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Trading Without a StopLoss

  • #2,501
  • Oct 30, 2014 11:48am Oct 30, 2014 11:48am
Quoting stewrigh
{quote} Why so?
I probably shouldn't have written that but my initial reaction was just that (and still is).
Just a few reasons:
So price just goes up or down does it? What about sideways?
Warren Buffet isn't a day trader, he's a buy and hold value investor.
How can you have proper money management when you don't know where your squeal point (stop) is?
I'm firmly in the "Cut your losses and let your profits run " camp. Hiding a loss with a hedge is still a loss in my book. Drawdown = loss.
Trade management is the most important part? I disagree. Psychology is in IMHO.
Not taking a loss screams of ego and a trader that must always be right. It is not about being right or wrong with a trade, it is about probabilities.
Lastly, a trader that is a day trader and holds a loss for 3 months?? I think that is called "position trading"
FF journal: Peaks and Troffs
  • #2,502
  • Oct 30, 2014 2:09pm Oct 30, 2014 2:09pm
Quoting bogus
{quote} I probably shouldn't have written that but my initial reaction was just that (and still is). Just a few reasons: So price just goes up or down does it? What about sideways? Warren Buffet isn't a day trader, he's a buy and hold value investor. How can you have proper money management when you don't know where your squeal point (stop) is? I'm firmly in the "Cut your losses and let your profits run " camp. Hiding a loss with a hedge is still a loss in my book. Drawdown = loss. Trade management is the most important part? I disagree. Psychology...
A clear view of the context of price is what's most important regardless of trend, scalp, position, range trading.

If your system has this (clear view of the context of price at current levels), perfect. If it doesn't, well, then keep believing in how 'random' this market is....

if you want to take a look at my most recent explorer due to broker changes, you'll see a NZD/USD buy that looks terrible - well, the whole purpose of that trade is swap building - and I don't care how long it takes for the actual trade to profit...It's at a volume that will take a LONG time to blow out the account that trade is in.

Trades running against you are UNREALIZED loss. You only win or lose when you buy (open long/close short) or sell (open short/close long) - anywhere between that is UNREALIZED gains/losses other than having to figure them into your money management plan.

At the end of the day, this market is VERY dynamic and must be analyzed and traded as such. With it's character being to respond to so many different things, money management and risk management rule the day IMO. Anything less than excellence in these two topics will cause you to lose.
"Holy Grail" exists - accepting where is the first step.
  • #2,503
  • Oct 30, 2014 4:28pm Oct 30, 2014 4:28pm
I think that the reason that "this thread has dried up" a bit is that the two camps on this issue will never agree with one another and one camp will never convince the other to come to their side. It's just the way it is ... .

Stop losses have a role in particular trading methodologies; they just don't play a role in mine unless I am looking to reduce a profitable position to a no risk proposition after it moves into the green because I have a particular concern about the position or because I am not particularly excited about it for one reason or another and would like to close the position out and move onto to something that is of greater interest to me.
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,504
  • Nov 1, 2014 9:19am Nov 1, 2014 9:19am
Quoting jmn5611
{quote} 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.
Good point. One thing that is hard to grasp in multiple position trading is even though some trades seem to be deep in the red, we are still pocketing profitable trades. I have found that the constant banking of profitable trades eventually overcomes and over-runs the negative trades. Unless one is really badly on the wrong side of the long term trend you can always recover a bad trade and win more than you lose. Yes I have eaten some bad NZD buys lately but I am still up on my account because I keep a constant flow of winning trades to bank. People who only think in one in one out have a hard time conceptualizing that if you are running 40 trades you are always pocketing winning trades. Then you have fresh trades you are constantly entering. All week long I am putting into my account winning trades and letting the losing trades reverse back into BE or closing out those traders with a bunch of winners. The concept of multiple positions gets lost to the one in one out crowd.
  • #2,505
  • Nov 1, 2014 9:21am Nov 1, 2014 9:21am
CSS is the greatest trading tool I have ever used. Here are my comments for this week.

