for survival from last 6 months |
I am doing trading for living now | My profile will tell me more |

Thanks , Prachait

Prachait Saxena
  • #2,187
  • Aug 5, 2014 10:40pm Aug 5, 2014 10:40pm
Statistically speaking, if you keep your margin use in check, the market will have a hard time catching you.

When you have approx. 3% of your account at risk, the market has to move about 6200 pips against you for you to face a margin call.

At 6%, approx. 3000.

So, you tell me - is the idea of a stop loss a little over hyped?

It seems to me most traders place trades that are too large for the account they're trading anyway...What about that? Making $100/day on a $1000 account isn't realistic. It's suicidal, yet, many still try it and their trade explorers show it...

My opinion has been for some time that a stop loss is nothing more than you communicating to your broker when you're scared out of the trade and the majority of the time, yeh, your stop is hit by just a few pips, and then things go in your favor...

Range is important to define. Knowledge of extreme lows and extreme highs is crucial...Yet, many leave static lines on their charts in an attempt to define a dynamic market that's ever changing.....kinda baffling really...
"Holy Grail" exists - accepting where is the first step.
  • #2,188
  • Aug 5, 2014 10:44pm Aug 5, 2014 10:44pm
Quoting ZebraSquirl
{quote} Unfortunately, I think that the same legislation that imposed FIFO took away our ability to do hedges. Nevertheless, there are ways around even this with corresponding pairs. For example, USD/CHF and EUR/USD are so closely correlated that you can hedge a EUR/USD position with an inverse USD/CHF position ... .
... Just an addition, 'cuz I just wanted to be clear: Americans no longer have the ability to hedge with American brokers. I understand, tho, that there are still a few brokers out there who will take U.S. traders and allow them to hedge/avoid FIFO.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,189
  • Aug 5, 2014 10:54pm Aug 5, 2014 10:54pm
Quoting VaBikePacker
Statistically speaking, if you keep your margin use in check, the market will have a hard time catching you. When you have approx. 3% of your account at risk, the market has to move about 6200 pips against you for you to face a margin call. At 6%, approx. 3000. So, you tell me - is the idea of a stop loss a little over hyped? It seems to me most traders place trades that are too large for the account they're trading anyway...What about that? Making $100/day on a $1000 account isn't realistic. It's suicidal, yet, many still try it and their trade...
Exactly. Small positions + small overall exposure. I would not survive for long if I was taking 5% positions in every trade, either from the perspective of keeping my equity intact or from the perspective of having my heart blow out of my chest.

There are actually three trades: Never shoulda entered. Shoulda used more margin. Shoulda checked the order before pressing "OK".
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,190
  • Aug 5, 2014 10:59pm Aug 5, 2014 10:59pm
Quoting prachait
Thanks to Rap Skallion , nanningbob and hanover for excellent explanation on NOT USING Stop Loss, Balancing Orders by 28 Pairs Using 0.01% of the amount per order ie. 0.01 / $1000 Long duration trading with looking into "ration range" on currency pair Being a new comer in forex, I spent 20+ hours to read this complete thread and found very information. I would like to Thank each one sharing there valuable views and time here | Keep it up, It support people like me who just joined and experimenting for survival from last 6 months | I am doing trading...
You should look up and read the posts of Bilstein. A really laid back, slightly different way of trading without a stoploss.
Your summary of what this stream is saying ( At least what I am saying) is well done. One thing about Bilstein's method is that fifo, hedging restrictions, just do not afffect him.

Live cheap, grow rich quick, and remember the poor.!
  • #2,191
  • Aug 5, 2014 11:10pm Aug 5, 2014 11:10pm
Quoting ZebraSquirl
{quote} There are actually three trades: Never shoulda entered. Shoulda used more margin. Shoulda checked the order before pressing "OK".




Nice addition Zebra...

It's typical - see the FX market and think "Oh man - I'm going to tear it up!!"

This is not a "get rich quick" deal...Many think it is....
"Holy Grail" exists - accepting where is the first step.
  • #2,192
  • Aug 5, 2014 11:48pm Aug 5, 2014 11:48pm
Quoting VaBikePacker
{quote} Nice addition Zebra... It's typical - see the FX market and think "Oh man - I'm going to tear it up!!" This is not a "get rich quick" deal...Many think it is....
That being said: kudos to those guys who are making 50% a month, but they are freaks of nature, an uncommon breed, outliers. All of them have six fingers, two heads, tails, two hearts, and four kidneys. I'm just a simple caveman ... for whom a simple 5% a month will do:

Attached Image (click to enlarge)
Click to Enlarge Name: Simple Caveman.jpg Size: 73 KB
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,193
  • Aug 6, 2014 2:00am Aug 6, 2014 2:00am
Quoting ZebraSquirl
{quote} That being said: kudos to those guys who are making 50% a month, but they are freaks of nature, an uncommon breed, outliers. All of them have six fingers, two heads, tails, two hearts, and four kidneys. I'm just a simple caveman ... for whom a simple 5% a month will do: {image}

