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Trading Without a StopLoss

  • #2,441
  • Sep 6, 2014 7:13am Sep 6, 2014 7:13am
To try to show how a hedging strategy would work and you would need to use low leverage to keep swap costs down. Here is the NZD/USD monthly chart. The difference between its highest high and lowest low is 5000 pips. If you spaced your trades 100 pips apart you would have a potential of 50 buy trades and 50 sell trades going as your maximum number of trades. In reality you would not sell at the low ends of buy at its extremes. WHY? Because for an economy to function properly prices have to stay in a certain range. If the value gets too high your products become too expensive and no one buys them. If the value gets too low your economy gets overheated and you fight inflation with higher interest rates and other measures. So all currencies will stay within a certain range or balance for the long term good of the economy. You can see on this chart back in 2000 when Pres. Bush started the depreciation of the dollar to get things back to balance. Then they let it go too long and it collapsed in 2008. Then with recovery and China continuing to grow it came back up again. Anyway once you have your 50 buy trades and 50 sell trades set covering your DD, you are permanent DD and every trade is profitable from then on out. NZD dollar wont go lower than its lowest price unless there is a total economic collapse and it cant go much higher than its highs because it wont be able to sell its products. They will become too expensive. You could go for decades of just collecting those 100 pip profits from then on. It would take 10 years to have it complete to full DD. Meanwhile while this is all happening you are taking 100 pip profits along the way as price jumps up and down, up and down. Obviously this is a long term trading strategy but it would work.
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  • #2,442
  • Sep 6, 2014 7:22am Sep 6, 2014 7:22am
Now the NZD/USD is a very slow moving currency, non-volatile but this would be 800 pips in profit over a 3 month period.
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  • #2,443
  • Sep 6, 2014 7:27am Sep 6, 2014 7:27am
A more volatile pair could be the eur/jpy which has an 8000 pip range. So potentially 80 buy/sell trades make up the permanent DD. This would have been established over a 4 year period.
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  • #2,444
  • Edited 7:47am Sep 6, 2014 7:35am | Edited 7:47am
In the last 3 months over 1300 pips but price was within a 300 pip range. Eur/jpy is a much more volatile currency and would garner you more pips. So bottom line is. Your hedged positions would prevent account wipe out, the DD would be permanent and would never grow unless price went outside the currency range. You would collect nothing but profit from then on out and you could keep something like this going on for decades. This is a long term strategy and a commitment. I have shown that a hedging strategy used long term would be successful and profitable.

I know Merlin will never pay out his offer of showing a successful hedging strategy because his offer was a fraud offer.
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  • #2,445
  • Sep 6, 2014 7:42am Sep 6, 2014 7:42am
I hope this answers you questions of how such a strategy would work. I know of a trader who does something close to this with a fund in Australia. I wish I had kept the article he wrote explaining it but I did not. There are also traders who do only buys with aud and nzd and never take a SL they just keep a permanent DD. They trade on the simple belief that the AUD and NZD will always come back up because nations will always need their commodities. So buy the dips in the worldwide downtrends. If you think long term non SL strategies can work but they are investment strategies not day traders.

FIFO and the forced trading strategies forced on us by govt. decree is full of crap. NSA would you please forward these posts to those morons in Washington.
  • #2,446
  • Sep 6, 2014 6:26pm Sep 6, 2014 6:26pm
Pretty interesting stuff, Bob... kind of like paying cash for a house and living off the rent. I guess with Oanda you could still do something in that fashion using subaccounts for each trade... but I think they cap you at 20 accounts, so have to spread them out a lot more than 100 pips apart...
  • #2,447
  • Sep 6, 2014 10:35pm Sep 6, 2014 10:35pm
I am not going to reveal the person who sent this email but jeepers if you are going to trade use your brain and read what we said. We have said many many many times we trade small lot size to account size.