Because of the huge JPY move it kind of distorted the whole thing. Made everyone else go up while the JPY went down big time. This probably will carry for the week so definitely look for JPY sells. If the massive move continues just jump in and take the ride.
AUD broke above the 20 line and is the strongest and NZD will probably follow but weakly.
USD is moving up again and should be fairly strong the rest of the year.
CAD and GBP are moving up also but I think that is more caused by the JPY fall.
EURO and CHF flattened out they should continue their flatness with a possible move towards weakness. Right now I am not a big fan of the euro going down much further but its still possible. So for the week look for:
aud, usd strength
cad, gbp continue to move up but not as strong.
eur, chf, nzd flat
jpy down down down.
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  • #2,506
  • Nov 1, 2014 10:18am Nov 1, 2014 10:18am
I trade with a wide emergency stop loss, but I consider perfect trading to never hit a stop loss, and pretty good trading to only hit one very rarely. Stops always take me out at a low profit point, and that's never where I want to exit. I have had situations with loss of internet connection while news was coming out that made me build that comfort factor stop into my trading. Otherwise, my exits are mental and usually right around break even or for profit. If price goes against me right after entry, I exit quickly for just a few pips loss. I assume that is one of those situations where my entry was right on the peak of a move up and price will continue retracing against me. More often than not I am right. If price goes up a little, and then retraces to my entry point, I exit break even and try again if entry conditions are still satisfied, no harm no foul. I will sometimes try up to 3 entries on a pair before just giving up and moving on, never more. If price goes well in my direction and never retraces back to my entry point, I consider it as good trade. I'll ride the trend and add more lots as I go and always exit those few good trades with profit, often very good profit.

So, in the end, I suppose you could say I trade with a wide emergency stop, and a tight mental stop and I rarely hit a stoploss. My goal is to never hit another stop loss, but I can't say I'm there yet. I hit one stoploss a couple weeks ago when price reversed violently while I was sleeping, taking me out of a very profitable three tier trade at just a little better than break even. Had I been awake, I would have exited earlier and saved most of my profit, but I have to sleep sometime. Yes, price did return to the direction of the prevailing trend in a couple days and had I been trading with no stop loss I would have regained my profit, but I'm simply not comfortable trading that way. One should never trade outside their level of comfort.

I've seen, and personally experienced, too many accounts busted from one "Black Swan" event, or a series of unlikely events, to ever be comfortable trading with no stop at all. I just consider giving back some profit now and then the cost of my very comfortable sleep. I don't consider all the double up to catch up strategies a suitable substitute for good trading. Everyone I've ever known who tried those, including some very large managed funds, eventually busted their account. If it was that easy, we'd all get rich, and everyone can't get rich off a zero sum game. That's just mathematically impossible.
  • #2,507
  • Nov 1, 2014 7:46pm Nov 1, 2014 7:46pm
Quoting Graviton
I trade with a wide emergency stop loss, but I consider perfect trading to never hit a stop loss, and pretty good trading to only hit one very rarely. Stops always take me out at a low profit point, and that's never where I want to exit. I have had situations with loss of internet connection while news was coming out that made me build that comfort factor stop into my trading. Otherwise, my exits are mental and usually right around break even or for profit. If price goes against me right after entry, I exit quickly for just a few pips loss. I assume...
Sound money management can make a poor trading system work and lousy money management can make a good trading system lousy. I didnt become profitable until I got this MM thing down pat. Too many traders are looking for the perfect trading system rather than properly managing their account. I trade in such a way that a black swan event can never take me out. It would take losing well over 100,000 pips for my account to be wiped out, 20,000 pips to suffer 20% loss of an account. There is no such Swan event that could to that. For example the highest high and lowest low difference of the eur/usd would be around 8000 pips. At its worst the last 10 years its only 4000 pips. Not that I would put a buy at the highest part and a sell at its lowest but the point is I trade in a way that allows me to trade another day. Even on my worst trading month I have ever had, I still have plenty of funds in the account to continue trading. Anyways you have a sound system and know what you are doing.
  • #2,508
  • Nov 1, 2014 9:12pm Nov 1, 2014 9:12pm
A. 30 pip stop loss - Comment: TP should be more than 30 pips with a method that generates more than 10 winners in a block of 20 trades. But a decent normal price fluctuation can eat this stop loss

