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Trading Without a StopLoss

  • #2,461
  • Sep 7, 2014 9:48am Sep 7, 2014 9:48am
Quoting Chicky
{quote} 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...
Sounds what CB's do to me - they have huge reserve of currencies and juggle them all the time.

I tried the equity millipede for a while and found that most of my millipedes went the same way and just closed them all out and started again in the opposite direction.
  • #2,462
  • Sep 7, 2014 9:57am Sep 7, 2014 9:57am
Quoting nanningbob
{quote} 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,...
Thanks Bob - a light just went on - but I think I would still have a problem resisting the urge to close out all my profitable trades and start again instead of hedging.

And whilst I accept the swap is minimal(even fully hedged will incur some cost), it is still a cost that will accumulate quite a lot over years.
  • #2,463
  • Sep 7, 2014 11:54am Sep 7, 2014 11:54am
Quoting nanningbob
{quote} 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.
You are totally right! Just saw this now on my other broker, cheers bob!
All posts are my personal opinion
  • #2,464
  • Sep 7, 2014 2:32pm Sep 7, 2014 2:32pm
Quoting stewrigh
{quote} Sounds what CB's do to me - they have huge reserve of currencies and juggle them all the time. I tried the equity millipede for a while and found that most of my millipedes went the same way and just closed them all out and started again in the opposite direction.
Equity Millipede is a good system, but just like any other method, it needs a framework to operate at its optimum.

For example, unlike stocks and commodities, the good thing about forex market is that one has to switch the boat. It doesn't mean it cannot go in one direction for years, it does, but in a very long term. I remember trading Euro when it was 0.8000. Can it go there once again? Yes, definitely ......... but no one knows when. Now if it goes there and one rides all the way down to this level, has to reverse the position on getting there. What makes one to change/reverse the position is the Framework. I don't know what is the framework for Equity Millipede method because I only glanced at few posts there to see the basics of this method, but whatever I saw, liked it.

The best framework is the knowledge of fundamentals (macro economics). One cannot get a complete picture of world's economic prospects by just studying and analyzing, you have to have views of people at world's topmost levels in different fields to know what strategic lines they are thinking on. One reason, it is always good to look for impartial views of world leaders made in private meetings. There is a great difference when they talk in public and when they talk privately. I don't mean they provide insider privileged information (most don't), but they have certain limitations when expressing views in public. Now, if you get a general idea about any sign of reversal, you accordingly start building your position. Please do remember that there are certain events no one can control no matter how resourceful, for example, tsunami in Japan. These factors sometimes change the whole scenario.
The Thief of Wall Street
  • #2,465
  • Sep 7, 2014 3:04pm Sep 7, 2014 3:04pm
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...
I hate to say it, but for some people the max exposure/per position exposure rules of thumb light never seems to go on, even though folks have beaten that topic to death here and elsewhere ... . The basic rule is no more than 5 x equity per position/no more than 10 x equity for all open positions; the rule does not change just because your broker allows you to trade on 500:1 margin. Naturally, there is room to play with these max exposure rules a little bit intratrade depending upon your risk appetite, and they will obviously require some bending if you are trading with <$2,000 U.S. and the smallest lot you can trade is 1 microlot (.01 standard lot).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,466
  • Sep 7, 2014 5:19pm Sep 7, 2014 5:19pm
Quoting stewrigh
{quote} Thanks Bob - a light just went on - but I think I would still have a problem resisting the urge to close out all my profitable trades and start again instead of hedging. And whilst I accept the swap is minimal(even fully hedged will incur some cost), it is still a cost that will accumulate quite a lot over years.
The key is having to long term patience to set something up like this. I doubt I have it. Swap problem is solved by going low leverage. Some people argue there is no purpose in hedging. I found one and call it a time out. Like last Thurs. euro drop. You could take a big loss during the move or hedge and wait until things settle and then decide whether your losing positions need to be closed or you can just enter a 2nd trade and clear them out. The other is a long term plan of just carrying a permanent DD. Both of these trading scenarios make hedging a valuable tool. However, if your just a bad trader or have bad trades then hedging becomes just another noose around your neck.
  • #2,467
  • Sep 7, 2014 6:07pm Sep 7, 2014 6:07pm
Quoting nanningbob
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...

