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Trading Without a StopLoss

  • #2,481
  • Sep 10, 2014 9:23am Sep 10, 2014 9:23am
Quoting dgalaz
Is a suicide, yesterday in a demo with 160% UP, excelent performance, without stp loss lost everything. Bad idea.
That's what happens when you have no concept of inventory management. Obviously, it's a bad idea for you. You probably shouldn't do it. You should go find a nice indicator that tells you when to buy and sell so you can blame it for bad trades instead of yourself.
  • #2,482
  • Oct 4, 2014 1:47pm Oct 4, 2014 1:47pm
Quoting nanningbob
{quote} I have done tier trading and its a good way to multiply a move. When the markets are trading I look at my trades for the week and see if pocketed more moves than pips available. If I have I had a really good week. For example if eur/jpy moved 350 pips from high to low and I pocketed 4-500 pip I maximized the move. I just keep buying the dps/rallies and add some extra levels here and there. If you catch a nice trend for the week it makes for a great week. My schedule does not allow me to do as much of that as I like during the summer but...
Hey Bob,

Could you elaborate a bit more on the multi-level trading between two correlated pairs? Perhaps give a real world example. I just can't see two correlated pairs diverting enough for you to make a profit from it. But then again I'm usually wrong.
Remember, Red. Hope is a good thing, maybe the best of things...
  • #2,483
  • Oct 28, 2014 11:30pm Oct 28, 2014 11:30pm
Gosh ... . Awfully quiet in here.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,484
  • Oct 29, 2014 5:12am Oct 29, 2014 5:12am
Quoting ForexFury
{quote} Hey Bob, Could you elaborate a bit more on the multi-level trading between two correlated pairs? Perhaps give a real world example. I just can't see two correlated pairs diverting enough for you to make a profit from it. But then again I'm usually wrong.
I dont trade correlated pairs, I trade strength of currency. So if one currency is running strong I trade it against currencies the are weak. When I get a matchup like that I can multiply my trades. I also watch the xxx.000 llines and play those breaks of those lines.
  • #2,485
  • Oct 29, 2014 5:19am Oct 29, 2014 5:19am
Quoting Bilstein
{quote} That's what happens when you have no concept of inventory management. Obviously, it's a bad idea for you. You probably shouldn't do it. You should go find a nice indicator that tells you when to buy and sell so you can blame it for bad trades instead of yourself.
Sheesh didnt we talk about trading and going for 5-15% a month. The fact that that this trader was up 160% shows that this trader has no concept of lot size to account size. If you have a 10,000 account and trade 1 dollar lots you would have to lose 10,000 pips to lose your account. If you traded dimes you would have to lose 100,000 pips. Anyway, at 160% the trader would have to be up to 16K. Now any idiot would know to protect his winnings or close the trades and take a nice profit. The very fact this trader posted such a ridiculous example kinda shows how dumb he really is. Basically has no concept whatsoever of what we are talking about.
  • #2,486
  • Oct 29, 2014 5:25pm Oct 29, 2014 5:25pm
Quoting nanningbob
{quote} Sheesh didnt we talk about trading and going for 5-15% a month. The fact that that this trader was up 160% shows that this trader has no concept of lot size to account size. If you have a 10,000 account and trade 1 dollar lots you would have to lose 10,000 pips to lose your account. If you traded dimes you would have to lose 100,000 pips. Anyway, at 160% the trader would have to be up to 16K. Now any idiot would know to protect his winnings or close the trades and take a nice profit. The very fact this trader posted such a ridiculous example...
... which is kind of why I set up a demo account to demonstrate how to get a 100% return annually earning what most would consider a modest 6-7% per month (compounded monthly) with fairly conservative exposure.