B. Stop loss below 30 Pips- Comment: TP should be more than SL in number of pips. Very likely to be stopped out, very very likely. But, TP of about 30/40 pips can also get hit. Better than A above.
s
C. 31 to 200 pip stop loss - Comment: If TP is less than SL in number of pips and trade taken at the right time with an effort to get better price, can work, provided trade success rate is good enough to covers negative risk/reward ratio. Better than B above

D. Over 200 Pip SL - Comment: Good for trying to catch a mega trend reversal. TP may not be necessary for this trade, only a strategy defining when to move SL to BE or "BE Plus Few". Better than C above if one divides full position into smaller trades and has a plan how to use the "Loss Budget". No good a plan if it does not allow the trader in utilizing the full budget. We don't want a situation when only 1/10th of a trade gets 800 pips but a full position gets stopped out at 250 pips.

E. No Stop Loss - Comment: ......................... "Will be back soon, going for a smoke" ........ and a coffee ............ and some snacks
The Thief of Wall Street
  • #2,509
  • Nov 1, 2014 9:27pm Nov 1, 2014 9:27pm
E. No Stop Loss - Comment : take profit must be bigger than total amount of the account, after tp reached, restart.. if margin called, stop.. haha
live your life heartfully..
  • #2,510
  • Nov 1, 2014 9:29pm Nov 1, 2014 9:29pm
B. Stop loss below 30 Pips- Comment: TP should be more than SL in number of pips. Very likely to be stopped out, very very likely. But, TP of about 30/40 pips can also get hit. Better than A above.


So stop should be more than tp than it is Very likely to hit TP very very likely.
don't predict direction, but dance with flow of water
  • #2,511
  • Nov 1, 2014 9:31pm Nov 1, 2014 9:31pm
Quoting chrisyuto
E. No Stop Loss - Comment : take profit must be bigger than total amount of the account, after tp reached, restart.. if margin called, stop.. haha
You continue .............. I am listening, there is one more after "No Stop Loss" and that is the best. Tell me which one is left.
The Thief of Wall Street
  • #2,512
  • Nov 1, 2014 9:34pm Nov 1, 2014 9:34pm
Quoting priceaction1
B. Stop loss below 30 Pips- Comment: TP should be more than SL in number of pips. Very likely to be stopped out, very very likely. But, TP of about 30/40 pips can also get hit. Better than A above. So stop should be more than tp than it is Very likely to hit TP very very likely.
(Half) Agreed ............ Depends on market condition and timing of the trade.
The Thief of Wall Street
  • #2,513
  • Nov 1, 2014 9:39pm Nov 1, 2014 9:39pm
F. ???????
live your life heartfully..
  • #2,514
  • Nov 1, 2014 9:42pm Nov 1, 2014 9:42pm
with out stop loss. it is many ways to do it, what I do is divide account into 1/10. start with 1000. I use to park 900 in one account and 100$ in another account, using 1:888 leverage. with out stop loss doing KAMAKAZI trade no stop loss. just need perfect entry point as euro was traded @1.2495. the risk is 10% of capital but never ever put all amount in KAMAKAZI account.
don't predict direction, but dance with flow of water
  • #2,515
  • Edited 10:02pm Nov 1, 2014 9:45pm | Edited 10:02pm
Quoting Chicky
A. 30 pip stop loss - Comment: TP should be more than 30 pips with a method that generates more than 10 winners in a block of 20 trades. But a decent normal price fluctuation can eat this stop loss B. Stop loss below 30 Pips- Comment: TP should be more than SL in number of pips. Very likely to be stopped out, very very likely. But, TP of about 30/40 pips can also get hit. Better than A above. s C. 31 to 200 pip stop loss - Comment: If TP is less than SL in number of pips and trade taken at the right time with an effort to get better price, can work,...
Continued ........

