Trading Without a StopLoss | Page 133 | Forex Factory

Options

Go to
Permalinks
Print Thread

Similar Threads

MT4 Trading without GAP and without Excel 669 replies

Trading Without a Stoploss--BHILC 52 replies

Set Order without StopLoss / TakeProfit ? 4 replies

Trading without a stoploss 53 replies

MB Trading software, how to place stoploss and target 1 reply

Attachments: Trading Without a StopLoss
Exit Attachments

Trading Without a StopLoss

  • #2,641
  • Jan 16, 2015 11:14pm Jan 16, 2015 11:14pm
Quoting grin
{quote} Do not exaggerate. Stop loss is stop loss in the context of more of less normal liquidity. It is unreasonable to expect someone to pick something from you just because you suddenly want to get rid of it. Even in this case folks with tight stops were able to get out before lower stops drained liquidity triggering avalanche. Keep in mind that negative $10K could be negative $300K. You are merely unhappy about the level at which you were able to find takers.
In fact, I never use stop loss, and expect nothing from it.
That is why I wonder.
  • #2,642
  • Jan 17, 2015 1:11am Jan 17, 2015 1:11am
Quoting VaBikePacker
{quote} but is a stop loss a risk management tool or a money management tool? (I have my own opinion and have no intent of telling you you're wrong with your opinion on the matter...I'd enjoy a reasonable debate...no name slings or anything...not worth it..)
This is why I scour every thread on this site. Sometimes someone asks a rather profound trading question!

Okay, here is my pitch. A stop loss is a money management tool. I believe risk management lies in position size. Position size is correlated to leverage. I am hopeful that a lot of aspiring traders learned something this week.
If you are good at something, never do it for free--Joker
  • #2,643
  • Jan 17, 2015 1:14am Jan 17, 2015 1:14am
I am very new to Forex trading (just over a month), and have managed to lose half of my acc in the first week due to emotional trading, so definitely take my words with a grain of salt. But SLs do help against emotional trading, and prevent any sudden shifts in the trend (sorry to all CHF traders). I'd like to think of it as way of reminding yourself that the market did not go according to your plan, and maybe a bail out is the best choice. If you can watch the market 24/7, and can properly excute your strategy, then I guess then SL would only do more harm than good to your trading account.
  • #2,644
  • Jan 17, 2015 5:38am Jan 17, 2015 5:38am
Quoting VaBikePacker
{quote} but is a stop loss a risk management tool or a money management tool? (I have my own opinion and have no intent of telling you you're wrong with your opinion on the matter...I'd enjoy a reasonable debate...no name slings or anything...not worth it..)
Its always nice to have a friendly debate! And to answer your question, I would like to argue that money money management is knowing how much money you can afford to risk and how much you intend to gain. Money management can be broken into two forms; Risk Management (Stoploss) & Profit Protection (Take profit).
0% FEAR 100% GREED
  • #2,645
  • Jan 17, 2015 5:45am Jan 17, 2015 5:45am
Quoting Dbanga
SL in busy times are useless, they only work when someone else "buys" them. Most brokers have rigged the systems in their favour. but anyone who tells you that you can set your stop loss and feel safe is wrong. that stop loss you set has to be filled by someone willing to take that off your hands. brokers have a varied level of response to trying (or not) to offload your stop loss. So, that stop loss you set has to be filled by someone willing to take that off your hands, in busy times ie NF Payrolls dont use them....danger Will Robinson...danger...
I disagree. Maybe you are using stop-losses incorrectly. For me, I can never trade without setting a stop-loss, its to risky, take what has happened in the recent events for example. This is main reason why stop-loss are USEFUL.
0% FEAR 100% GREED
  • #2,646
  • Jan 17, 2015 7:32am Jan 17, 2015 7:32am
Quoting jmn5611
{quote} This is why I scour every thread on this site. Sometimes someone asks a rather profound trading question! Okay, here is my pitch. A stop loss is a money management tool. I believe risk management lies in position size. Position size is correlated to leverage. I am hopeful that a lot of aspiring traders learned something this week.
Nice JMN - I believe position size is still directly correlated with money management, so, what is risk management? DIRECTION. Which direction carries the most risk of affecting my money management plan? Excellent pitch IMO and nothing wrong with it if that's your (borrowed from Magix) "optic" that makes the market clearer for you. Most don't even consider the idea, so, you're 90% ahead already
"Holy Grail" exists - accepting where is the first step.
  • #2,647
  • Jan 17, 2015 7:37am Jan 17, 2015 7:37am
Quoting AlwaysWinnin
{quote} Its always nice to have a friendly debate! And to answer your question, I would like to argue that money money management is knowing how much money you can afford to risk and how much you intend to gain. Money management can be broken into two forms; Risk Management (Stoploss) & Profit Protection (Take profit).