By way of background, the strategy utilized for the demo relies upon the ZigZag indicator (more particularly, the 3-level ZigZag Semaphore indicator in MT4; ordinarily using the 4H chart) and enters .25 x equity legs (.13 lots at this point in time). I started the demo on October 9th and have made October's 6% goal ... :

Attached Image (click to enlarge)
Click to Enlarge Name: Demo MTD.jpg Size: 65 KB


No stop losses were used ... . Naturally, one month isn't much, but it's a start.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,487
  • Oct 29, 2014 6:06pm Oct 29, 2014 6:06pm
Quoting ForexFury
{quote} Hey Bob, Could you elaborate a bit more on the multi-level trading between two correlated pairs? Perhaps give a real world example. I just can't see two correlated pairs diverting enough for you to make a profit from it. But then again I'm usually wrong.
This chart gives you the relative strength of each currency. When one is going up and another is going down you buy the currency going up. If they are above/below the 20/-20 lines you have a trend going and ride the wave. You can see the consolidation after runs by the USD (red) pound (BLUE) and then the YEN (GOLD) So that is how I trade. As you can see by the strong down on the gold line it will be selling JPY time again.
Attached Image (click to enlarge)
Click to Enlarge Name: CSS.png Size: 60 KB
  • #2,488
  • Oct 29, 2014 6:28pm Oct 29, 2014 6:28pm
Quoting nanningbob
{quote} This chart gives you the relative strength of each currency. When one is going up and another is going down you buy the currency going up. If they are above/below the 20/-20 lines you have a trend going and ride the wave. You can see the consolidation after runs by the USD (red) pound (BLUE) and then the YEN (GOLD) So that is how I trade. As you can see by the strong down on the gold line it will be selling JPY time again. {image}
Coolest looking COT study graphic I've seen ... .

Interesting the amount of consolidation between the currencies right now ... . Makes me want to have a gander at GBP/JPY ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,489
  • Oct 29, 2014 6:53pm Oct 29, 2014 6:53pm
Quoting nanningbob
{quote} Sheesh didnt we talk about trading and going for 5-15% a month. The fact that that this trader was up 160% shows that this trader has no concept of lot size to account size. If you have a 10,000 account and trade 1 dollar lots you would have to lose 10,000 pips to lose your account. If you traded dimes you would have to lose 100,000 pips. Anyway, at 160% the trader would have to be up to 16K. Now any idiot would know to protect his winnings or close the trades and take a nice profit. The very fact this trader posted such a ridiculous example...
Well, we've said it here about a billion times, but it bears repeating:

1. Keep your expectations reasonable. There are a number of Trade Explorers that show gains in excess of 100% for the month of October alone (I see about 50 or so). Kudos to them, but the individuals who are garnishing these stats are statistical outliers; they are not the average trader. Shooting for these kinds of stats, especially when just starting out, is not a reasonable expectation.

2. Establish reasonable (and repeatable) goals. I think 5-15% per month is a reasonable goal and one that is repeatable if a trader adheres to reasonable exposure rules. Small positions allow for big mistakes. Big positions leave virtually no wiggle room for error, and trading is an error-ridden process. While there are those who have gotten rich quick, the traders that endure are generally the ones that make small, incremental gains over time.

3. Limit exposure per trade and for your equity as a whole (<1-2 times equity per net position max and < 10 times equity for your entire exposure). Point in fact, as a general rule, I only take positions that are equal to .25 x my equity (although I have experimented with larger sizes to my detriment). Naturally, this is in part due to the fact that I frequently take several positions or legs in a currency pair over time ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,490
  • Oct 29, 2014 7:38pm Oct 29, 2014 7:38pm
There is a ton of bad advice being given in this thread and clearly for reasons that any consistently profitable trader should understand. Consistently growing capital is not the errand of fools.

- Does George Soros, use a Stop?
- Does Warren Buffet, use a Stop?

Trade Management is so incredibly overlooked and even more misunderstood by the vast majority of retail traders. You don't fail to use a stop because you do not know what's going on in the market. You don't use a stop because you do understand what's going on in the market. There are too many people getting it twisted in this thread and all other threads that I've ever read on the subject about whether or not to use a stop is wise.

The Trader is the stop and the stop is the Trader. That's what's so widely misunderstood by novice Traders. That can only be achieved through strategic and tactical Trade Management. Trade Management does not mean glaring at a computer screen wondering and biting your teeth about when to exit a losing trade. Trade Management is about Entry Position Sizing, Dynamic Cost Basis Allocation, Recovery Position Sizing and the correct application of Specific Recovery Protocols. Trade Management is that "other subject" that never gets any attention on retail trading boards - or barely any attention.

