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Multiple Stop Losses? Guranteed S/L+ Normal S/L-Advice Needed

  • #1
  • First Post: Mar 22, 2017 3:42pm Mar 22, 2017 3:42pm
Hello,

Is it possible to use two simultaneous stop losses for a given trade?

Stop Loss 1: Normal Stop Loss as per the System we are trading
Stop Loss 2: Guaranteed Stop Loss for Contingency Purposes.


Example: Consider trades being taken based on some System X.

S/L is a fixed pip of say 20 pips.

In addition to this can we have a additional contingency stop loss for Black Swan Events where price moves 100's pips within an instant.

In the above trade, say we use a guaranteed stop loss at 300 pips away as the chances of the normal S/L being filled is suspect.

Can we use both and if not is there a work around.

Thanks
  • #2
  • Mar 23, 2017 5:17am Mar 23, 2017 5:17am
Have you considered using a trailing stop?
  • #3
  • Mar 23, 2017 6:08am Mar 23, 2017 6:08am
Quoting UlliC
Have you considered using a trailing stop?
Trailing Stop though behavior is different would still come under the category of a normal stop. Looking for protection in the form of additional Guaranteed Stop Loss.
  • #4
  • Mar 23, 2017 6:22am Mar 23, 2017 6:22am
Only way is to keep just enough funds to cover margin and your stop loss. No other way that I'm aware of. Unused equity will be chewed through like a plague of locusts if you get SNB type scenario.
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #5
  • Mar 23, 2017 9:07am Mar 23, 2017 9:07am
you can use different Expert Advisors (Management ones ) with a hidden and a normal SL . Or some option like cut all open positions on different values % Equity, given Value and so on . Hope that helps.
  • #6
  • Mar 23, 2017 10:35am Mar 23, 2017 10:35am
Quoting Stu Effex
Only way is to keep just enough funds to cover margin and your stop loss. No other way that I'm aware of. Unused equity will be chewed through like a plague of locusts if you get SNB type scenario.
Hello Stu Effex,

Thanks for the inputs. That's exactly the scenario that I am trying to avoid. In black swan events I think the capital is gone like thin air, hence researching about Guaranteed Stop Losses offered by some brokers. Although it seems to be coming with a premium. So looking to see if I can use them only for contingency purposes and for usual trading the normal Stop Losses.
  • #7
  • Mar 23, 2017 10:42am Mar 23, 2017 10:42am
Quoting DwainUK
you can use different Expert Advisors (Management ones ) with a hidden and a normal SL . Or some option like cut all open positions on different values % Equity, given Value and so on . Hope that helps.
Thanks Dwainuk for chipping in...

My opinion is, Although EA's/Management ones provide convenience, they don't serve the purpose.
  • #8
  • Mar 23, 2017 11:07am Mar 23, 2017 11:07am
Quoting aaven
{quote} Hello Stu Effex, Thanks for the inputs. That's exactly the scenario that I am trying to avoid. In black swan events I think the capital is gone like thin air, hence researching about Guaranteed Stop Losses offered by some brokers. Although it seems to be coming with a premium. So looking to see if I can use them only for contingency purposes and for usual trading the normal Stop Losses.
I know you trying to avoid that and that only sure fire way I know. Be careful of brokers who guarantee stop loss, may not matter depending on what style trading but they are likely B book your trades. No liquidity provider is going to guarantee stops, it's a broker gimmick.
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #9
  • Mar 23, 2017 11:18am Mar 23, 2017 11:18am
Quoting aaven
{quote} Trailing Stop though behavior is different would still come under the category of a normal stop. Looking for protection in the form of additional Guaranteed Stop Loss.
Maybe try some sort of overall equity stop tool. In the past, I've seen several overall equity stop EAs that might be what you're looking for.
  • #10
  • Mar 23, 2017 11:25am Mar 23, 2017 11:25am
Quoting aaven
Hello, Is it possible to use two simultaneous stop losses for a given trade? Stop Loss 1: Normal Stop Loss as per the System we are trading Stop Loss 2: Guaranteed Stop Loss for Contingency Purposes. Example: Consider trades being taken based on some System X. S/L is a fixed pip of say 20 pips. In addition to this can we have a additional contingency stop loss for Black Swan Events where price moves 100's pips within an instant. In the above trade, say we use a guaranteed stop loss at 300 pips away as the chances of the normal S/L being filled is...
Yes. It's called running out of margin. Run a number of small accounts rather than one big one. Simple.
  • #11
  • Mar 23, 2017 12:35pm Mar 23, 2017 12:35pm
Quoting Stu Effex
{quote} I know you trying to avoid that and that only sure fire way I know. Be careful of brokers who guarantee stop loss, may not matter depending on what style trading but they are likely B book your trades. No liquidity provider is going to guarantee stops, it's a broker gimmick.
Thanks Stu for shedding light.It makes sense for a liquidity provider to not provide any guaranteed stop loss.