Cool....I took a "logic" class in college - the professor went over arguments and I found what he said very profound at the time and still do: "A math equation is an argument - have you ever seen one jump off the table and yell at you?" - His point being, there's nothing wrong with an argument, they exist everywhere but the ones everyone tends to pay the most attention to are the emotionally fueled ones...Ok, sideline done...

Interesting perspective, my personal idea is that every trading decision falls under two areas: Money management or Risk management and it's important to recognize which area you're working on and which area any variable falls under. Money management examples: position size, margin use, distance to margin call Risk management: announcements, central bank rhetoric, direction

AT the end of the day, we just have to consistently get direction right. Interestingly, with good money management you can get direction wrong for a while as well..

Thanks for the share Always...good stuff...same thing as with JMN - if the way you understand it and have figured out for yourself is generating the ROI you're satisfied with, stick with it...
"Holy Grail" exists - accepting where is the first step.
  • #2,648
  • Edited 5:43pm Jan 17, 2015 12:55pm | Edited 5:43pm
I think S/L is neither. It is purely absolving the user of his MM. In fact I would go as far as to say that most traders derelictions in regard to their accounts could quite possibly be due to their absolute trust in the placing of a S/L.
After all a s/l is worth zilch when something like Thursday happens
Where price is now, it has been before, and will be again.
  • #2,649
  • Jan 17, 2015 12:57pm Jan 17, 2015 12:57pm
Quoting VaBikePacker
{quote} Cool....I took a "logic" class in college - the professor went over arguments and I found what he said very profound at the time and still do: "A math equation is an argument - have you ever seen one jump off the table and yell at you?" - His point being, there's nothing wrong with an argument, they exist everywhere but the ones everyone tends to pay the most attention to are the emotionally fueled ones...Ok, sideline done... Interesting perspective, my personal idea is that every trading decision falls under two areas: Money management...
As always. Excellent
Where price is now, it has been before, and will be again.
  • #2,650
  • Jan 17, 2015 1:48pm Jan 17, 2015 1:48pm
Quoting Jenx
I think S/L is neither. It is purely absolving the user of his MM. In fact I would go as far as to say that most traders derelictions in regard to their accounts could quite possibly be to their absolute trust in the placing of a S/L. After all a s/l is worth zilch when something like Thursday happens
"Holy Grail" exists - accepting where is the first step.
  • #2,651
  • Jan 17, 2015 2:09pm Jan 17, 2015 2:09pm
Lots of people saying the danger of no S/L is ruining your entire account.

This weeks "Swissgate" events have gotten me thinking about how we store our money on our Forex accounts.

Let me explain what my current thinking/question is.

The Situation

Mr X has a £5000 balance in his account and trades 2% per trade (£100). He sets his stop loss and contract size so that his SL cuts his losses at £100 as he likes good money management. His required margin for this trade ~£35 also meaning that a maximum of ~£135 of his equity can be used up on this trade. As he has £5000 he thinks this is good money management and is happy with these numbers.
This is his only live trade at the moment and (as it would turn out) will be his only live trade for another week or so.
Then something like "Swissgate" happens. It goes so far against his trade that he loses £8000 on that trade alone. His broker will reset his account to £0 meaning he won't owe them anything but he has lost his £5000.

A Solution?