Technically, I have not had a losing trade in years, but that does not mean that I trade at 100% accuracy. It means that when a trade fails to strike its target, I initiate Trade Recovery Management immediate to slowly bring that losing position either into a net positive gain, or a gradual break-even trade. That is a skill in and of itself that too many retail Traders ignore at their own peril. It is THE most important skill you will ever develop as a Trader, because it defines whether or not you will be able to consistently grow capital on a predictable and reliable basis over the long term.

I am an intra-day Trader. That means my positions are supposed to close within 24 hours. Yet, I still have positions that have been open for more than one month at present. Why? Because that's what real Traders do - they work the trade until it yields a profit or until it breaks even, so that they can recovery working capital and get it back into production instead of being used to clean-up bad trades. You don't have to lose a dime in this business, when you learn what Trade Management truly means. My longest work-out to date took nearly three (3) months to conclude before it finally broke-even with a series of interconnected trades at varying sizes.

"Cut your losers and let your winner run?" Nonsense. Manage your losers with precisely calculated swap positions and hedges at the appropriate time and continue doing so until you get your money back - then close the position without loss, or at a small profit.

That's Trade Management and you need to learn how to do it - it is the most important part about being a Trader. Trading with a stop, guarantees the loss and it increases overall risk. It does not decrease risk. Trade Management decreases risk because it works failed trades back to original cost basis levels.

The market can only move in two (2) directions! Why on earth would you set a stop knowing that fact! Just learn to work the position in both directions until the market makes up its mind and pushes your remaining position(s) to break even. In other words, learn to Defend Your Capital. If you don't know how to defend your capital, you need to find another business.

Taking a loss? Are you kidding me? Is that some kind of joke? I don't care if it takes me a year in recovery, I'm not losing one thin dime. Stops are dangerous. Learn to live without them. And, no. Pyramid Schemes for the sake of Pyramiding a Loss is NOT the optimal road to recovery. You have to do the math based on your Entry Size and Remaining Equity.

Some of stuff I've been reading here is flat out dangerous and it explains why so many retail Traders blow it all the time. YOU are the "stop." BE the "stop." Don't relinquish control over the stop to some automated routine. That's nuts. That's absolutely bonkers. Learn what Recovery Ratios mean and then learn to work the deal flat.

Geepers, people.
F-X-C-M | A Classic Retail Bucket Shop Scam Artist Who Manipulates Prices
  • #2,491
  • Oct 29, 2014 9:55pm Oct 29, 2014 9:55pm
Quoting nanningbob
{quote} This chart gives you the relative strength of each currency. When one is going up and another is going down you buy the currency going up. If they are above/below the 20/-20 lines you have a trend going and ride the wave. You can see the consolidation after runs by the USD (red) pound (BLUE) and then the YEN (GOLD) So that is how I trade. As you can see by the strong down on the gold line it will be selling JPY time again. {image}
Bob, very cool. Thanks for that explanation. I'll dig more into this and see if I can make some sense out of it.
Remember, Red. Hope is a good thing, maybe the best of things...
  • #2,492
  • Oct 30, 2014 12:11am Oct 30, 2014 12:11am
Quoting iDoubleStoch
There is a ton of bad advice being given in this thread and clearly for reasons that any consistently profitable trader should understand. Consistently growing capital is not the errand of fools. - Does George Soros, use a Stop? - Does Warren Buffet, use a Stop? Trade Management is so incredibly overlooked and even more misunderstood by the vast majority of retail traders. You don't fail to use a stop because you do not know what's going on in the market. You don't use a stop because you do understand what's going on in the market. There are too...
Great post ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,493
  • Edited 12:58am Oct 30, 2014 12:46am | Edited 12:58am
Quoting iDoubleStoch
There is a ton of bad advice being given in this thread and clearly for reasons that any consistently profitable trader should understand. .
I cannot agreed more, having a habit of taking losses is just bad thinking. Taking a loss and starting fresh of next trade, that kind of mentality is deadly. Taking enough of that account is dead for sure. one misconception most people have is 50/50 = break even. That's false most of the time. On most cases it's a guarantee of a lost of capital. Every trade matters in a statement in my opinion.

Bulls make money, bears make money, pigs get slaughter. If one trader get shaken about 50 pips movement than one is doomed to fail. Once again, I'm speaking base on my trading style so it's solely just my opinion.