Hi Bob,

I read all your posts and have gained heaps from them thanks very much.

This guy at Forex TSD used a huge grid with small pip spacing and constant Take Profits perhaps something similar to what you mention. He used hedges to control drawdown. http://www.forex-tsd.com/commercial-...day-print.html

I also enjoy your fundamental insights into currency movements. Can you reveal your sources? Or your best source?
  • #2,468
  • Sep 7, 2014 6:14pm Sep 7, 2014 6:14pm
Quoting nanningbob
{quote} The key is having to long term patience to set something up like this. I doubt I have it. Swap problem is solved by going low leverage. Some people argue there is no purpose in hedging. I found one and call it a time out. Like last Thurs. euro drop. You could take a big loss during the move or hedge and wait until things settle and then decide whether your losing positions need to be closed or you can just enter a 2nd trade and clear them out. The other is a long term plan of just carrying a permanent DD. Both of these trading scenarios...
I remain jealous of those who can hedge and are not subject to ridiculous FIFO rules. To me, it would seem like a fairly ideal system and take a good deal of the work out of what I have to do to set up trades and to take profit at opportune times without hedging and in light of FIFO. Naturally, I assume that one of the keys to such a system is proper risk management and exposure, something that I've never really struggled with.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,469
  • Sep 7, 2014 6:55pm Sep 7, 2014 6:55pm
Quoting nanningbob
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...
Thanks very much for your elaboration. much appreciated.

Makes me keener to further pursue my gridtrading. Just a few suggestions on what I have picked up over the years:

Trade the smallest grid you can to pick up the most volatility.

Quite often price does not reach 00 or 100, from 05 to 95 catches more trades, you still get 90% profit and only have to pick up 1 extra trade to compensate.

Use a simple Trade Replicator EA to reduce screentime even further.

I like the analogy above where it is compared to buying a house to rent out, a well proven way to financial freedom.
  • #2,470
  • Sep 7, 2014 9:32pm Sep 7, 2014 9:32pm
Quoting waltini1
{quote} Hi Bob, I read all your posts and have gained heaps from them thanks very much. This guy at Forex TSD used a huge grid with small pip spacing and constant Take Profits perhaps something similar to what you mention. He used hedges to control drawdown. http://www.forex-tsd.com/commercial-...day-print.html I also enjoy your fundamental insights into currency movements. Can you reveal your sources? Or your best source?
I read alot. I used to really like John Maudin newsletters. He didnt write about Forex specifically but overall fundamentals. However, lately he has slid into the gold crowd logic and I dont find his letters as useful. If you really want to understand economic fundamentals DO NOT READ the gold crowd stuff. The world is not on the gold standard so their conclusions do not match what is really happening in Forex. That does not mean you cant have strong beliefs about having a gold standard (I am not by the way) but the information is not useful in trading. Their predictions are always the same USD down GOLD up and that simply is not true. Not a one of them predicted correctly gold's retracement the last two years. So economics that deal with the big picture will help you greatly in Forex direction. Most of the writers posting here at FF are dimwits and you will see me pick on them once in a while. But Macro-economics and government policy is what drives Forex long term. Looking at Monthly charts gives you a sense of long term direction.

The other thing and the most valuable tool I have ever used in Forex is what we call the CSS. You can google nanningbob and 10.7CSS and find my thread. Using that indi correctly will give you a good sense of overall direction of the market. It is the only indi I have seen that is pretty good at letting you know where a currencies strength and weakness is going. I wouldnt trade without it. It can be used with any system because it is showing the overall strength/weakness of a currency. Everyone following that was in Thurs. surprise move. I will give you a trading tip that I use from it so you will know how to trade this week and look for the best areas to trade.

Where ever the AUD goes the NZD follows almost 90% of the time. The aud is presently the 2nd strongest currency on the board so the NZD just moved up into growing strength. I will be looking for NZD buys across the board especially by selling gbp/nzd, eur/nzd, and buying nzd/jpy. The aud, cad, usd are also very strong so they probably would range or not provide as good of trades. This indi helps in finding which pairs are strongest and which ones are weakest so I know where to go look for my buys and sells. Then you go to your charts and try to find good entrance points.