Dear sir,

I have entered a sell trade on audjpy at 97.42 & not set stoploss. So now my trade at -118 usd. Now my account balance is 721 usd. If you can pls tell me is there any posibilities to down next week. Because i did not open a headge trade.if it is not go down side i can open a hedge trade. Pls advise me.

First let me show the difference between you and me. You are down 118 dollars on a trade so it appears you are trading 1.00 per pip or its approximate. You took this trade with only 839 dollars in your account and your account is now over 14% in DD. You are in big trouble. Just to compare the difference.

I have a 50,000 dollar account to trade with and I trade .50 cent lots. With the same trade I would be 59 dollars in the hole and only be 1/10 th of percent of my account DD. Do not these numbers ever affect how you trade?
.1% vs 14% I can do a lot of things with my trade you are on your way to destroying your account.

Can I help you? You hedge the trade and wait for the JPY to become stronger than the AUD. That could take months. Or close out AND NEVER TRADE 1.00 LOTS AGAIN. With that amount of money to safely trade you can only trade one penny lots and learn the business. After you put some years into it and you show you can make 2-5% a month average then and only then are you ready to trade. But if you want to last in this business you have to quit trading large lot sizes.

Now lets take a look at the trade. You played that price would range and bounce off of the R point. I have an orange line at that spot. So your trade reasoning was sound and if it worked you would have had a nice trade. But it didnt work and the aud/jpy is continuing its yearly trend. So if you are not going to use a SL you should be trading with the trend and not against it. So was it a possibly a good trade? yes. Did it work? no. I would have just bailed on this trade with that large of a lot size.

The other option is to hedge and wait for a time when price will retrace a 100 pips and get out with a well place 2nd trade. Problem with that is JPY is going to weaken its currency some more this fall probably in Oct. and the AUD/JPY will probably continue the entire year with an UT. Do you have a chance of price going back down and retesting previous Resistance line and it becomes Support. This does happen often and could happen in September. Should you try? No. You dont have enough equity to play with a trade using 1.00 lot sizes. If you were trading penny lots like I recommend with this much money, then you could do something like that and learn some trading techniques.

Anyway, this is how beginners lose their money. They trade too large lot sizes to account size and at some point they will ALWAYS lose their money. There is no such thing as a trader who never has a losing week, losing month, etc. You make no provision in your trading for just having a bad week, or month. Trading like this you are 100% guaranteed to lose all you money because YOU WILL have a losing week or month and you can kiss your account goodbye.

I only trade 1.00 lots with my account of 50K when I know the fundamentals are strongly on my side. You are trying to do it with 800 bucks. It just aint going to work. Sorry for the chewing out but you earned it.
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  • #2,448
  • Sep 6, 2014 10:54pm Sep 6, 2014 10:54pm
Quoting nanningbob
I am not going to reveal the person who sent this email but jeepers if you are going to trade use your brain and read what we said. We have said many many many times we trade small lot size to account size. Dear sir, I have entered a sell trade on audjpy at 97.42 & not set stoploss. So now my trade at -118 usd. Now my account balance is 721 usd. If you can pls tell me is there any posibilities to down next week. Because i did not open a headge trade.if it is not go down side i can open a hedge trade. Pls advise me. First let me show the difference...

well I read this from nanningbob I was shocked to see some one trading $1 per pip with a small account and what he said is very true =small accounts .01 to .05 on a $1000 account even .05 is a risk , I also have a large account and never trade $1.00 per pip even when I get the trend right i never take that risk
people leave, but this thread will go on for ever
  • #2,449
  • Sep 6, 2014 11:31pm Sep 6, 2014 11:31pm
Quoting trevwest
Pretty interesting stuff, Bob... kind of like paying cash for a house and living off the rent. I guess with Oanda you could still do something in that fashion using subaccounts for each trade... but I think they cap you at 20 accounts, so have to spread them out a lot more than 100 pips apart...
I would think you could do it with just 2 accounts. One for buys and one for sells. With what happen at IBFX and their sudden drop into FIFO with 2 weeks notice I would not try such a strategy with a USA broker. You could do it with a bank that is not covered by NFA. One of the reasons I am considering CITI FX
  • #2,450
  • Sep 6, 2014 11:54pm Sep 6, 2014 11:54pm
Quoting nanningbob
{quote} I would think you could do it with just 2 accounts. One for buys and one for sells. With what happen at IBFX and their sudden drop into FIFO with 2 weeks notice I would not try such a strategy with a USA broker. You could do it with a bank that is not covered by NFA. One of the reasons I am considering CITI FX