My philosophy on trading is, once I have a position, it's an investment, own it, hold it. Having a SL order = gambling, not trading. If a position is in trouble. Average it out if necessary, taking a negative red number in an account statement is really the final last resort.
Be like water making its way through cracks.
  • #2,494
  • Oct 30, 2014 1:10am Oct 30, 2014 1:10am
Quoting iDoubleStoch
There is a ton of bad advice being given in this thread and clearly for reasons that any consistently profitable trader should understand. Consistently growing capital is not the errand of fools. - Does George Soros, use a Stop? - Does Warren Buffet, use a Stop? Trade Management is so incredibly overlooked and even more misunderstood by the vast majority of retail traders. You don't fail to use a stop because you do not know what's going on in the market. You don't use a stop because you do understand what's going on in the market. There are too...
Bollocks.
FF journal: Peaks and Troffs
  • #2,495
  • Oct 30, 2014 4:17am Oct 30, 2014 4:17am
Quoting bogus
{quote} Bollocks.
Why so?
  • #2,496
  • Oct 30, 2014 9:43am Oct 30, 2014 9:43am
Quoting iDoubleStoch
There is a ton of bad advice being given in this thread and clearly for reasons that any consistently profitable trader should understand. Consistently growing capital is not the errand of fools. - Does George Soros, use a Stop? - Does Warren Buffet, use a Stop? Trade Management is so incredibly overlooked and even more misunderstood by the vast majority of retail traders. You don't fail to use a stop because you do not know what's going on in the market. You don't use a stop because you do understand what's going on in the market. There are too...
Great post, great explanation. Why give money away? People simply dont comprehend that multiple positions is the best way to trade. Look at the COT reports. The numbers are almost always between 40-60 % going one way or the other. You think those guys have single positions with 50 pip SL. No they multiply and stack their trades. Anyway we are on the same page on that one.
  • #2,497
  • Oct 30, 2014 9:49am Oct 30, 2014 9:49am
Quoting stewrigh
{quote} Why so?
Because he is Bogus.
  • #2,498
  • Oct 30, 2014 10:10am Oct 30, 2014 10:10am
Quoting nanningbob
{quote} Because he is Bogus.
  • #2,499
  • Oct 30, 2014 10:29am Oct 30, 2014 10:29am
its actually been very quiet on here for a few months since the markets started selling off,
so the lack of posts tells its own story
a few months ago when all was well and price mostly went up
we had post after post shouting the virtues of using no SLs
we can make our own minds up to why the posts have dried up

there's always a happy medium, and no one says use a 25 or 50pip stop loss
except the brokers

certain trades need a 125 pip stop for a 1:1 trade
others need 300pips for 2:1 / 3:1 trades etc
if your scalping you need less
that's how it is for most, no need to be under water for months or wks on end
get in / get out move on,
sometimes its nice to be stopped out, and so you were wrong and if its only a few trades why does it matter?
we are trading probabilities, and not always an exact science

using Buffet and Soros as examples is silly, as they move the market and have billions stuffed down the back of the sofa and in their sock drawers

if you trade ludicrously small lots then maybe you can get away with it and just sweat it out
as standard deviation will usually revert back to the mean, although not always
it would be nice not to use stops, but when trading a few lots or more its not practical or safe enough for most, and can sleep slightly better at night
  • #2,500
  • Oct 30, 2014 12:36pm Oct 30, 2014 12:36pm
Quoting Carlsberg
its actually been very quiet on here for a few months since the markets started selling off, so the lack of posts tells its own story a few months ago when all was well and price mostly went up we had post after post shouting the virtues of using no SLs we can make our own minds up to why the posts have dried up there's always a happy medium, and no one says use a 25 or 50pip stop loss except the brokers certain trades need a 125 pip stop for a 1:1 trade others need 300pips for 2:1 / 3:1 trades etc if your scalping you need less that's how it is...
Maybe the posts have stopped because there is only so much to say about this subject. Trading small positions relative to account size can and will add up. Price going up or down is not relevant. What is relevant is whether you follow price action, and how you follow it. When in a range and carrying a negative float, you can still make pips. It is simply pointless to use hard stops when there are so many better ways to manage your money.
If you are good at something, never do it for free--Joker
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