If he knew he only needed ~£135 for that (or any other) trade (or say that every tarde he ever makes require between £110 - £160) then why not just have ~£300 "loaded" into his account at any time and the rest nice and safely in his own bank account?
Deposits nowadays are extremely quick and can be added to at any time meaning he always has a couple of trades worth of free equity available at anytime. The advantage, of course, is that when it all goes wrong and he loses £8000 then he loses the money in his account but it is so much lower.
Hope that made sense.

What have I missed in my thinking here?
  • #2,652
  • Jan 18, 2015 11:50am Jan 18, 2015 11:50am
Quoting Umistboy
Lots of people saying the danger of no S/L is ruining your entire account. This weeks "Swissgate" events have gotten me thinking about how we store our money on our Forex accounts. Let me explain what my current thinking/question is. The Situation Mr X has a £5000 balance in his account and trades 2% per trade (£100). He sets his stop loss and contract size so that his SL cuts his losses at £100 as he likes good money management. His required margin for this trade ~£35 also meaning that a maximum of ~£135 of his equity can be used up on this trade....
You're absolutely correct.However ,a lot of brokers are now starting to remove credit cards and paypal etc as modes of deposit meaning you would have to wait many hours if not days to save a trade.
Where price is now, it has been before, and will be again.
  • #2,653
  • Jan 18, 2015 7:59pm Jan 18, 2015 7:59pm
Quoting Bilstein
{quote} Problem is, there's no such thing as a "guaranteed" stop loss in FX. I often wonder if anyone bothers understanding market microstructure before undertaking this endeavor. A stop loss order is a market order that triggers when a certain level is reached. Do you know the difference between a market order and a limit order? Here's a simple way to put it: limit orders guarantee price but not execution.While market orders guarantee execution but not price.The reason it's "bad luck" is because, while you had a plan with your stop loss, the lack...
I think you've done an excellent job of highlighting the distinction between market and limit orders. I suspect this distinction only applies when opening a trade and that we are not offered the choice when closing, we can only place a market order. If we wish to get a specific price than we use manual execution at that price. (I can only speak for my broker platform, not others which may differ.) It's one reason why I rarely place a stop.

I must disagree with there being no such thing as no guaranteed stop loss though. My broker describes it at https://marketdatasystems.secure.for...teLocale=en_GB
with statements such as "protect you against slippage" and "we will guarantee to close your position at that exact point, even if the market moves suddenly". In the Australian regulatory environment such statements without backing them up would breach trade practices act (a serious thing). The small premium (as pointed out by Copernicus) you pay for the guarantee could be used by the broker to hedge their position with another broker or use options or other means.

I also disagree with your statement that no one saw last week's events coming. Those with a short position were probably hoping for it. Another poster (post 124 at http://www.forexfactory.com/showthread.php?t=521797&page=7) pointed out Dukascopy Group saw it coming "The scenario of such shock had been anticipated four months in advance as shown in Dukascopy news published on 3rd of October 2014: "Due to the possibility of a break of the 1.2000 floor in EUR/CHF which may see significant price gaps and cause negative equity on client accounts, Dukascopy Europe is forced to implement a maximum leverage for EURCHF exposures of 1:10 as of 12 October 2014".

I agree there is a difference between seeing it coming and knowing when it would happen (which only SNB did once deciding).
Hope for the best, prepare for the worst.
  • #2,654
  • Jan 18, 2015 8:09pm Jan 18, 2015 8:09pm
Quoting Umistboy
Lots of people saying the danger of no S/L is ruining your entire account. This weeks "Swissgate" events have gotten me thinking about how we store our money on our Forex accounts. Let me explain what my current thinking/question is. The Situation Mr X has a £5000 balance in his account and trades 2% per trade (£100). He sets his stop loss and contract size so that his SL cuts his losses at £100 as he likes good money management. His required margin for this trade ~£35 also meaning that a maximum of ~£135 of his equity can be used up on this trade....
"His broker will reset his account" - brokers are not obligated to do this. Knowing whether they will or won't before you trade is therefore invaluable information. Many may implement the policy on a case by case basis ie if it's in their best interests to retain clients for future profits than yes, especially when it may be costly to collect money from retail clients. However if it were a choice between their own solvency and their clients, whose will they choose? Rhetorical question, so unless they have a policy of always doing it you can't use this to give you 100% confidence.
Hope for the best, prepare for the worst.
  • #2,655
  • Jan 18, 2015 8:24pm Jan 18, 2015 8:24pm
Quoting VaBikePacker
{quote} but is a stop loss a risk management tool or a money management tool? (I have my own opinion and have no intent of telling you you're wrong with your opinion on the matter...I'd enjoy a reasonable debate...no name slings or anything...not worth it..)
I like the question and the thoughts people have shared. Thinking of Direction as risk management is not something I’d consciously thought much about, despite statistics (from AUDUSD of the last 14 years movements) telling me that there is greater risk of large drops than large gains. I'd simply implemented it in my trading, at times absorbing negative swap to focus on shorts because of lower risk.

