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Trading Without a StopLoss

Quoting dab
{quote} Thanks, curious how you define extreme?
I've found after loads of number crunching that what the market does in one direction it can do double in the opposite...and does...just becomes a waiting game...

So, the risk management side of the house gets pretty easy: the further into a move, according to "distance history" a pair goes, the higher the probability of a reversal in the other direction....Yeh, like an NFP announcement that causes direction to not make sense that in reality is the beginning of a significant reversal. The "difficulty" of what I do is why I only trade a few pairs, but I've found through this work that there is plenty of ROI in just a few pairs and also hedging opportunity....just with higher margin commitment is all.. (US based broker here...no hedging and FIFO...so, I've adapted to both...while they both stink, I can still manage fine with them in place..)
"Holy Grail" exists - accepting where is the first step.
Quoting VaBikePacker
{quote} I've found after loads of number crunching that what the market does in one direction it can do double in the opposite...and does...just becomes a waiting game... So, the risk management side of the house gets pretty easy: the further into a move, according to "distance history" a pair goes, the higher the probability of a reversal in the other direction....Yeh, like an NFP announcement that causes direction to not make sense that in reality is the beginning of a significant reversal. The "difficulty" of what I do is why I only trade a few...
Interesting & has some similarities to what I do. One clarification would be when you say 'can do double in the opposite', have you looked at the probability of doing double or you don't actually look for double in your targets and just concentrate on the higher probability of reversal?

So far I've only looked at AUDUSD and similar to your method have looked at peaks and troughs. I have one system for more frequent (4hr, daily charts) trading that looks at 100+ pip movements and recently looked at 400+ pip movements. In the latter I've looked at size between peak and troughs but also duration. For instance in 14 years of data the longest duration from peak to trough is 198 days (there are much larger durations from trough to peak). If the recent low of .8033 is the turning point then it was 189 days from the peak (second longest in last 14 years). This tells me that the chances of a lower low before we see at least .8433 are pretty low.

What I'm still trying to fine tune is when to enter (I entered some longs way too soon) and whether to in future focus more on the size or duration or use combination. Also to fine tune position sizing. In the meantime I'm focusing on my 100+ pip system as have had more success with it.
Hope for the best, prepare for the worst.
Quoting dab
{quote} Interesting & has some similarities to what I do. One clarification would be when you say 'can do double in the opposite', have you looked at the probability of doing double or you don't actually look for double in your targets and just concentrate on the higher probability of reversal? So far I've only looked at AUDUSD and similar to your method have looked at peaks and troughs. I have one system for more frequent (4hr, daily charts) trading that looks at 100+ pip movements and recently looked at 400+ pip movements. In the latter I've looked...
So my "system" primarily centers around 30m open data. Back in 07/08ish I was focusing pretty intensely on the EUR/USD with the same setup. Between that work and focusing on AUD/USD since april of last year I've calculated probably 2-3000 targets and every single one of them has been hit. For probably half of those I tracked the duration to target and toyed around with that as many ways as I could figure out but never came to any solid conclusions on timing, so, I kinda left that behind.

The essence of what I do expresses a short zone, a buy zone and a no new trade zone. I've also toyed around with the precisely the same math on 4hr opens with some very good results so far as well.

Interesting to hear from another "quantitative trader" or "spreadsheet/data trader" - I dunno about you, but I find the work to result in very predictive information about what the market needs to do.

It's been great to see the feedback/comments that have come through on this topic - I'm glad to finally find a group of like minded folks in regards to money management and understanding that sustainable growth in this market is about having a good working knowledge of trade entry and how it affects your account. Thank you guys for contributions!!
"Holy Grail" exists - accepting where is the first step.
Quoting VaBikePacker
{quote} So my "system" primarily centers around 30m open data. Back in 07/08ish I was focusing pretty intensely on the EUR/USD with the same setup. Between that work and focusing on AUD/USD since april of last year I've calculated probably 2-3000 targets and every single one of them has been hit. For probably half of those I tracked the duration to target and toyed around with that as many ways as I could figure out but never came to any solid conclusions on timing, so, I kinda left that behind. The essence of what I do expresses a short zone, a...
If you don't mind me asking, how do you calculate your targets? What negative movement are you prepared for in getting to your targets eg do you accept pips going against you larger than your targeted profit? Do you add to your positions as price moves against you (I do, at planned intervals).

From your reply in other thread about excel, are you interested in seeing how I have my spreadsheet (with example data only) setup? I could PM it to you? No guarantee that it will teach you anything but I figure it can't hurt. I mainly have a sheet for all my trades (data downloaded from broker and converted with a macro to format I want), another for open trades to calculate risk & margin and another for detailed info on every order placed etc (again data from broker, converted with macro).
Attached File(s)
File Type: xlsx transactions example sheet.xlsx   209 KB | 303 downloads
Hope for the best, prepare for the worst.
I think trading without a stop loss is irresponsible and I would never do that!
Trade smart, not hard
Quoting TimTheTrader
I think trading without a stop loss is irresponsible and I would never do that!

From a beginners perspective, Yes! Trading with a Stop loss is always recommended, unless you trade with a B-book broker who would hunt your stops.

Personally, on a longer run i have always found having a proper risk management with risk:reward ratio while entering a trade helps me in keeping my trading as mechanical as possible without letting my emptions get the better of me.
Stop Loss is a must in my trading and I can't imagine a trade setup without SL.

It's suicide!

