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Trading Without a StopLoss

  • #2,221
  • Aug 8, 2014 9:26pm Aug 8, 2014 9:26pm
Quoting ZebraSquirl
{quote} I use 1H and 6H time frames for trades of fairly short duration (on average). I don't think that there's any rule of thumb for what charts to use; it depends upon what kind of trader you are (day, scalp, swing, position). I have to kind of disagree that any system should have a fixed profit target for a given trade (e.g., 70 pips) (regardless of whether it's an SL or a No SL system or strategy). That just doesn't make sense to me. Every pair has different S/R and what makes sense for one pair may not make any sense whatsoever for another....
Yes, I agree with you. Any pair has its behaviour of its own; that's how I would like to think of them.
Thanks for your insight.
  • #2,222
  • Aug 8, 2014 9:36pm Aug 8, 2014 9:36pm
Quoting aed71
{quote} Hi, I've tested in EURUSD between 2003 and 2013. I should say that it also depends on your strategy. In my system (breakout strategy), with tight stoploss and if the market is not trending, I was stopping out quite a lot. I'm also using a kind of trailing stop system (in the positive territory) when I catch 25pips profit I was moving stoploss from -70pip to +5PIP. So either market fluctuates too much, if it goes in my way (at least 25 pips) I was doing at least 5pips profit (of course there are situations that you make even more that 100pips...
Thank you for your reply.
So, EU, a high probability of breakout strategy and 70 pip SL. Really makes sense for me.
Concerning the big question, how would you know when he left part of equation is higher?
  • #2,223
  • Aug 8, 2014 11:01pm Aug 8, 2014 11:01pm
Quoting banglubos
{quote} Thank you, nanningbob. You've just convinced me I'm on the right track. And I'll do your advice.
OK then the next step is how do you want to enter into that trend on a lower TF. Once you get that down you can be a successful trader. It is called top down analysis. What are the high end charts doing? What is the main fundamental driving the currency (if you can find that)? Then go to a lower TF and trade the moves. I prefer the 4H because checking charts every 4H is easy for me to do it fits my schedule.
  • #2,224
  • Aug 9, 2014 3:58am Aug 9, 2014 3:58am
Quoting banglubos
{quote} Thank you for your reply. So, EU, a high probability of breakout strategy and 70 pip SL. Really makes sense for me. Concerning the big question, how would you know when he left part of equation is higher?
I don't know. You can only backtest (no optimization) in long period. When I did between 2003-2013 left part of the equation was higher. This of course does not guarantee that it will be higher in 2014+. But if you can survive in 10 years with no optimization it will give you more confidence for tomorrows.

I guess the magic here is to able to have dynamic parameters to adapt market trends. If your entry, exit, stoploss/hedge, tp could be determined by dynamic parameters, you will have more chance that the left part of the equation is higher...
If u want to be successful, u must respect one rule: Never lie to yourself.
  • #2,225
  • Aug 9, 2014 1:42pm Aug 9, 2014 1:42pm
Quoting nanningbob
{quote} OK then the next step is how do you want to enter into that trend on a lower TF. Once you get that down you can be a successful trader. It is called top down analysis. What are the high end charts doing? What is the main fundamental driving the currency (if you can find that)? Then go to a lower TF and trade the moves. I prefer the 4H because checking charts every 4H is easy for me to do it fits my schedule.
Somewhere in this forum I wrote that I look at ALL timeframe--well, nearly all. I don't stop at H4 but go lower to H1 (to confirm the trend exists in that time frame) and M5 (where I enter a trade).

M5 suits me well enough. I have ordinary indicators telling me when to open a trade, several times each hour (prices fluctuate every now and then crossing up/ down a moving average).

That way I make myself feeling confident that price would move to the trend in no time.

Now, is there anything that I should be aware of in doing that way?

