You misunderstood my original intent…what I meant was that when using high amounts of leverage a stop loss is a sound strategy…
In your example of using a stop loss with no leverage, I’d say that it’s not needed as the move against you has to be tremendously big to affect you in any way…
Just take a look for example EUR USD, and imagine that you have gone long from 1.39 which was this years high using 1 micro lot on your 1k account…now lets assume that for whatever reason you didn’t wanted to close that trade and to wait for it to come into profit again…you would have had around 130$ (1300 pips) of floating loss in your account…for your account to be completely wiped, EUR USD would have had to go all the way down to 0.39 level and all time low is 0.82 (amazing isn’t it)
Now let’s look at it from a different angle…let’s say you had 1390$ in your pocket a couple of months ago, and you decided that it was a good idea to buy euros at that price and to wait for euro to go higher before selling them for profit. So you thought ok buy 1000EUR, sell 1390USD, then sell those 1000EUR when price is 1.5 and buy 1500USD profiting for 110$ but the EUR reversed and headed downwards, and now you are holding your 1000EUR in your hand and waiting for them to become profitable again…
There you have it, the easy way of making money without loosing it easily like those 70,80% of traders do
So if a trader takes a 13% drawdown of his NAV on a single forex trade with no exit strategy other than to wait for as long as it takes to see a profit (years maybe) this is somehow better than getting out at a predesignated price to commit capital toward a better trade? What if EUR/USD stays below 1.39 for the next decade? What would you do then?
So I read you. You are saying to ride losses forever basically. But when do you get out? Say, in 4 years EURUSD finally bounces above 1.3900, it goes to 1.4100, 1.4150, 1.5000… Where do you get out?
I am not saying you should ride the losses forever…I wouldn’t. I am saying that you have the option to ride the loss if you want to and not get your account wiped in the process. That’s what I’m saying
Cut your losses short, let your profits run… You can’t let your profits run with artificial Risk:Rewards ratios everyone is talking about…If you go short at 1.39 where do you get out if you put your stop at 1.41…do you get out at 1.35? Why, because it’s 1:2 R:R, why not letting it run all the way to 1.25, then get out there? Because you are limiting yourself to R:R, to fixed stop losses…
Anyway, you can trade with and without stop loss…you can get out where ever you want to get out, be it in profit or loss… You can do anything you want if you do not limit yourself…
OK, so how do YOU decide win/lose where to get out? Sounds like you are saying you would get out whenever you want. But how do you determine that?
I get out on the break of a predetermined range. If I short EUR/USD at 1.3900, I would get out at the next new 3-day high. (If you are interested I can tell you how I chose that range.) If EUR/USD goes straight to a new 3-day high I get out with a loss. If the high of each day is lower and lower for several days, the 3-day high will eventually fall below my 1.3900 entry. Suppose it falls to 1.2500 and then hits a new 3-day high at 1.3150. I would get out there and book 750 pips profit. This is simply a Donchian strategy, a time tested profitable strategy to determine entries and exits.
What about the effect of swap. While for short term trades this really is minimal. But hold the trade long term and slowly it adds up. If your going to use examples then you need the full picture not half a story.
Yeah bro. Although very minimal its still a cost. SL to me is about freeing up capital to trade. Hold a trade and that capital is not available to be used elsewhere.
I feel you for sure. But I don’t know how to take it down any more than it is. I mean, you could take only trades that have positive roll, but on the average the negative roll for my trades is still less than 3% all in. I have one trade on right now with a 7% roll (****!). That said, the net gain on this trade is currently 2.3% of my NAV in 13 days with 1.17% locked in. So I am giving up 8 basis points in total NAV gain to the roll cost. Do you do anything to lower that cost?
Yeah. I place one trade a day and am usually in n out within the hour lol. I don’t think swap/roll over should be focused on to heavily. It really is minimal unless you’re holding the trades months on end. Then it adds up.
But if our friend is going to use an arguement based on holding a trade then it does become a cost. I’d rather loss my money to a poor trade than give it to my broker. He gets enough as it is. Also my method is very dependent on leverage to make it viable so getting out of a trade is even more critical. 9 times out of 10 I will exit the trade b4 my SL is hit. Its more there to help calculate position size
Do you have to sit in front of your platform to get in and out? I can’t do that, I run an accounting business all day. The OP said he was going to trade on the side while working. Do you have a strategy that lets you place orders once a day and then see how things shook out on the next?
Yes, I do agree with you. But to support it, I think full-time trader should set stop loss for their trades because how can you manage your trades when black-out or internet off? Call broker to close your trades? I think every trades should go with a stop loss or default stop loss (your margin)
No problem, for that trade I would trail my stop for every 100 pips in green if I’m trading long term…for a positive/negative swap I would always choose to trade with positive swap if TA allows it, if not look elsewhere…there are 27 pairs
Anyway we are getting off track here…the point was no it’s not mandatory to trade with stop loss as there are ways for and against that, but seems that a few know how to do it safely
Btw… 3 day high, seems like modified 4 week high/low rule
Accountants and acid, best I get you to do my tax bro:) You can have a look at what I do here 301 Moved Permanently
But please remember I’m no wizard at trading or teaching. I make things from milk. The purpose of the thread is do get people thinking about how they look at a chart and to find a style that’s matches them.
I have the patience and disciple to sit by a chart for hours if need be. But experience has taught me that there are only a few key time periods one needs to monitor each day to exploit the market. What I need but is a trade to work or fail, one or the other. Here and now. So that’s why it works for me. Don’t want the head ache of watching market fluctuations affect my trade. Hope you can get something out of it.
True so my apologizes to the OP. But it demonstrates why stops are important to me. What I like about speculating is that there are no rules. Believe nothing, try anything, do what works for you. If you think trading can work for you without a stop then go for it. At the end of the day you only have yourself to answer to when things go wrong.
I don’t know where do I read a quote something sound this way. An INVESTOR can trade without at STOP LOSS, but a TRADER trading MUST have a STOP LOSS. The difference is INVESTOR had a longer term view on APPRECIATION, but a TRADER trade with shorter term trading. I think it is a good quotes, just my 2 cents view.
No worries, I am not a tax filer anyway. I do financial and managerial accounting for firms including a microscope manufacturer, an oil refinery, and a farm supply distributor. I specialize in ERP software solutions. If you need someone to look at your books and tell you how f@#*ed you are, I am who you need. But taxes? No way!
So you are looking for breakouts on intraday charts. I actually started forex trading doing just that. I was profitable. But after looking at my costs (and after being up crazy hours to trade during the early London session) I realized I needed to find a strategy that was conducive to my single dad 9-5 life and that had a better income/cost ratio.
I could see that you could put more on during those sorts of trades. You can also scale out with multiple targets getting out of the final unit with a trailing stop (in case things get really exciting). You can also get a baby-butt smooth yield curve if you really work that right. But that is a lot of screen time I reluctantly was forced to admit I can’t afford.
With positions in 14-20 pairs running at a time and total equity fluctuations from 2-8% almost every day, a lot of traders might vomit watching my strategy play out. But I just don’t count chickens before they hatch.
What sort of position sizing strategy do you use exactly?
If you were using stop losses in the past and you were losing money it was not because of your stop losses but because of your system. I’d recommed to stop trading real funds and go back to demo untill you can be profitable. Stop Losses are super important to avoid catastrophic loses. Maybe you can get away with your trading without s/l for a while until you don’t, and since you don’t have any exit strategy you’ll lose all your money.
