i guess its not about whether or not you should place a SL rather where should you place a SL. I myself just stopped out on a pretty good setup and apparently my SL was too close since I was trying to adjust my SL to risk reward ratio. I find when youre trying to strict your SL and TP based on risk reward ratio I tend to get stopped out earlier than I should only to find out later marked moved to same direction as I was trading in the beginning. So my conclusion its always good well almost a must specially new traders like us to have SL in place. Not only that we need to learn to place those SL at a level where you wonât be get stopped out too early in the game rather than base it off completely by risk reward ratio. I never realized SL and TP could be so tricky so much trickier than learning the technicals I think. Once you once master this along with MM and RM and with good system youâre going to be good or maybe more than good.
Just when I feel like its almost there theres always something i need to refine a little bit. It is challenging. Sorry that was a little off point.
I donât know why people could trade without a Stop Loss. To me, Stop Loss is very very important rules and discipline. Sometime a lot of trader mentioned that broker hunt stop loss, but I never believe that. Because I always keep in mind, before I criticizing on other people, why donât I ask myself 1st whether I did a good analysis with good planning on entry or exit? If I already do so and it really did hit my SL, I donât blame on broker because sometime setup do failed. It is the same scenario as playing an online poker game. When you win, you never take into account. But when you have a bad hand, you will start to criticize the game is rigged. You always forgot you are just a small prawn in a sea, so why people wanna attack your SL and not other people. It doesnât make sense right? Even 98% of winning, there are still 2% of losing hand.
So, the story is donât blame other people on your trading failure. It is better to realize your mistake, rectify it or implement it.
1 more nice video that I can share with you guys here. I think this video is good explained on MISTAKE and those BLAMING AROUND TRADER. If you donât realize your problem, you will never become a successful trader.
Stop losses help define risk in adverse market conditions but if you feel you can MAKE MONEY without them by all means. A wise man once said, âwe all get what we want out of the marketâ. We all want different things.
A book I would recommend is Super Trader by Van Tharp. This will help all.
You are right Rookie, entry is important. 20 or 25 pip is acceptable on a 1H chart but certainly not on a 4H unless you were 90% right to start (the perfect entry).
Losses are part of trading, otherwise what is the point if you donât loose? It is the reason why the banks fired a lot of traders and gave the job to machines.
E.g. I took a 60 pip loss on my Stop Loss in one days move on the NOK. I donât even care, I know I am a good trader, so on to the next trade. The pair moved some 90 pips a loss I did not want to take. My one regret is I didnât close the trade when it moved 20 pips against me because I was in the city doing something else but thatâs beauty of a stop.
In my opinion a lot of traders new and experienced donât understand that a stop loss based on risk ratio of 2 arbitrary numbers:1:2. 1:3 etc is useless. A risk ratio in poker 1:5 means it will cost you 1 to win 5. Itâs based on odds. In forex you are not dealing with odds youâre dealing with probabilities. So the left side of the equation is fixed, 1% of your account balance or 20 pips. The right side is a projection based on the probabilities. It is why you see traders basing the trade first on former support and resistance areas then calculate to see the risk ratio.
Getting stopped out is part of trading. You canât avoid it, but you can get better at placing your stop loss using a money management with strict rules to keep you trading. Adopt this attitude: Some trades do work out; some trades donât; So what, I placed my stop loss according to my money management plan and rules; NEXT.
Great. The video I am sharing is from Van Tharp. His website also perfect to me, full of very useful information.
Yes, by the way putting a stop loss prevent something bad happens. If trading by price action, still, a good trader will get out of the bad trade without hitting stop loss. Nice recommendation anyway.
Yes, I agree this. Most of them misunderstood on what those R:R means. They though they stick with a good Money Management rules by using 2 arbitrary numbers, by the end gotten stop out and blame on brokers for chasing their SL. Some trader even forgot the noises different of each instrument, so it will have different set rules of calculations.
I think the main reason people donât want to use stop loss is their fear of loss. But you need to understand that no trading system is perfect and all trading strategies have losing trades. Having a stop loss is an integral part of a good risk management plan. You never know how badly market will move against you.
Agree on you mate. If those who still donât like to use SL, I might intro you to have a read on my blog here. I love to share something true stories instead of giving excuses blaming to the broker.
There is no hard and fast rule at where stop loss should be placed but the use of stop loss totally depends on individual even with the advantage and disadvantage. Stop loss does not always guarantee a making of profit and as a trader there is need for intelligent strategies to help in making profits.
Even if you do not use stop loss, most likely, you would like to exit your losing trade at some point. Therefore, experienced traders implement previously created plans. If you intend to exit a losing position when the price reach a certain level (previously determined by you), why not setting a stop loss? If it is being hit too frequently, maybe it is too tight, or you do not enter the market in the right moment.
Then you are using a stop loss with no leverageâŚseems that no one truly understands that there are no rights and wrongs in tradingâŚeverything goes, nothing is forbiddenâŚitâs only up to you how will you use that
And this mambo jumbo about the necessity of using stop loss is stupid, because fixed stop loss is not necessaryâŚyou can accept it or not
I agree with his point, not how he wrote it. Before you decide whether or not to use a stop loss, at a minimum you have to understand thoroughly the difference between: short term market swings, pull backs and a retrace with the currency pairs you are trading. As well as how leverage can affect your account balance, and how to apply proper money management with no stop loss.
You can not be a legend in your own mind, but truly have to without to much thinking be able to spot the rules by which youâre trading without a stop loss and trade only when all the rules are met. Trading without a stop loss, is the same as drinking a driving; no matter how many times you get away with it, it only takes one time not to and you can have a disaster on your hands.
If youâre new to trading in my opinion you should use a hard fixed stop, as you get more experience, then you could move to a trailing stop and after that you could try with no stop; but again depends on your skills, money management and trading method. But miliardo is right when he says there is no right or wrong; however there is almost always what you should do, almost always the things you should never do and in between is grey. Bottom line again in my opinion, before you can trade without a stop loss, you have to know how to trade with one first.
There are really 2 types of reasons I can think of to not place a stop loss, the rational and the irrational one. The rational reason would be that placing the stop loss puts out some information on your trade that may be taken advantage of by stop-hunting brokers and such. This is an empirical claim which should be settled by empirical data one way or another.
The irrational reason would be some personal psychological objection to having a predetermined exit level when the trade goes sour. This may be appealing to most of us, given we hate to admit defeat and we hate to have trade closed out at a lossâŚhowever, it is these human urges which we must suppress if we want to be skilled risk managers.
for some traders yeah i guess it would seem trading without stop loss is ok, if you are a scalper and tend to stay infront of the pc while the trade is going till it ends then you might take the decision to close it manually, but for traders like me who trade hours even days or weeks. i would love to leave a decent stop lose depending on how much im willing to invest or risk in a certain trade, i have blown an account in my early days with hotforex, it was due to some silly newbie mistake regarding stoploss and adjusting my sl it was a very bad habit that got me in a crazy domino effect, add to it the emotions, so i guess it really depends on what kind of trader are you and how you wana trade