Thank you, nanningbob.
  • #2,226
  • Aug 9, 2014 1:59pm Aug 9, 2014 1:59pm
Quoting aed71
{quote} I don't know.
I like the smily

Quoting aed71
{quote}I guess the magic here is to able to have dynamic parameters to adapt market trends. If your entry, exit, stoploss/hedge, tp could be determined by dynamic parameters, you will have more chance that the left part of the equation is higher...
As a newbie I can only guess what you mean by "dynamic parameters". Do you refer to the ability to make adjusments to whatever in my way of interpreting the market (e.g., indicators)? I would like to be more aware of this kind of thing.

Thank you, aed71
  • #2,227
  • Aug 9, 2014 6:13pm Aug 9, 2014 6:13pm
In reading about the reasoning behind the no hedging and FIFO rules imposed here in the U.S., I was surprised to find this little nugget, which was commenting on the legislation's reduction in leverage to 50:1 max:

When I first learned of the leverage restriction, I was very upset. A 100:1 leverage for forex was a powerful advantage over all other markets, as it could enable the trader to take advantage of higher leverage in cases of opportunity, hardship, or diversification. That being said, a prudent trader should never use more than 2:1 leverage per trade anyway, and no more than 5:1 in aggregate positions, so a leverage reduction to 50:1 should not crimp a professional money management style. A leverage restriction to 10:1 would have been intolerable.


http://www.forexrazor.com/en-us/scho...ion-in-the-usa (italics added).

Interesting that his per trade guideline is higher than I would use per trade (<.5:1), but his aggregate position guideline is half what I am willing to expose all my equity to (<10:1). Nevertheless, he would have been unhappy with a 10:1 cap on leverage because it would limit his flexibility, I imagine, to continue to trade during intratrade drawdowns or where he wanted to remain in a position for whatever reason and continue to trade.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,228
  • Aug 10, 2014 12:44am Aug 10, 2014 12:44am
Quoting banglubos
{quote} Somewhere in this forum I wrote that I look at ALL timeframe--well, nearly all. I don't stop at H4 but go lower to H1 (to confirm the trend exists in that time frame) and M5 (where I enter a trade). M5 suits me well enough. I have ordinary indicators telling me when to open a trade, several times each hour (prices fluctuate every now and then crossing up/ down a moving average). That way I make myself feeling confident that price would move to the trend in no time. Now, is there anything that I should be aware of in doing that way? Thank...
No, no problem. Every trader has their style they like or prefer. I trade 4H because it best fits my daily schedule. Sometimes I will look at 1H but most of the time I am 4H and up. I like placing my trades before a trade session and then on my way. I come back later before the next session starts and see how I did. Then I set my trades for the next session. I do not baby sit my screen and sometimes check it once a day when I am busy. As long as I am in the long term trend then I am happy with how my trades are going.
  • #2,229
  • Aug 10, 2014 12:49am Aug 10, 2014 12:49am
Quoting ZebraSquirl
In reading about the reasoning behind the no hedging and FIFO rules imposed here in the U.S., I was surprised to find this little nugget, which was commenting on the legislation's reduction in leverage to 50:1 max: When I first learned of the leverage restriction, I was very upset. A 100:1 leverage for forex was a powerful advantage over all other markets, as it could enable the trader to take advantage of higher leverage in cases of opportunity, hardship, or diversification. That being said, a prudent trader should never use more than 2:1 leverage...
Leverage is not a problem with me now. I could trade 10:1 because I have enough in my account to trade that. Lowering leverage kills the small account and the beginner trader. 200 bucks and 400:1 leverage and you can trade and learn. You lose your money but that is the price of tuition. 10:1 I would imagine at least 5K to trade maybe you could get by with 2K. That knocks a lot of beginners out. I probably would never have become a trader at 2K entrance fee. But heck 200 there, 300 here, I could trade and make it last. My first goal was to see if I could keep it and not restart the account. I got over that hump many many years ago. Now I just try to make sure I make money every month and keep my account balance growing.
  • #2,230
  • Aug 10, 2014 4:59am Aug 10, 2014 4:59am
Quoting nanningbob
{quote} No, no problem. Every trader has their style they like or prefer. I trade 4H because it best fits my daily schedule. Sometimes I will look at 1H but most of the time I am 4H and up. I like placing my trades before a trade session and then on my way. I come back later before the next session starts and see how I did. Then I set my trades for the next session. I do not baby sit my screen and sometimes check it once a day when I am busy. As long as I am in the long term trend then I am happy with how my trades are going.
Yes, every trader has her/his own preference. What we do in trading reflects who we are--our personality. My thought says that it's not money but a feeling of tranquility that can make me a good trader; tranquility which I can get out of a setup because it's a good one--one that give me confidence. Nice side of this zero sum game.