The eur, gbp, chf are on the bottom but I dont know if their runs are over with or not yet. I was going to play gbp weakness but it gapped down so big today that I wont touch them right now. The euro I will be looking for sells back into the DT or breakouts from it lows. I expect it to run for a while because when you have major change in an interest rate a currency will run 1-3 weeks off of that news. So I will look for euro sells. That will be my week euro sells and nzd buys.
  • #2,471
  • Sep 7, 2014 10:53pm Sep 7, 2014 10:53pm
Quoting nanningbob
{quote} I read alot. I used to really like John Maudin newsletters. He didnt write about Forex specifically but overall fundamentals. However, lately he has slid into the gold crowd logic and I dont find his letters as useful. If you really want to understand economic fundamentals DO NOT READ the gold crowd stuff. The world is not on the gold standard so their conclusions do not match what is really happening in Forex. That does not mean you cant have strong beliefs about having a gold standard (I am not by the way) but the information is not useful...
Largely on same page as you ... . NZD longs (wherever I can find them); AUD longs (again, where I can find them, with the possible exception of AUD/NZD); JPY crosses are kind of all over the board and I'm not keen on getting into a lot of them due to how prices have ripped with certain crosses (CAD/JPY, USD/JPY, AUD/JPY, GBP/JPY, and EUR/JPY all experienced rips of one kind or another), but NZD/JPY may present buying opportunities. I don't trade CAD a great deal, but if there are opportunities in AUD/USD and NZD/USD, there are also likely to be AUD/CAD and NZD/CAD long opportunities that share a similar trajectory. I am likely to be out of EUR and GBP crosses for several days as those two digest their losses, but will sell both on significant bounces ... .

I generally don't trade CHF at all, since it has been so closely correlated with the Euro, but I may need to rethink that in light of various noises surrounding the EUR/CHF 1.20 peg. http://www.marketpulse.com/20131212/...ely-necessary/
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,472
  • Sep 7, 2014 11:19pm Sep 7, 2014 11:19pm
Quoting ZebraSquirl
{quote} Largely on same page as you ... . NZD longs (wherever I can find them); AUD longs (again, where I can find them, with the possible exception of AUD/NZD); JPY crosses are kind of all over the board and I'm not keen on getting into a lot of them due to how prices have ripped with certain crosses (CAD/JPY, USD/JPY, AUD/JPY, GBP/JPY, and EUR/JPY all experienced rips of one kind or another), but NZD/JPY may present buying opportunities. I don't trade CAD a great deal, but if there are opportunities in AUD/USD and NZD/USD, there are also likely...
As far as my analysis of individual pair direction goes, I largely just use multiple time frame analysis ... . To a certain extent, this is all the farther any trader should need to go ... .

However, this analysis is coupled with my understanding of which central banks are easing (ECB, BOJ) and which ones are tightening (the Fed, BOE, RBA, RBNZ, BOC).

Naturally, certain central banks are in various stages of easing and tightening. The ECB, in my mind, is just beginning easing, which means we're in for several years of easing measures (at least in my mind). The BOJ claims it is easing, but its approach is "unique" (to be kind), extremely measured (i.e., slow), and at times somewhat bizarre (e.g., raising sales taxes to combat deflation). The Fed is nearly finished with QE, but there is an ongoing debate as to when interest rate hikes might occur. The BOE has indicated a desire to hike interest rates, but is in the same quandary as the Fed with inconsistent data leading to hesitation coupled with uncertainty as to the effect that Scottish independence will have on Cable. Both the RBA and RBNZ are looking toward interest rate "normalization" going forward and are, in fact, the most "normalized" economies in the developed world right now. The BOC is also looking to hike interest rates, but has taken pains to assert that its Central Bank is not in lock step with the U.S. as to when this occurs and will instead rely upon its own somewhat inconsistently improving data to inform that decision.

This is why, for the foreseeable future, I will continue shorting EUR/USD on bounces. Not only does multiple time frame analysis support the view that EUR/USD is in a strong downtrend (a "no shit Sherlock" observation), the ECB is in a long-term easing mode (weakening the Euro), and the Fed is in a long-term tightening mode (strengthening the dollar).

