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Trading Without a StopLoss

  • #2,601
  • Nov 13, 2014 4:55am Nov 13, 2014 4:55am
Quoting ZebraSquirl
{quote} Most traders have difficulty with their entries ...
ZS, I think I have to disagree with this statement.* I think the bigger issue is exits...or more to the fact that traders 'think' they have planned a good exit, but have potentially shot themselves in the foot.

I've seen stats mentioned about average profitable trades being 7 pips and losers being 37, and I believe these numbers help to validate this issue. The large average losers is probably due to MC's with multiple trades going negative and closing. As open, positive trades will never close automatically (e.g. no MC, unless there are more outstanding negative trades), these are only closed with limit orders, EA's or the trader. Therefore, the traders are potentially cutting off their profits far, far too soon. "Let your profits run" makes SENSE, but it seems like many find this hard to put into practice.

So, are traders closing trades too soon? There are fantastic examples of people supporting and discussing and agreeing with this behaviour all over this forum - "Make 5 pips a day", "All you need is 30 pips", "I make 2.5% per week and then stop trading..." and on it goes.

Why? Why stop the winners so quickly?


I think people need to get away from having expectations about R:R, TP limits, etc., as this is potentially capping many big, winning trades. What they need to do instead is accept a minor, potential win by bumping up the SL from BE into +5, +10, +15, etc. area when the trade is up 40, 60, 100 pips. Yes, you could 'lose' all your profits on a pullback, but so what? You couldn't know if it was going to come back to only +15, or go up another 300.

So, give it a try. It can't hurt you, as we all know you can't lose in forex by taking winning trades. But you need to let the winners be big winners sometimes (or fall back and just be a little ones).


*I will add that actually, getting in is much easier, but can still be a bit awkward, or at least it seems to be. That is, if a trade 'goes against the trader', it may be called a bad trade/bad entry. However, it wasn't necessarily bad (if all the indicators were reasonably positive), but it just happened that the market didn't move in a positive direction. Therefore, in hindsight, the trader might want to call it as being a 'bad entry', but it could also be overly tight SL, news, etc. and thus nothing to do with the entry and/or indicator.
  • #2,602
  • Nov 13, 2014 6:31am Nov 13, 2014 6:31am
Trading recepy for success and entrys vs exits.

The entrys is one of the most important things for your trading success, to be able to pick the sweet spot can be the difference between loosing and winning.
The exits would most definitely be the most easy part, if you are in profit, you can exit at any time of your choise, then it really doesn't matter where or when you exit, if you don't know how to exit, then in my opinion, you have no buisiness trading live. if it is about greed? maybe you want to milk every cent out of the trade before you can exit? then you need to work on your self, the entrys on the other hand, must be very precise because you must catch the price just as it is turning around to minimise your risk. and you need help from the big boys because you can't push up the price your self with your microlot, so you better enter where they do, if you are wrong with your entry then youre scruwed because the big boys will most likely be trading against you, and you will most likely either be stopped out if you are using a SL, or you will be in a loosing trade. it is really important to be able to read price and understanding what it does and what is the most likely thing to happen. then your entrys and trades, will be more successful alltogether, if you manage to get most entrys right or even above 50% or even slightly below that, it would be difficult to lose, then all it is, is a matter of risk to reward, and prooper money management, and stone cold patiance, keep your loosers short and let the winners ride. your ability to read the price will also let you keep your winners longer, and it will make you see where to get out more easy for sure, and you also know when not to trade, so how can you learn this? screen time and hard work, there is no substitue and no shortcuts, there is no one who will teach you this because everyone wants you to lose your money to them, practice! but do it on a demo account untill you see consistency. you need to log each trade to be able to see this, this is very important, like a trading diary, make a note why you entered the trade, take a sceenshot of the chart also, a picture tells more than a tousand words. then you can look back and build your strategy based on experience, if you don't do this, then I can guarantie you will have forgotten 90 percent of all your trades, and you will not develope in your trading, this is how I have done and I recommend you all to do the same thing, it is very helpful. there is a lot of talk about not using a stoploss, the stoploss is your tool to minimise risk, if you don't use one, you are actually allowing the market to take all your money, this is very poor judgment, we are trading to win so we must protect our money at all times, if you feel you are getting stopped out a lot, then use a larger stop, then atleast you have one in case there will be some terror attack sending the market to the abyss, you never know what will happen. it can happen and it will, it is just a matter of when. so please use a stoploss. for you guys who doesn't want to use a SL, I recommend you to have a mental stop loss, that is the place where you would have your SL normally, then put a SL the doubble amount of pips above or below, now you are still protected and you won't get stopped out so easy, good luck!
Bulls are stupid Animals!especially when Im short!
  • #2,603
  • Nov 13, 2014 6:48am Nov 13, 2014 6:48am
Roughtrader - Wow, wall of text. I got into about the first third of that and my eyes started bleeding...