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.
Hello Dare123, I understand why someone would sometimes hate trading using stop losses. It has happened to me at some point, where the price triggered my stop loss limit, just before turning back in the favor of my trade. However, with rule-based trading it is possible to come up with better methods of placing your stop loss. one of the best ways is to factor in different timelines when placing the stop loss. You can use one to predict the other thereby constantly shifting the stop loss accordingly. E.g using the hourly and four-hourly charts to predict the movement in the daily chart can help you shift the stop loss accordingly.
if you use proper leverage, don't over trade and have an edge in the market(i mean a good system) without stoploss you can build a great equity.and believe it or not your account wont drain anytime sooner than you use stoploss.
i forget to mention that the trader must have a great psychology and a lot of patience too.
and use higher timeframes(daily, ...)
conclusion: it's not for noobs(i don't tell that i'm a pro)
Quoting pooyan2012
if you use proper leverage, don't over trade and have an edge in the market(i mean a good system) without stoploss you can build a great equity.and believe it or not your account wont drain anytime sooner than you use stoploss. i forget to mention that the trader must have a great psychology and a lot of patience too. and use higher timeframes(daily, ...) conclusion: it's not for noobs(i don't tell that i'm a pro)
I agree Pooyan. Tradin without sl is possible, but this approach inherently must include:
1. A long term, probably more fundamental focus
2. Very low leverage per trade
3. The willingness to wait out short term fluctuations
4. Must be trend following

I began experimenting with no sl in dec. based on these rules, and so far it's the best thing that's ever happened to my account. I dont have a technical sl, but i do have a "fundamental sl", in that i look out for economic changes that could lead to change of trend. This is based on the assumption that fundamentals rather than technicals are the main driver of trends and reversals on the upper timeframes.
I believe that trading without a stop loss is pure stupidity. There is always a possibility of black swan event like earthquake, industrial catastrophy, terrorist attact etc. Therefore a stop loss, even a wide should always be used. I strongly believe that it is better to enter trade again if SL triggered than just watch with no money after account is blown.
NO SL is suicide and even a SL won't guaranty that your position will be closed................
the market is not random but anything can happen.
No SL is just a different way of trading that requires different risk management techniques. I find the majority of traders who advocate SLs are short-term traders, who use 70% technicals and 30% fundamentals, or try to ignore fundamentals completely. This bias probably comes from the fact that the majority of trading resources on the internet are mostly on technical, short-term intraday trading, where larger lots are used. When trading shorter term, you must have an sl, because even a small move in price can mean a huge loss. But that's not the case in longer term fundamentals-based trading.

There are also other ways to reduce risk besides setting an SL, such as hedging or watching for a "fundamental turning point." It may be a good idea to set a "disaster sl", but even in the case I did that it would be so large that it wouldn't be triggered during any normal market conditions. The no SL strategy is basically a buy-and-hold strategy, which has been known to work very well.
😃 u sead all hope more people understand the meaning of goo trade from the trend hi to the low on week position to hold on the free sentiment of traders detection,moving just de sl on the detection of profit.,very good coment
all times learnning
Quoting Nilfmonkey
No SL is just a different way of trading that requires different risk management techniques. I find the majority of traders who advocate SLs are short-term traders, who use 70% technicals and 30% fundamentals, or try to ignore fundamentals completely. This bias probably comes from the fact that the majority of trading resources on the internet are mostly on technical, short-term intraday trading, where larger lots are used. When trading shorter term, you must have an sl, because even a small move in price can mean a huge loss. But that's not the...
That was a good short summary. Appreciate it.
It might sound weird but some traders like myself have found more success without using stop loss. Some of the things I have witnessed is that stop loss does not actually work well when the markets are very volatile. I only use stop loss when I have a certain bias, as a means to cutting short an unlikely trend reversal. Sometimes I can go for weeks without any stop loss is triggered, as I often cut the losses short manually when I realize things may not be going according to expectations.
Quoting verdisol
😃 u sead all hope more people understand the meaning of goo trade from the trend hi to the low on week position to hold on the free sentiment of traders detection,moving just de sl on the detection of profit.,very good coment
Thanks Verd and Nanning. Verd: Exactly, I feel like when you trade with SL you depend on it too much and it replaces your need to think and really weigh the probability of the trade. Also, success when trading with SL depends on the timing of price movement even more than the price movement itself. If the price moves against you before moving in your direction, then you lose. So, even though your analysis of probability was correct, you took a loss because you got the timing wrong. On the other hand, when I trade no SL 10% of the trade is trying to get the right timing (entry on a pullback), 90% of the trade is building a view of high probability based on trend and fundamentals. Therefore I reduce my risk by concentrating on getting a good trade idea, not by using a stop loss.

In Summary, people who use SL have to fulfill two criteria to get a successful trade:
1. Entry timing was right in relation to SL size
2. Price moves in the predicted direction

I only have to get #2 right, which makes my life easier.

One of my favorite quotes is from Warren Buffet, "timing the market is impossible."

Sorry for the long-winded reply.
Quoting moonshot
It might sound weird but some traders like myself have found more success without using stop loss. Some of the things I have witnessed is that stop loss does not actually work well when the markets are very volatile. I only use stop loss when I have a certain bias, as a means to cutting short an unlikely trend reversal. Sometimes I can go for weeks without any stop loss is triggered, as I often cut the losses short manually when I realize things may not be going according to expectations.


Although i agree on a certain point with you and you might control and be more profitable without using stop loss, dont you think that it is a risky strategy to use? What i am trying to say is that at one day this maybe turn out like a boomerang and suffer with serious losses
Hello good afternoon .... I would like a statement from a window , with stop loss , account scaling % . EX : I have a $ 1,000 account when it comes 4 % of my account , $ 4 , I get a stop , .. pardon my English....
Personally, I would only trade without a stop loss if I was using extremely low leverage. Only on daily time frame and up. Any less than that is courting a fat loss if you are unlucky enough.
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