So, we have two parts of a happiness here. We could be happy when we open a good trade and we could be happier when it turns into a winner.

Thanks for your sharing, nanningbob
  • #2,231
  • Aug 10, 2014 8:54am Aug 10, 2014 8:54am
Quoting banglubos
{quote} I like the smily {quote} As a newbie I can only guess what you mean by "dynamic parameters". Do you refer to the ability to make adjusments to whatever in my way of interpreting the market (e.g., indicators)? I would like to be more aware of this kind of thing. Thank you, aed71
It's more valid for experts, however could be applied to manual trading as well is you are not very emotional.

If you can analyse the current market situation at least as trending or non-trending (there always be boundary issues i.e. when trends starts) then you can set different stop levels, different period parameters etc. There is no off-the-shelf method (should be very valuable to disclose) for this but basic idea is to able to adapt the market as much as you can.

if this is still complex, let me give another example. MACD is a good indicator however does not work on non-trending markets. That's why you have not heard about anybody who became millionaire using MACD only. Williams%R is a good oscillator for non-trending markets (or RSI). So in trend you use MACD with medium level stop and use willams%R in non-trending markets with higher stoploss.

Applying this approach (even poorly) is much better than using the same indicators, stoplevels, tp levels. This is what I mean by "dynamic".

I'm mainly working on to use different hedge/stop mechanisms for different market situations. I do not want to use just 70pips for 30pips all the time but sometimes 70 and sometimes 30.
If u want to be successful, u must respect one rule: Never lie to yourself.
  • #2,232
  • Aug 10, 2014 9:07am Aug 10, 2014 9:07am
Quoting aed71
{quote} It's more valid for experts, however could be applied to manual trading as well is you are not very emotional. If you can analyse the current market situation at least as trending or non-trending (there always be boundary issues i.e. when trends starts) then you can set different stop levels, different period parameters etc. There is no off-the-shelf method (should be very valuable to disclose) for this but basic idea is to able to adapt the market as much as you can. if this is still complex, let me give another example. MACD is a good...
There was one guy who likened trading to golfing. The market is on the fairway and you need to choose the right club for the right conditions. I kind of do the same thing. I use one set of trading rules when its ranging and another when its trending. That comment helped cement in my mind about reading the markets and deciding what strategy to use. Putter, Sand Wedge, 9 Iron or 3 Wood, same concept in trading.
  • #2,233
  • Aug 10, 2014 9:45am Aug 10, 2014 9:45am
Nanningbob, have not heard the golfing story, but what you are saying is spot-on!! Wish all the traders will read this. One has to adjust to the market, not only weekly, but even daily.
  • #2,234
  • Aug 10, 2014 11:08am Aug 10, 2014 11:08am
Quoting aed71
{quote} It's more valid for experts, however could be applied to manual trading as well is you are not very emotional. If you can analyse the current market situation at least as trending or non-trending (there always be boundary issues i.e. when trends starts) then you can set different stop levels, different period parameters etc. There is no off-the-shelf method (should be very valuable to disclose) for this but basic idea is to able to adapt the market as much as you can. if this is still complex, let me give another example. MACD is a good...
I got the point. Metaphorically speaking, it's like taking pictures of an object. A photographer should adjust her/his camera (lenses, speed etc) so as to be able to take different object in various conditions and background.

Examples you gave me (especially Williams%R) have open up my eyes. I should do in-depth reading of them.