Sorry, I completely disagree about entry. It's a vague, approximate point in price/time that we validate based on whim, indicators, measurments, news, etc.

People get into good trades all the time, at 101.01, 101.02, 101.04, 101.15, 100.98, etc.

If the price goes to 101.14, some will get out, some will hold.
If the price returns to 100.90, some will get stopped out, some will panic and get out and others will just hold.
If the price goes to 101.25, some will get out, some will hold...

Making sense now? Trading forex is NOT a cleverly crafted/executed activity like milling a piece of metal down to a millimetre precision. It's approximate and very arbitrary, once again, based on indicators, mindset, timeframes,etc.

Yes, there are better times to get into a trade, but no one...NO ONE...actually knows when that is. Some think they know when it is, but they can't know for certain. All we look for is indication that the price action (and overall market sentiment) is influenced and thus shifts in a direction that confirms our indicator and gives us a potential to take profits.

Deciding when to get out is crucial, as the market will not always move in your favour on trades, thus we need to maximise the potential profit (e.g., maximise when we EXIT).
  • #2,604
  • Nov 13, 2014 11:47am Nov 13, 2014 11:47am
Quoting Nefser
Roughtrader - Wow, wall of text.
Im sorry, I am a terrible writer

I disagree with you, but that is ok, we are all different individuals, but for me, the entry is the absolute most important thing,
you wrote, NO ONE...actually knows when that is, wrong, I do know, ofcourse not all the time, but the majority off times,
there are ways to find out where the major levels are located.
institutional traders know, after all, they are the ones moving the markets.
been trading forex for over 8 years so Im not intirely newbe
Bulls are stupid Animals!especially when Im short!
  • #2,605
  • Edited 12:57pm Nov 13, 2014 12:08pm | Edited 12:57pm
Can't believe this thread is still alive LOL.

Anyway entry is about reducing the risk and uncertainty.. Ideally you want the market to move in your favour immediately after you enter... i.e. capturing the moment with the optimum risk (variance) and lowest uncertainty (knightian uncertainty)

ofcourse higher risk must be compensated with higher profits... (simple example: when daily range is large, volatility is large, so you are forced to use a larger stop-loss and hence you need higher take profit to compensate for the increased risk)

Exit is about reducing losses and maximising profit... You can exit at anytime really, but ideally, you want to make sure your the returns compensate the risk that you have taken.. and that expected returns are positive... that's all.

Entry has to be complemented with exits. If not you have a half-assed strategy.

so yeah, both are important but entry is definitely trickier...

***

going back to the topic... what if you don't use a SL? then simple, your SL is your margin call... but never mistake it for not having a stop-loss...

But hey, it's not a bad strategy... you can flip many small accounts 10x if you are skilled by betting huge with leverage and trying to accumulate many lots into a large trade..

Alternatively, you can not use a SL and trade with very low leverage... It works as long as you don't hold trades for too long... A time stop works well here. The simple idea here is that exchange rates follow a random walk, so variance and calculable risk increases linearly over time. The longer you hold your trade, the greater the risk. So long as you keep the time horizon manageable and reduce lot size, it's very possible to trade without a SL and be profitable this way too.

To illustrate this further... when you open a trade, you expect the drift/direction to be either positive or negative (that's why you open a trade, you wouldn't open a trade if you thought price was just going to stagnate and stay in one place...) A few variables here:


- Expected drift/ time period: what's the take profit you are looking at and how long do you think it'll take to get there...