The same would go for EUR/AUD and EUR/NZD; the ECB is easing, and the RBA and RBNZ are in the process of tightening or moving toward normalization of interest rates, which will have the effect of strengthening those currencies.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,473
  • Sep 7, 2014 11:48pm Sep 7, 2014 11:48pm
http://www.marketpulse.com/20140908/...take-usa-2024/

What ever happened to the predictions that China would overtake the USA in 2016 or 2017?? The one big problem with these predictions is they think in terms of constants, China will continue to grow 8%... USA will grow at 2% etc. What they dont take into account is the USA will come out of its recession at some point, which it slowly has been, and China's economy will slow down as it matures. It is impossible to stay at 8, 7, or even 6% growth long term. I read an article where one guy postulated that with the USA becoming #1 energy nation and the natural decline in China's growth rate, China may not catch the USA in decades if ever. So now its 10 years instead of 2 or 3 hmmmmmmmmmmm.
  • #2,474
  • Sep 8, 2014 12:00am Sep 8, 2014 12:00am
Quoting nanningbob
http://www.marketpulse.com/20140908/...take-usa-2024/ What ever happened to the predictions that China would overtake the USA in 2016 or 2017?? The one big problem with these predictions is they think in terms of constants, China will continue to grow 8%... USA will grow at 2% etc. What they dont take into account is the USA will come out of its recession at some point, which it slowly has been, and China's economy will slow down as it matures. It is impossible to stay at 8, 7, or even 6% growth long term. I read an article...
I love articles that assume that everything remains static going forward ... .

8% growth in any economy is not sustainable ... .

Wasn't Japan's economy predicted to overtake the U.S. at some point? .... http://articles.chicagotribune.com/1...eton-japan-yen (in 1970 and again in 1995, Japan was predicted to overtake the U.S. economy by 2000).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,475
  • Sep 8, 2014 12:27am Sep 8, 2014 12:27am
Quoting nanningbob
{quote} I read alot. I used to really like John Maudin newsletters. He didnt write about Forex specifically but overall fundamentals. However, lately he has slid into the gold crowd logic and I dont find his letters as useful. If you really want to understand economic fundamentals DO NOT READ the gold crowd stuff. The world is not on the gold standard so their conclusions do not match what is really happening in Forex. That does not mean you cant have strong beliefs about having a gold standard (I am not by the way) but the information is not useful...
DO NOT READ the gold crowd stuff

I read all Maudlins stuff and the gold stuff but I'm a self avowed gold bug, so TTFWIW . Don't trade it tho, just buy the phys, and I actually prefer silver, which I do trade, my take is that if I can buy anything for less than it costs to produce thats got to be a good deal lol
  • #2,476
  • Sep 8, 2014 12:27am Sep 8, 2014 12:27am
Actually JPY is not too difficult long term. Just keep selling it. It is going to bust out at some point. The JPY govt. is borrowing over 1/2 of the money they use that is just not sustainable and sooner or later they have to super depreciate the thing.
  • #2,477
  • Sep 8, 2014 1:00am Sep 8, 2014 1:00am
Quoting nanningbob
Actually JPY is not too difficult long term. Just keep selling it. It is going to bust out at some point. The JPY govt. is borrowing over 1/2 of the money they use that is just not sustainable and sooner or later they have to super depreciate the thing.
I kind of think that's the BOJ's goal ... . Depreciate the Yen so that imports of Japanese goods become more attractive ... .

If USD/JPY 105.00 doesn't work, they'll depreciate further. If 110.00 doesn't work, a little more ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,478
  • Sep 10, 2014 6:24am Sep 10, 2014 6:24am
You want the best free daily fundamental news forecast analysis? John kicklighter from daily fx. Will turn you into a macro fx trader in no time
All posts are my personal opinion
  • #2,479
  • Sep 10, 2014 6:55am Sep 10, 2014 6:55am
Quoting Rtm
You want the best free daily fundamental news forecast analysis? John kicklighter from daily fx. Will turn you into a macro fx trader in no time
Yeah, a very good run-through ... .

For basic trading/price action stuff (he doesn't do set-up's or picks, generally), I like James Stanley's videos and webinars, too. No nonsense kinda approach (although he probably would not endorse/be a fan of no SL trading). http://www.dailyfx.com/forex-educato.../James_Stanley
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,480
  • Sep 10, 2014 6:59am Sep 10, 2014 6:59am
Is a suicide, yesterday in a demo with 160% UP, excelent performance, without stp loss lost everything. Bad idea.
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