Thanks, aed71. You've been very helpful and generous in sharing your knowledge and experience.
  • #2,235
  • Aug 10, 2014 1:54pm Aug 10, 2014 1:54pm
Yes! golfing, taking pictures good examples.

The issue is, there is no "sharp" boundary to decide when to switch between lenses. You can have multiple lenses but which one to use is the major question. So the more you try to carry more lens near you the harder you decide. As I mentioned before even if you can poorly select between two lens it's much better to have one lens. This is one of the major part to be successful in trading however not as easy as to write or talk about...
If u want to be successful, u must respect one rule: Never lie to yourself.
  • #2,236
  • Aug 10, 2014 2:44pm Aug 10, 2014 2:44pm
Quoting nanningbob
{quote} There was one guy who likened trading to golfing. The market is on the fairway and you need to choose the right club for the right conditions. I kind of do the same thing. I use one set of trading rules when its ranging and another when its trending. That comment helped cement in my mind about reading the markets and deciding what strategy to use. Putter, Sand Wedge, 9 Iron or 3 Wood, same concept in trading.
Best analogy Ive seen yet!
All posts are my personal opinion
  • #2,237
  • Aug 10, 2014 2:54pm Aug 10, 2014 2:54pm
Quoting nanningbob
{quote} There was one guy who likened trading to golfing. The market is on the fairway and you need to choose the right club for the right conditions. I kind of do the same thing. I use one set of trading rules when its ranging and another when its trending. That comment helped cement in my mind about reading the markets and deciding what strategy to use. Putter, Sand Wedge, 9 Iron or 3 Wood, same concept in trading.
To add to the golf analogy ... .

I always seem to be either hooking or slicing. I try to correct for the hook, and then end up slicing. I correct for the slice, and end up hooking. When I do want to hook, I end up slicing and vice versa. Ugh. In trading though, I just want to be consistent. If I am consistently hooking the ball and I realize that, I can adjust and consistently land the ball where the hook sends it ... . Hopefully that is not in a tree ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,238
  • Aug 10, 2014 3:54pm Aug 10, 2014 3:54pm
Quoting nanningbob
{quote} No, no problem. Every trader has their style they like or prefer. I trade 4H because it best fits my daily schedule. Sometimes I will look at 1H but most of the time I am 4H and up. I like placing my trades before a trade session and then on my way. I come back later before the next session starts and see how I did. Then I set my trades for the next session. I do not baby sit my screen and sometimes check it once a day when I am busy. As long as I am in the long term trend then I am happy with how my trades are going.
Bob or Rap,
I was just curious if once a position is in profit if you tend to put in a SL at BE+ a few pips to protect winnings?
  • #2,239
  • Aug 10, 2014 4:02pm Aug 10, 2014 4:02pm
I am no good with ranging markets, so I just don't trade them. Almost every day some pair is breaking out somewhere. My strategy is to find that pair and trade it.

kudos to those who trade ranges. They require a completely different mind - set from that which I find profitable.

Switching correctly from one mind-set to another requires a flexibility many of us do not have.

You may well do better in trading the one way you are good at than trying to trade the other., at least until you can do well with the other one in demo.

Are you naturally an extensive person, or an intensive one? trading ranges seems to require intensive sensibility on the critical period when a trade changes trend.

Both styles of trading require you to tell if a pair is ranging, or breaking out, and the points at which this is likely to happen.
  • #2,240
  • Aug 10, 2014 4:11pm Aug 10, 2014 4:11pm
Sherpa :
I put a take profit in that allows the market to give me money when I sleep.
If I find a pair in profit, I scalp it, watching the tick chart and closing when I see it turn. Then if it turns back again, I re-enter. If not, I put a pending trade in just in case it continues into profit when I am not looking.

It riles me to see a trade come into profit and go out again.

Others are more patient and may well make more money that way.

I think sometimes my way is better, and sometimes theirs. ( My profits do seem to be larger when I am away from screen ...)
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