One question: Not withstanding the general disadvantages of using a B Book broker VS A Book broker, what are the shortcomings of using guaranteed stops with B Book brokers?

To be precise, Reading the below thread scared me and trying to see how best of a solution there is:

Brokers chasing you for negative account balance

Thanks.
  • #12
  • Mar 23, 2017 12:41pm Mar 23, 2017 12:41pm
Quoting jen101
{quote} Yes. It's called running out of margin. Run a number of small accounts rather than one big one. Simple.
Jen,

Appreciate your guidance....

Could you elaborate more/Let Me know if i understood this correctly:

Say a total capital of $10k, use a portion $2K and deposit into the broker account and then trade-->Periodically with draw profits.
Worse case scenario like black swan events: The Broker terminates the account for lack of funding/margin call...?

But does this approach protect against scenarios like the ones described in this thread?

Brokers chasing you for negative account balance

Thanks...
  • #13
  • Mar 23, 2017 12:41pm Mar 23, 2017 12:41pm
Quoting TGS
{quote} Maybe try some sort of overall equity stop tool. In the past, I've seen several overall equity stop EAs that might be what you're looking for.
Thanks TGS. Will look into them...
  • #14
  • Mar 23, 2017 1:41pm Mar 23, 2017 1:41pm
Quoting aaven
{quote} Thanks Stu for shedding light.It makes sense for a liquidity provider to not provide any guaranteed stop loss. One question: Not withstanding the general disadvantages of using a B Book broker VS A Book broker, what are the shortcomings of using guaranteed stops with B Book brokers? To be precise, Reading the below thread scared me and trying to see how best of a solution there is: Brokers chasing you for negative account balance Thanks.
I'm not saying there is shortcomings, just be realistic about the ethics of the broker. I no idea how you trade so some things don't matter but if broker says for example that your order is going straight through to be hit interbank, you have to question the validity of that claim in light of the fact they guaranteeing your stop, as I said before no liquidity provider is going to guarantee your stop, so the broker must be your direct match. IE you are participating in their own pseudo market and never getting to market.
Someone using broker guarantee would be better placed to advise. I personally would be concerned about other aspects, requotes, etc

What I was saying was, say you have 10k equity but only trade 1 lot once every couple days or so on a 4hr/daily chart you only need to have sufficient funds in account to cover the margin (think deposit according to leverage offered) and enough for your stop loss. The remainder of the equity keep in bank. If black swan strikes, the balance of your equity is safe. Only margin and stop funds at risk. If broker doesn't hit stop during such event and claims negative balance is it best for you to tell them to whistle "Dixie" for it, or leave it in trading account and risk the lot going ? Of course many more factors this is simplistic. Depends what style trading you do, frequency but in any event try and keep to the minimum you need. It's better a broker chasing you than you having nothing left to trade with.
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #15
  • Mar 23, 2017 3:07pm Mar 23, 2017 3:07pm
Quoting aaven
{quote} Jen, Appreciate your guidance.... Could you elaborate more/Let Me know if i understood this correctly: Say a total capital of $10k, use a portion $2K and deposit into the broker account and then trade-->Periodically with draw profits. Worse case scenario like black swan events: The Broker terminates the account for lack of funding/margin call...? But does this approach protect against scenarios like the ones described in this thread? Brokers chasing you for negative account...
It all depends how you trade and how much you risk per trade or basket of trades. Really, you don't need much more in your account than to cover that.