Yep, thats why oanda is the only option... just using one account you couldnt cash out your newer trades thanks to horrible FIFO regs... use a subaccount for each trade with oanda, its treated as a different account. At least for now. but that only gives you 10 buys, 10 sell. I just wouldnt do it because of the long term aspect... would hate for oanda to close doors when i am in deep drawdown.
  • #2,451
  • Sep 7, 2014 12:14am Sep 7, 2014 12:14am
Quoting Aussi
{quote} well I read this from nanningbob I was shocked to see some one trading $1 per pip with a small account and what he said is very true =small accounts .01 to .05 on a $1000 account even .05 is a risk , I also have a large account and never trade $1.00 per pip even when I get the trend right i never take that risk
Isn't $1.00 per pip is the minimum for 10K (Mini Lot) accounts with most brokers?
No offense, I am just curious, How much a person can make or lose @ $1.00 per pip? It means one has to wait for 1,000 pips to make just $1,000?
The Thief of Wall Street
  • #2,452
  • Sep 7, 2014 12:50am Sep 7, 2014 12:50am
Quoting Chicky
{quote} Isn't $1.00 per pip is the minimum for 10K (Mini Lot) accounts with most brokers? No offense, I am just curious, How much a person can make or lose @ $1.00 per pip? It means one has to wait for 1,000 pips to make just $1,000?
hi Chicky my account is from .01 to $60 per pip with hotforex on my pro account ,
people leave, but this thread will go on for ever
  • #2,453
  • Sep 7, 2014 4:37am Sep 7, 2014 4:37am
i find it funny some people are actually arguing about stoploss.
  • #2,454
  • Sep 7, 2014 5:12am Sep 7, 2014 5:12am
I think we confusing lot sizes here.
0.01 is 10 cents/pip
0.1 is $1/pip
1.0 is $10/pip

I would say for every $1000 go with .01 lot sizes.
All posts are my personal opinion
  • #2,455
  • Sep 7, 2014 5:32am Sep 7, 2014 5:32am
Quoting Rtm
I think we confusing lot sizes here. 0.01 is 10 cents/pip 0.1 is $1/pip 1.0 is $10/pip I would say for every $1000 go with .01 lot sizes.
Depends on the broker that is why I use pennies and not lot sizes. 0.01 lot with IBFX is 1 penny, 0.10 is a dime and if you want to trade dollars you trade 1.00 lots. So when I explain things I use pennies, dimes and dollars because lot sizes can vary from broker to broker and from what kind of an account you have.
  • #2,456
  • Sep 7, 2014 6:56am Sep 7, 2014 6:56am
Quoting nanningbob
I am not going to reveal the person who sent this email but jeepers if you are going to trade use your brain and read what we said. We have said many many many times we trade small lot size to account size. Dear sir, I have entered a sell trade on audjpy at 97.42 & not set stoploss. So now my trade at -118 usd. Now my account balance is 721 usd. If you can pls tell me is there any posibilities to down next week. Because i did not open a headge trade.if it is not go down side i can open a hedge trade. Pls advise me. First let me show the difference...
Alternatively he could start scaling in long until his long trades offset the loser.
  • #2,457
  • Sep 7, 2014 7:11am Sep 7, 2014 7:11am
Quoting nanningbob
A more volatile pair could be the eur/jpy which has an 8000 pip range. So potentially 80 buy/sell trades make up the permanent DD. This would have been established over a 4 year period. {image}
This seems akin to the equity millipede system - and I understand the concept but don't understand why you would bother to hedge trades in profit. Why not just take all the profit or start building a position in the opposite direction. I can understand hedging losers until direction becomes clearer but if it's right to hedge a winner, it's probly right to take a profit surely?