- Calculable risk/variance: the current volatility and what it implies for your pre-defined exit.

- Knightian risk/uncertainty: How to reduce this with a well timed entry... entering at market inflection points, consolidation patterns, breakouts, etc. etc.


If anytime during the trade, your expectation of price direction in a given time horizon changes, then get the f**k out...


But nothing can save you if a 1000 sigma event happens and suddenly euro crashes by like 10% in 1 minute... They shouldn't happen in well functioning markets lol. But if it does... you're f**ked
Build good relationships with others.
  • #2,606
  • Nov 13, 2014 1:43pm Nov 13, 2014 1:43pm
My previous reply was mostly in regards to ZS entry comment, but realised as it was in this thread, it was a bit OT.


However, I didn't say I keep my trading open ended...just sitting there with trades using SL's just waiting to be closed out for a loss. I do use scaled down hedge positions to offset trades that go against initial positions. Seems better than to keep throwing my stopped out trade pips back at my broker.


Quoting shellsnail
But nothing can save you if a 1000 sigma event happens and suddenly euro crashes by like 10% in 1 minute... They shouldn't happen in well functioning markets lol. But if it does... you're f**ked
If this happens, a vasty majority will be, as stops go out the window or kick in well past many peoples margin limits. Secondly, if you have all your funds available in your trading account, you are, yet again, asking for trouble. Money management is key.
  • #2,607
  • Nov 13, 2014 4:53pm Nov 13, 2014 4:53pm
Quoting Nefser
{quote} ZS, I think I have to disagree with this statement.* I think the bigger issue is exits...or more to the fact that traders 'think' they have planned a good exit, but have potentially shot themselves in the foot. I've seen stats mentioned about average profitable trades being 7 pips and losers being 37, and I believe these numbers help to validate this issue. The large average losers is probably due to MC's with multiple trades going negative and closing. As open, positive trades will never close automatically (e.g. no MC, unless there are...
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,608
  • Nov 13, 2014 6:20pm Nov 13, 2014 6:20pm
Quoting ZebraSquirl
{quote} Most traders have difficulty with their entries ... . I try to choose entries that look good, but it's not an accurate endeavor ... . This way, to use a billiard/pool term, I get to play "slop."
I disagree. It is "all" not "most".
The Thief of Wall Street
  • #2,609
  • Nov 13, 2014 6:43pm Nov 13, 2014 6:43pm
Quoting Chicky
{quote} I disagree. It is "all" not "most".
Can't resist ... . I have difficulty with my entries (that's what she said).
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,610
  • Nov 13, 2014 7:41pm Nov 13, 2014 7:41pm
Quoting Nefser
{quote} ZS, I think I have to disagree with this statement.* I think the bigger issue is exits...or more to the fact that traders 'think' they have planned a good exit, but have potentially shot themselves in the foot. I've seen stats mentioned about average profitable trades being 7 pips and losers being 37, and I believe these numbers help to validate this issue. The large average losers is probably due to MC's with multiple trades going negative and closing. As open, positive trades will never close automatically (e.g. no MC, unless there are...
But on a more serious note, traders statistically cut short winning trades too early and wait too long to get out of losing ones ... .
Fireworks are fun ... as long as you don't blow your fingers off.
  • #2,611
  • Dec 14, 2014 6:18am Dec 14, 2014 6:18am
People who trade without a stop-loss have completely ignored the basic principle of risk management. You greatly increase your risk by not including a stop-loss. Good luck in the long run. You wont last at all.
0% FEAR 100% GREED
  • #2,612
  • Edited 3:24pm Dec 14, 2014 2:22pm | Edited 3:24pm
Quoting AlwaysWinnin
People who trade without a stop-loss have completely ignored the basic principle of risk management. You greatly increase your risk by not including a stop-loss. Good luck in the long run. You wont last at all.
Only if you trade too large for the capital you have.
Someone with a $10,000 account could place a .01 buy limit every 200 pips on AU & EU and never get close to blowing the account.
  • #2,613
  • Dec 14, 2014 6:50pm Dec 14, 2014 6:50pm
Quoting AlwaysWinnin
People who trade without a stop-loss have completely ignored the basic principle of risk management. You greatly increase your risk by not including a stop-loss. Good luck in the long run. You wont last at all.
define "long run" then...
"Holy Grail" exists - accepting where is the first step.
  • #2,614
  • Dec 14, 2014 7:23pm Dec 14, 2014 7:23pm
Quoting Gumrai
{quote} If you are trading with a real account and putting your money at risk, then it's up to you really, isn't it? I have traded without a SL in the past and regretted it. For me it is important to know how much of my account I will be putting at risk when I enter a trade and that is not possible unless a SL is in place.

