That depends on your trading strategy. Whilst in simple binary betting, that tends to be the correct policy, there are other strategies where stop losses are regarded as simply a way of giving your money away. These tend to be reversal strategies and the cash value of each bet tends to be tiny, but if you look at some of the posts @rrram2 writes, one can see some merit in his observations.
To get instantly wiped out in a single bet tho’ does seem to indicate that the size of the gamble was way too large !
When did this happen ? I just looked at my charts and do not see any ‘Black swan event’ such as this in the last day or so ?
I understand that, but this is a special circumstance. Random brexit news can easily cause an unpredictable 1-3% pump or dump out of nowhere, and that can be incredibly dangerous given that people (especially short term traders) are usually leveraged up
I can’t speak for the guy, but I would assume the 1.5% pump that happened over 3 hrs on the 15th is what got him.
If you have a bet running where a move a little under 2x recent ATR will wipe out your Account you should not be leaving that bet untended for 3 hours ! and neither is 3 hours “All of a sudden” or “instant” [hell it was only 100 pips ! ]
It’s a shame this happened, but hopefully it can provide a valuable lesson to others.
We are curious about the amount of leverage you were using for your EUR/GBP position. What was the size of your trade relative to the amount of money in your account? Was your effective leverage greater than 10:1?
The rumours that Raab would resign if the ‘backstop’ didn’t have a specific time limit were circulating back since Nov 5th - here is just one of the many sites that reported this:
There was no denial re the time limit from Raab, so the market waited.
The talk from EU was that there would be no time limit so many traders were cautious going long GBP when the agreement was published.
Note how ‘contained’ Eur/Gbp was when Irish broadcaster RTE reported a leak that a draft was agreed (Nov 13 at 15.55gmt) - maybe that move caused your crossover.
Next day - no time limit and no resignation - cabinet meeting announced for 14.00gmt - see again the containment - that was the time to exit.
Crossovers are great - but important to be market aware.
May I also subtly add that, if you have caused this damage as a result of the event you outlined, then perhaps you also need to work on your trade psychology.
This degree of emotion in response to a trade not going your way is a concern, and if I may add, an unhealthy way of dealing with losses (albeit one that wiped out your account).
I don’t think that picture was of teh actual damage @CandleStuck - The picture was a joke by @BaconSandwich. So hopefully he damaged it rather less than the pictured one !
Sorry that this happened, but trading EUR/GBP in a massive Brexit news week with no S/L and not sitting on it minute by minute is trading madness. For me that’s a string of mistakes made, so at least learn from them. I don’t trade the news, but I stay aware of it and keep out of the way of it. The ministerial resignations were trailed the night before. I haven’t touched EUR/GBP in a while owing to Brexit, as each side can spike oddly. So I’d personally want a different currency on one side of that at the moment.
(Not saying that EUR/GBP can’t be traded just that it isn’t for the novice or the unwary imho)
Hi sorry to hear this.
But surely you had a stop loss set.???
Also you sound seriously over leveraged. I personally use 0.2 lots per $5k.
Sort yourself a trading plan. Forex trading is a business and every business needs a plan.
Good luck.
When it comes to leverage it’s necessary to understand the difference between the maximum leverage available to you, and the actual amount of leverage you are using. Maximum leverage is like the top speed your car can reach, while your effective leverage is like the speed you actually drive your car. And just as you would never drive your car at its top speed, you should never look to open trading positions so large that your effective leverage reaches the maximum leverage available to you.
That’s because leverage magnifies both your gains and your losses. Beginner traders tend to think only about how much money they can make and don’t pay enough attention to how much they could lose. You may find this article helpful in understanding the rationale behind risking only 1% of your account balance per trade: The Most Important Math in Trading | New Trader U
It would be very hard to limit your risk to 1% of your account balance if you are using more than 10:1 effective leverage. That’s why studies have shown that traders who use 10:1 leverage or less tend to perform better than traders who use more than 10:1 leverage.
Regardless of the maximum leverage available to you through your broker (50:1, 100:1 or 500:1, and you should be concerned about the risk management of brokers offering extremely high leverage to clients), you can choose to use 10:1 effective leverage (just as you can choose to drive 45 mph, whether your car has a top speed of 155 mph or 255 mph) which would equate to one micro lot (or 1000 currency units risking 10 cents per pip) for every $100 in your account balance.
A leverage of 1:500 is too high if your position size is too big. 0.01 lot with a 1:500 is in lots of cases no problem at all. The key is risk management and when that is right you can trade with 1:500.
I think the example with the car speed doesn’t fit so well.
The speed is depending on the move of the rate/market. When the market is moving fast, it means there is a lot of wind so you accelerate and get to where you want faster.
The leverage is more like how much can you carry on your sailing boat. 1:10 small sailing boat. 1:500 very very big boat.
Both boats are on the same sea and are using the same wind. But even this example is not fully correct.
I feel u deserved that happening to you, I don’t know y people have go through pain intentionally to understand the Dynamics of trading like seriously why, why do people need to blow up accounts to really click this game, gosh:sleepy:
Seems like a huge lesson for you .I would rather take regular smaller wins than try the huge leverage route ,Especially me being as a newb,Why do i keep reading about people thinking big wins do not chance big loses with huge leverages and no stop loses .
Good luck next time .
Unfortunately you’ve committed a cardinal sin with not having a stop loss , you should be Setting a SL risking no more than 2% of your account on every trade
