Yes it is up to a trader how he feels comfortable with trades he can use or not use stop loss tool. I mostly use stop loss . Some times when I am monitoring trades fully I skip to use stop loss. I then try to manage trades instantly.
Oh really? Definitely, I use stop loss trading tool in my live account, as I know basic rules of Forex trading! Trading, without stop loss is really horrible! Then you can lose your full balance at any time! On the other hand, I always set my stop loss trading tool according to my market analysis with +5 to +10 pips!
not so sure about that…january 15th 2015 (swiss franc removing it’s peg to the euro) was such an event and many many stop losses were not triggered, because there was no price available, so price passed stop losses and accounts were wiped out even with SL…
i think the only way to survive a black swan event is managing your position sizes correctly…e.g. orienting your position size at the alltime high/low of the pair you trade, if you can survive such a drawdown then you might be quite safe (not a life insurance, but mabye the best you can get)…on the other hand you might not find the profits attractive enough…
Does anyone have experience of using guaranteed stop losses that some brokers provide? I assume they would operate as expected in, for example, the swiss franc/recent (alleged) fat finger incidents?
you mean gbp/usd fat fingers incident probably …
guaranteed means, they will fill it at the level you have in stop-loss, so no slippage concerns for you … but not every broker is providing it
I agree that a stop isn’t a guarantee to protect your account, but it is a good tool that will work in most cases. In the rare case like the Chf spike you mentioned, price can blow right through your stop if there is no counterparty willing to take the trade at your stop value. In that case, you are depending on a combination of the stop and your trade size management to limit the damage. I was in that Chf trade with a very small size and my stop executed about half way down the spike with only reasonable slippage. The loss was tolerable considering the speed and magnitude of the move. Using a good broker helps a lot too since they have lots of feeds and counterparties to help execute trades smoothly without unreasonable slippage. I’d advise new traders to always use a stop as well as size trades to risk a very small amount of equity. Most pro traders risk no more than 1 or 2% per trade. I’d say 2% is about a max. A new trader should think more in terms of 0.5 to 1% max risk per trade, and ALWAYS use a stop loss, even if it is placed well beyond the expected range of the trade. If the stop is placed well beyond the expected range of the trade, then it will only be triggered if something unexpected occurs, and that’s just when the stop is most needed. In my own humble opinion, trading without a stop is like driving a car without any brakes. It works just fine until you need it and it’s not there. Then it’s too late to reconsider. Best success. - G
Before entering in the trading we should set the stop loss as it keep the trader safe from the huge loss, I always use the stop loss, I am astonish that you are trading without using stop loss and making money.
Even though a stop-loss order is a simple tool to prevent excessive losses or to lock in profits, I don’t always use it. I have noticed that a stop-loss strategy leads to lower returns even though it would reduce volatility. But it’s good to know you have the protection should you need it.
I think it’s not about “not using stops at all”, but how to avoid stops hunting, I found answer in one of books about “Turtles”, they use “manual stops”, so random spikes will not hurt positions.
But you should use a wide stop loss than normal instead of not using one at all. Its a waiting game, trading, so you cannot sit all day at charts to see if the loss is enough close trade or not.
Basically you should only trade with money you can effort to lose. The only logical reason I can think of for you trade without any stop loss is if you have enough money (considered to your trades size) in your trading account that you don’t care about. If so you would be able to stand up to big movement in the opposite direction of your trade(s). Of course that is risky. However soon or later the market will turn in your direction (key word = eventually). If you rely on that logic and have enough money in the account (and patience), you can afford trading without a stop loss. If not than use at least a wide stop loss as forexcrisp suggested.
In some cases stop loss is helpful but in other cases it is not. So I guess it shouldn’t be used all the time. But this is only my opinion. It is better for the person who does not have experience to use it as a precaution but the more experience he earns, he learns how to avoid using it by just monitoring the market conditions. Of course we should be careful for any important news releases which can cause sharp market movements. It is indeed quite risky to not use stop loss but in some trading styles and strategies is better to not be placed. For example it can be replaced by price alerts.
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It is your personal choice you use stop loss or not. I normally use it whenever I trade with scalping I do not feel I should use stop loss because then I have to adjust trades quickly according to market movement not wait to hit take profit or stop loss. I have to then monitor my trades by self.
Generally speaking, I am always all for for using a stop loss, unless one does like marginfx and scalps. If you’re doing that it’s pointless to set up a stop loss, if just takes away from the time you can use to monitor and close your position manually.
I am still using stop loss in trading because this is like as one way to manage the risk in uncertainty market condition, without stop loss sometime making worried in trading because not always able analyze the trend market properly, on certain condition stop loss can prevent from big loss
I always trade with a stop loss for the same reasons you have given. But what do you think should happen if your stop loss order is not placed exactly where you wanted it to be?
Stop loss is the best method to keep the account save from the huge loss and before entering a trade we have to need and idea of how much we are willing to lose if the trade goes against us. It is suggested that we should use the stop loss in order to avoid the big losses, I always use the stop loss in my trading.
thank you bearish
I only partially agree. Stop loss can be a great tool, but it can protect you from losses only if you’re implementing it properly.