Different strokes for different folks
  • #2,194
  • Aug 6, 2014 4:49am Aug 6, 2014 4:49am
Quoting ZebraSquirl
{quote} Unfortunately, I think that the same legislation that imposed FIFO took away our ability to do hedges. Nevertheless, there are ways around even this with corresponding pairs. For example, USD/CHF and EUR/USD are so closely correlated that you can hedge a EUR/USD position with an inverse USD/CHF position ... .
Zebra, I never trade the USD/CHF but will sometimes trade the EUR/USD so will definitely look into this. I've been using a similar strategy on the EUR/JPY and GBP/JPY crosses for a few years now with nice success. I find these two pairs to be fairly well correlated although "The Beast" likes to run from time to time!
  • #2,195
  • Aug 6, 2014 6:06am Aug 6, 2014 6:06am
Quoting ZebraSquirl
{quote} That being said: kudos to those guys who are making 50% a month, but they are freaks of nature, an uncommon breed, outliers. All of them have six fingers, two heads, tails, two hearts, and four kidneys. I'm just a simple caveman ... for whom a simple 5% a month will do: {image}
5% a month, 60% a year: that's an exemplary gain for any other investment and quite doable here.
  • #2,196
  • Aug 6, 2014 6:15am Aug 6, 2014 6:15am
Quoting dare123
Good-day All, I choose to stop trading with stoploss. I now trade without stoploss. What do you think about trading without stoploss? and if you are currently trading this way or you have traded this way before, kindly share your expirience.
First off, only when I'm sure the trade will be a winner.
How?
Look for a trend in ALL timeframe: MN + W1 + D1 + H4
Open position in M5 (here I use Heiken Ashi + EMA36).

The MN
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDMonthly.png Size: 44 KB


The W1
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDWeekly.png Size: 47 KB


The D1
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDDaily.png Size: 46 KB


The H4
Attached Image (click to enlarge)
Click to Enlarge Name: EURUSDH4.png Size: 50 KB


First trade +261 after SL was hit. Was playing safe.
The second +904 after TP was hit. NO Stop LOSS.

I am waiting for the next sell position using M5.

I'm a newbie. Forgive me if sound naive. Just my humble opinion.
  • #2,197
  • Aug 6, 2014 8:13am Aug 6, 2014 8:13am
Quoting banglubos
{quote} First off, only when I'm sure the trade will be a winner. How? Look for a trend in ALL timeframe: MN + W1 + D1 + H4 Open position in M5 (here I use Heiken Ashi + EMA36). First trade +261 after SL was hit. Was playing safe. The second +904 after TP was hit. NO Stop LOSS. I am waiting for the next sell position using M5. I'm a newbie. Forgive me if sound naive. Just my humble opinion.
Thanks for sharing. I think it's a good method to check higher time frames even you are going up to months. This will definitely increase your winning probability although you may not find many cases where monthly, weekly, daily and H4 TF to be synchronized.

On the other hand it does not completely eliminate the probability of turning the trend in opposite direction. The probability low doesn't mean that it will not happen.

Of course everybody has his/her method to win, but from my perspective it does not bring me a sustainable trading mechanism. I'm currently checking daily time frame for the long term trend and trading in H1 time frame which helps me a lot (in expert).
If u want to be successful, u must respect one rule: Never lie to yourself.
  • #2,198
  • Aug 6, 2014 9:10am Aug 6, 2014 9:10am
Quoting jmn5611
{quote} I trade one penny per 1000 dollars.
I was reading
http://www.forexfactory.com/showthre...421191&page=91

I trade one penny per 1000 dollars. There are multiple trades in the same pairs as well as separate and distinct pairs. I have cut my pairs down to ten.
EURUSD USDCHF
EURCAD CADCHF
EURGBP GBPCHF
EURAUD AUDCHF
EURNZD NZDCHF
I trade with the swap only.


Question is:
You trade all the currency in the single account ?
How about trading in Multiple account with different base currency ?

Looking forward for your recommendations.

Thanks Prachait
Prachait Saxena
  • #2,199
  • Aug 6, 2014 10:57am Aug 6, 2014 10:57am
Quoting aed71
{quote} Thanks for sharing. I think it's a good method to check higher time frames even you are going up to months. This will definitely increase your winning probability although you may not find many cases where monthly, weekly, daily and H4 TF to be synchronized. On the other hand it does not completely eliminate the probability of turning the trend in opposite direction. The probability low doesn't mean that it will not happen. Of course everybody has his/her method to win, but from my perspective it does not bring me a sustainable trading...
Thanks for your comment.

Of course, it does not guarantee the price will go in the same direction as before. It's just that when one doesn't use SL, s/he should has some theoretical and empirical reason as to why a SL isn't needed. For me, it lies in the synchronization of MN, W1, D1 and H4.

Thanks again, aed71
  • #2,200
  • Edited 3:19pm Aug 6, 2014 11:31am | Edited 3:19pm
Quoting banglubos
{quote} Thanks for your comment. Of course, it does not guarantee the price will go in the same direction as before. It's just that when one doesn't use SL, s/he should has some theoretical and empirical reason as to why a SL isn't needed. For me, it lies in the synchronization of MN, W1, D1 and H4. Thanks again, aed71
You are welcome , I think your strategy in opening position is good; of course if it works on long run. If you can get net 10pips in net per month this means %10 percentage earning. Today you cannot even get such a big earning with conventional methods. I was previously trying to catch every fish but this did not bring me any value. So the more we enter to the very high probability positions the more we have chance to win. That's why we may sacrifice from more frequent wins in order to not to have too many loosing positions...

On the other hand, my thinking is that why we are generally against to stoploss is related our past experience. I don't think that people here who are against to stoploss are decided to do so before their trading life started. This is really important...

Stops and generally tight stops are often being stopped by big guys. The number of stops even small ones could kill all the strategy ( I have tested in 10 years time and it did). If I put the stops to 30-50pips (dynamic) some years the drawdown becomes very high and you go down from your the initial balance. When I set it 70pips it did not go down too much and it became profitable.

For an experienced trader I don't think that he/she will not close the position if the trend/system turns to the other side however generally we are afraid of being stopped and to see that the trend starts going in the initial direction again. At least this is why I hate stops (tight stops) and develop hedge strategy. It's not a question for me if the trend is absolutely turn in opposite direction I would try to catch new trend...
If u want to be successful, u must respect one rule: Never lie to yourself.
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