Personally I think a stop loss is a risk management tool as I define risk management as anything that helps manage risk. It is an effective tool in a liquid market but woefully inadequate (unless a guaranteed stop loss) in an illiquid market. I agree with Alwayswinn that risk management is a form of money management and hence stop losses are also part of MM. One can however manage risk and money through other means (additionally or instead).
Hope for the best, prepare for the worst.
  • #2,656
  • Jan 18, 2015 9:35pm Jan 18, 2015 9:35pm
Quoting dab
{quote} I like the question and the thoughts people have shared. Thinking of Direction as risk management is not something I’d consciously thought much about, despite statistics (from AUDUSD of the last 14 years movements) telling me that there is greater risk of large drops than large gains. I'd simply implemented it in my trading, at times absorbing negative swap to focus on shorts because of lower risk. Personally I think a stop loss is a risk management tool as I define risk management as anything that helps manage risk. It is an effective tool...
Glad to seem someone talk stats/numbers....Good stuff dab - thanks for sharing. I don't use stop losses, I look for extremes in both directions, realize they may be tested significantly prior to reversal to shake the would be winners out who use stop losses..
"Holy Grail" exists - accepting where is the first step.
  • #2,657
  • Jan 18, 2015 10:00pm Jan 18, 2015 10:00pm
Quoting dab
{quote} I think you've done an excellent job of highlighting the distinction between market and limit orders. I suspect this distinction only applies when opening a trade and that we are not offered the choice when closing, we can only place a market order. If we wish to get a specific price than we use manual execution at that price. (I can only speak for my broker platform, not others which may differ.) It's one reason why I rarely place a stop. I must disagree with there being no such thing as no guaranteed stop loss though. My broker describes...
the message that some brokers (it wasn´t Dukascopy alone) reduced the max. allowed leverage on EUR/CHF was the reason why i placed a short pending on that pair. At first i thought why the hell would they do so in that tight range.
just do it
  • #2,658
  • Jan 18, 2015 10:18pm Jan 18, 2015 10:18pm
Quoting thodie
{quote} the message that some brokers (it wasn´t Dukascopy alone) reduced the max. allowed leverage on EUR/CHF was the reason why i placed a short pending on that pair. At first i thought why the hell would they do so in that tight range.
smart move, how many pips did you make? (I couldn't see any CHF trades in your trade explorer)
Hope for the best, prepare for the worst.
  • #2,659
  • Jan 18, 2015 10:19pm Jan 18, 2015 10:19pm
Quoting VaBikePacker
{quote} Glad to seem someone talk stats/numbers....Good stuff dab - thanks for sharing. I don't use stop losses, I look for extremes in both directions, realize they may be tested significantly prior to reversal to shake the would be winners out who use stop losses..
Thanks, curious how you define extreme?
Hope for the best, prepare for the worst.
  • #2,660
  • Jan 18, 2015 10:24pm Jan 18, 2015 10:24pm
Quoting dab
{quote} smart move, how many pips did you make? (I couldn't see any CHF trades in your trade explorer)
more than ever estimatet, but the whole thing was far more lucky than smart.

http://www.forexfactory.com/showthre...90#post7996290
just do it
6 traders viewing now