Negative balance is simply scaremongering, preying on the gullible. Negative balance protection that some brokers offer is just marketing, no more. I tell you why. Firstly, leverage is a credit facility, an unsecured loan. The word you are looking at is unsecured. They can't touch your assets. Secondly, I am a UK citizen and anyone wanting to sue me would have to do so through a UK Court of Law. In the UK, we have a law that ensures Responsible Lending. That means the onus is on the lender to prove that they have done their due diligence to make sure you can afford it and also that you know what you are signing up for. Usually that means a credit check at the very least. They also have to give you a 14 day cooling off period.

Now can you see that there isn't a chance in hell that any broker can get you to cough up anymore? They know that too and that is why these Negative Balance deals are just pointless.

Also, I suggest you use all the leverage you can get, contrary to what most on here believe. The broker is really saying to you; keep your money in the bank and I will lend to you interest free. So what do you say? No thanks, I would rather use my own money?
  • #16
  • Mar 23, 2017 4:13pm Mar 23, 2017 4:13pm
Quoting aaven
Hello, Is it possible to use two simultaneous stop losses for a given trade? Stop Loss 1: Normal Stop Loss as per the System we are trading Stop Loss 2: Guaranteed Stop Loss for Contingency Purposes. Example: Consider trades being taken based on some System X. S/L is a fixed pip of say 20 pips. In addition to this can we have a additional contingency stop loss for Black Swan Events where price moves 100's pips within an instant. In the above trade, say we use a guaranteed stop loss at 300 pips away as the chances of the normal S/L being filled is...
hi aaven,

thatīs possible - and without ea, multiple accounts, maximum leverage or any other nonsense:

1. open one account with a (fsa or bafin, not cysec regulated) broker which offers guaranteed sl.
2. place a guaranteed sl for worst case scenario letīs say 100 points or pips away.
3. place a pending order in addition 20 points away as a normal sl (when you are long on your main order, pending order short and vice versa).

hope that helps. feel free to write me a pm. will not discuss on a thread where a bad lot from the rat hole is posting.

all the best

d1
fortis fortuna adiuvat
  • #17
  • Edited 3:57am Mar 24, 2017 3:11am | Edited 3:57am
Take the advice from someone who acts like a small child instead of a man at your peril.

You will add to your costs for guaranteed stop, dependent on style that may be too prohibitive and remember you are paying those costs in addition to normal. Using a pending buy/sell stop/limit to open further trade will only add to your woes. Remember this will be happening during an extreme event do you want another trade to be concerned with? Many times price spikes one way then the other. SNB day 15th Jan 2015 saw USD/CHF drop 2800 pips and rally 1700 pips with huge fluctuations in between. Other factors, physically at screen to manage/not at screen, even being at screen is no guarantee you can do anything. These events happen without notice. Argue along with hundreds/thousands of others to the broker about your guaranteed stop loss when they have gone out of business. A lean account is true protection. Equity not required for trades is always at risk. Not commenting any further now you had plenty of info to decide what's best for you.

Attached Image (click to enlarge)
Click to Enlarge Name: USDCHF_2017-03-24_07-58-42.png Size: 20 KB


EDIT: JEN101 is spot on about using max leverage. She does not mean to abuse by opening as many positions as possible and being reckless, she makes it quite clear that your amount for margin, think deposit is greatly reduced. So 50:1 1 lot trade Margin (Think Deposit) is 2% 400:1 1 lot trade Margin (think deposit) is 0.25%. Surely that is a no brainer.
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #18
  • Mar 24, 2017 3:24am Mar 24, 2017 3:24am
Quoting Stu Effex
...SNB day 15th Jan 2015 saw USD/CHF drop 2800 pips and rally 1700 pips with huge fluctuations in between...{image}
Is the event in your picture what people refer to as Black Swan? I've also seen reference to White Swan but I haven't seen a picture of that either.
  • #19
  • Mar 24, 2017 4:00am Mar 24, 2017 4:00am
Quoting TGS
{quote} Is the event in your picture what people refer to as Black Swan? I've also seen reference to White Swan but I haven't seen a picture of that either.
Yes it is TG. That is an extreme example but even a tweet now can cause an intra day spike that can make your eyes water if you are not prepared.
Once You See, You Can't Unsee But You Will Get The Odd Poke In The Eye
  • #20
  • Mar 24, 2017 4:05am Mar 24, 2017 4:05am
Quoting Stu Effex
{quote} Yes it is TG. That is an extreme example but even a tweet now can cause an intra day spike that can make your eyes water if you are not prepared.
Do you have an example picture of what some call a White Swan?
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