E. No Stop Loss - Comment: Every pair, no matter a major or cross, has an "Open Side" and there is a "Closed Side" of the price. If one wants to trade a pair without stop loss, should enter in the direction of Open Side. The trade size is calculated in such a way that if Pa goes against the trader and hits the Closed Side of the price, the loss should not be more than intended risk (maximum amount one wants to lose). Very safe, very very safe way of doing business, but returns may not be very lucrative unless one has a good success ratio. Better than D but nothing compares to F.

ps. Open Side price of Eur/USD is 2.5000, it is like -273.15 Degree Celsius. This eur/usd price of 2.5000 is not random or just an estimate, calculated from the price data.
The Thief of Wall Street
  • #2,516
  • Nov 1, 2014 9:51pm Nov 1, 2014 9:51pm
recently i realize there is no "no stop loss" condition, even if we don't put in stop loss order, there is another kind of stop loss from the broker side, margin call..
live your life heartfully..
  • #2,517
  • Nov 1, 2014 9:55pm Nov 1, 2014 9:55pm
Quoting chrisyuto
F. ???????
It took me over 10 years to figure out "F" and another 5 years to master its application. Want to see if someone's thoughts even reach there.
The Thief of Wall Street
  • #2,518
  • Nov 1, 2014 10:09pm Nov 1, 2014 10:09pm
Quoting Chicky
{quote} It took me over 10 years to figure out "F" and another 5 years to master its application. Want to see if someone's thoughts even reach there.
Hello Chicky,

You are right
  • #2,519
  • Nov 1, 2014 10:18pm Nov 1, 2014 10:18pm
Quoting muhitalam
{quote} Hello Chicky, You are right
Okay, I am tired now. You explain the details of "F" Stop Loss to people here.
The Thief of Wall Street
  • #2,520
  • Nov 1, 2014 10:37pm Nov 1, 2014 10:37pm
These words were written sometime ago in a different thread relating to Stop Loss. The test is almost complete.

Chicky wrote: My trading was good, up until recently, however, wanted to switch to longer term trading for a variety of reasons. That required changing some aspects of my short-term trading method, stoploss being the most important. In last one month, was amazed to note how greatly a proper stoploss affects one's profitability. My new stoploss calculation uses basics of horse race book-making principles. It is still under-test. A book-maker decides opening rates for the first favorite horse. Let's say 2/10. that means for every $10 the punter would get $2 winning (total $12) if first favorite wins. Since only one horse will win and all the others in that race will lose, the bookmaker will get $10 if first favorite loses, therefore the book-maker allocates part of that money (let's say $8) as winning amount for the second favorite. The rate for the second favorite may therefore be 8/3 (if second favorite wins, a person betting $3 on second favorite will receive $11). If there are only two punters, one betting $10 on first favorite and other betting $3 on second favorite,that would mean if first favorite wins the book-maker has a total collection of $13 and total payout is $12. However, if second favorite wins the race the total collection would still be $13 but payout would be $11. Then there is third favorite and amount of betting varies on horses as the time goes by ............. book-maker keeps on changing the rates in such a way that no matter what happens in race (including dead-heat)his collection is always more than the pay out................ if not for one particular race but atleast for all the races in that race day. Therefore my stoplosses are just like rates offered for first favorite, that is, 2 pips for a profit of 10 pips. Now once this trade has been entered, I have second and third favorites. The good thing is that I am not exposed to variation in betting amount by different punters and therefore calculation is much simple. Further, its not the bloody horse and the rider I am betting on, my favorites come from economic and technical analysis
The Thief of Wall Street
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