How not to use Stop Loss Orders

[Trendswithbenefits]

Ok… Hope I’ve got your attention… This thread is only for those that would like to think outside the box for a moment and trial other forms of Risk Mitigation that can be applied in these markets…Other than laying down a Stop Loss each and every time you open a position…

I have only applied these concepts to the same latest NASDAQ 1 Hour chart… No chart, timeframe cherry picking… If you want to trial any of these on other trading instruments you may need to alter the Periods and Levels… As all Instruments have different price behaviour and volatility…

Once you have reset and applied the concept to your traded instrument… Always do a look back over say 2-3 months to ensure the strategy applied is giving the clearest and best results…

NASDAQ 1 Hour TF - RSI-X Concept (Above)

We are using the RSI or Relative Strength Index for price strength/weakness rather than the overbought/oversold indicator it was originally designed as… We have shortened up the periods from the standard 14 to a 5 period and the 70/30 levels have been increased to 80/20 to display the strengths of price action…

At a simple glance you can see what is happening on the NASDAQ… Is price strong, is price weak… Is it about to change direction… This concept can be easily traded on the 1 hour timeframe…

No stop required… At the change of signal you can close out your position or stay in the market…

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NASDAQ 1 Hour TF - SSL Chanel Concept (Above)

Above we are using the SSL or Semaphore Signal Level which combines moving averages to provide you with a clear visual signal of price … It’s set to a Period of 21 so as to smooth volatility on the 1 hour charts… It also uses the rarely used Triangular Moving Average… This MA is good for imitating some of the markets algorithm’s… It is very good at filtering out market noise unlike many other moving averages…

Once again a simple glance and you can see what is happening on the NASDAQ… Is price strong, is price weak… Is it about to change direction… This concept can be easily traded on the 1 hour timeframe…

No stop required… At the change of signal or price moving inside the channel (Price is ranging) you can close out your position or stay in the market…

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NASDAQ 1 Hour TF - Colourised Moving Average (Above)

Here we are using a Colourised Moving Average (XLV4) which displays a rising or falling moving average in colour… Green is uptrend and red is a downtrend once again to provide you with a clear visual signal of price … It’s set to a Period of 20 so as to smooth volatility on the 1 hour charts… It uses the Wilder Smoothing Moving Average… This MA is also good for filtering out market noise unlike many other moving averages…

Once again a simple glance and you can see what is happening on the NASDAQ… Is price strong, is price weak… Is it about to change direction… This concept can be easily traded on the 1 hour timeframe…

No stop required… At the change of signal you can close out your position or stay in the market…

Will this guarantee that I never lose another trade…?

No… Price movement in these markets is insidious… Prices spike up before plunging downward… Price shoots down just before it skyrockets in the other direction… These strategies are for protecting you in the markets… They are designed to limit your losses while maximising your gains…

Trial them… Demo them… You will be pleasantly surprised how less stressed you’ll be when you can see the bigger picture of the market you are trading…

I will trial one of these strategies live next week if I get the chance…

[MattyMoney]

Good stuff, @Trendswithbenefits , doesn’t get much simpler than this.

Seems the RSI strategy generates fewer signals, but quite possibly better ones, allowing you to stay in the trade longer, which is ideal during a trend.

[fishmoyne1]

Thank you TWB,
This is opening up my mind a bit, changing settings and stuff on the RSI, I am manually backtesting on H4 with the Nas. I will admit I find it hard to get used to no Stop loss but it is a good exercise.

Now it is time to put it forward testing.

I will give a year or so tinkering and report back.

Cheers John
Ireland

[fishmoyne1]

Hello TWB,
May I ask you a few questions about your history statement? I was just going over the entry and exit prices and I am using the RSI same settings as you mentioned plus on the H1. I am confused about most of the entry and exits.

31/7/24 (00.37) I can get the same entry but how did you determine the exit

31/7/24 (06.05) Here you bought where you got out in the last one but I cannot see where the reason for getting in at that price 18628.6. Again what made get out at 19490.2

1/8/24 This sell with the RSI would be still opened but what would make you get out before it gives a buy signal and wipes a lot of gains

I would love to see how you personally approach and get out of these trades if that is ok with you. Not asking to be spoon fed, just very interested.

John

[fishmoyne1]

Thanks again,
So the lower highs on the RSI-X plus it going down below the 50 level (for the buy that is) is a fairly good warning sign the momentum is gone.

I am looking forward to doing another manual back test 3 months as you say. The first one I done last week I waited for the RSI to go to the opposite extreme so the result were probably a little better than break even.
As I say I appreciate you putting out these ideas, you definitely think outside the box

[MartialChartsFX]

I’m trading NQ using a 5M timeframe in my futures prop firm challenge and I’m only allowed to trade intraday and if drawdown gets too high the prop firm auto liquidates my positions, so I can’t afford to try this method over there.

It might be something worth trying on a Nas100 CFD. Thanks for sharing.

[MartialChartsFX]

Being my first time ever trying a prop firm and they definitely stack the deck against you with the rules.

[ontario]

Avoid using stop-loss orders by implementing alternative risk management strategies, such as using options to hedge against adverse price movements or diversifying your trading portfolio to spread risk across different assets. Instead of setting a fixed stop-loss, consider trailing stops, which adjust as the market moves in your favor, or use volatility-based methods to adapt to changing market conditions.