I use a margin call money management strategy. I open so many lots that all I have available to loose is 10-20% of my total equity. No stop loss necessary.
  • #2,615
  • Jan 15, 2015 4:36am Jan 15, 2015 4:36am
Where are those fake 'real' traders who trade without stoplosses.I dare you to trade without stoploss again.With EuroChf falling 3000+ pips r.i.p to your forex accounts.i wish swissy rally got you naked with no SL . lol
  • #2,616
  • Jan 15, 2015 4:54am Jan 15, 2015 4:54am
Quoting ericnyamu
Where are those fake 'real' traders who trade without stoplosses.I dare you to trade without stoploss again.With EuroChf falling 3000+ pips r.i.p to your forex accounts.i wish swissy rally got you naked with no SL . lol
Dear Mr. Nyamu,

indeed the CHF decision will have made a lot of damage to the accounts of many traders. But who are you to laugh about their fate, simpleton? Wishing other traders the loss of their account is very bad style and clearly not admissible. I've reported your post to FF staff and poliltely asked them to get you banned.

Please mind your own business. You'll need to, because with this kind of mindset you won't get very far as a trader.

Have a nice day
Be water, my friend
  • #2,617
  • Edited 5:42am Jan 15, 2015 5:18am | Edited 5:42am
I figured I'd come in here for a second to see how many people would have said "The Swiss decision probably killed these idiots".


Depends.


(1) I trade a currency "index" (or "basket index") - my book has been 80% short since last week. The Swiss decision put that index into the floor.
(2) Lot sizing is everything. I could have survived the decision if, it would have gone against my book. It would have sucked but, it would have come nowhere near killing my account.
(3) Can't lie. Last night was the most I've ever taken out of the market in a single night. Who could have known the Swiss would do that?

Edit* If it makes the guy laughing at us feel any better, I was long the NZD/CHF and lost 1,200 points on it. It just.. well.. didn't matter.
Attached Image (click to enlarge)
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  • #2,618
  • Jan 15, 2015 5:53am Jan 15, 2015 5:53am
Quoting Bilstein
Who could have known the Swiss would do that? {image}
Not really "known", but figured out. Just take a look at EURCHF chart... likely on the verge of ECB QE and the Greek elections 3 days after.
Pressure on EUR can likely be too strong to defend EURCHF floor.


Don't get me wrong: I don't pretend to be that smart nor do I believe in hindsight trading. Just wanted to discuss something I've learned for myself: signs of vicinity of NB actions and the profit potential they bare. Note taken!
Be water, my friend
  • #2,619
  • Jan 15, 2015 6:10am Jan 15, 2015 6:10am
Quoting spocktrader
{quote} Not really "known", but figured out. Just take a look at EURCHF chart... likely on the verge of ECB QE and the Greek elections 3 days after. Pressure on EUR can likely be too strong to defend EURCHF floor. Don't get me wrong: I don't pretend to be that smart nor do I believe in hindsight trading. Just wanted to discuss something I've learned for myself: signs of vicinity of NB actions and the profit potential they bare. Note taken!
Yeah, I suppose given how long prices hovered at 1.20 and never really broke upwards in a meaningful way would signify that, eventually, they'd let the floor out - from a technical standpoint, that is. Fundamentally I'm sure there were signs as well. Though, admittedly, I've always been pretty bad at piecing together the fundamental "puzzle".
  • #2,620
  • Jan 15, 2015 6:47am Jan 15, 2015 6:47am
just another piece of trading without a stop loss - stay away from trains and their tracks, or, choose what you trade carefully...
"Holy Grail" exists - accepting where is the first step.
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