For instance when you close a 100 pip winner at the edge of the range you are now not fully hedged so do you add another trade in the same direction bringing the hedge back into balance or do you increase your trades in the opposite direction meaning you are even more out of kilter. It wouldn't make sense to buy at a top just to bring the hedge back to even.
  • #2,458
  • Sep 7, 2014 8:02am Sep 7, 2014 8:02am
Quoting nanningbob
I am not going to reveal the person who sent this email but ................................
Wayne? He is the only person who I know trades with this philosophy and style. He has a user name here different from his real name.
The Thief of Wall Street
  • #2,459
  • Sep 7, 2014 9:20am Sep 7, 2014 9:20am
Quoting stewrigh
{quote} This seems akin to the equity millipede system - and I understand the concept but don't understand why you would bother to hedge trades in profit. Why not just take all the profit or start building a position in the opposite direction. I can understand hedging losers until direction becomes clearer but if it's right to hedge a winner, it's probly right to take a profit surely? For instance when you close a 100 pip winner at the edge of the range you are now not fully hedged so do you add another trade in the same direction bringing the hedge...
LOL. You argument sounds very logical but to few hedging is a very vast tool with multiple uses. In fact, what they term as Hedging is way beyond hedging. However, most of them initially start hedging to put breaks on the speed at which they start losing. Many take counter trades to "hedge", little wiser hedge with a different pair, more wiser partially hedge (over or under), etc. The primary focus of hedging until this stage is the losses. Then at a later stage they explore what hedging has done beyond their expectations (positively or negatively). From this new experience, they use hedging not only as full or partial stop loss but also to control the pace at which they gain or lose. At this stage, their hedging techniques find new avenues and they start hedging also their profits for two main reasons 1) maximize gains, 2) minimize draw down after a gain. In third step, they find more advanced uses of hedging, this is where hedging does not remain hedging but becomes Portfolio Management with sound risk management tactics.
The Thief of Wall Street
  • #2,460
  • Sep 7, 2014 9:44am Sep 7, 2014 9:44am
Quoting stewrigh
{quote} This seems akin to the equity millipede system - and I understand the concept but don't understand why you would bother to hedge trades in profit. Why not just take all the profit or start building a position in the opposite direction. I can understand hedging losers until direction becomes clearer but if it's right to hedge a winner, it's probly right to take a profit surely? For instance when you close a 100 pip winner at the edge of the range you are now not fully hedged so do you add another trade in the same direction bringing the hedge...
The philosophy of the matter is, no matter what direction price goes you will get a 100 pips. If you start at the top and move down you are taking sells every 100 pips and collecting every 100. You are also buying every hundred so whenever price ranges or reverses a 100 pips you collect a 100. The benefit is there is no thinking or studying charts, news, fundamentals, etc. You dont care what price does because no matter what it does you are collecting a 100 pips. If price ranges between a 200 pips range all summer or even a 100 pips range, while everyone else is complaining you are popping every 100 pip move whether it is up or down. The 2nd part is your DD remains the same once everything is set and you have no more DD. You just collect 100 pips over and over and over and over until you decide to shut it down. You dont give a rip what people are writing, saying, news, wars, recessions, inflation, you dont care. You just keep collecting a 100 pips over and over and over again. The only problem is do you have the patience to do such a strategy long term. I played with this before hedging was banned in the USA and it worked very well. I did on a demo but the problem I had was not enough capital because I was trying it on 15 pairs. Needless to say that wasnt too smart. I ended up having too many trades going and it would freeze up the MT4 and profits were taking too long to close because I would get a bunch at one time. I was doing it manually, didnt have an EA back then, and kept missing my new entrances etc. So you have to keep the numbers down.
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