I’m at the point now where I’m afraid to use any stop losses whatsoever because they’re always getting triggered. I’ve sacrificed thousands of dollars on the “Let your winners ride” theory because every time I add one to an order even just to break even, it gets triggered. In theory it makes sense, right, because we all know what can happen when we let our losers ride with no SL. So that theory makes perfect sense that it would work the other way as well. WRONG! Worst advice I think I’ve gotten in regards to trading so far. NO MORE!
Yesterday was a good example, and just one of many. I woke up to my account being up about $300. I though great this is going to be a good day! So I added SL’s to all the positions that were in profit, just above the break even point so they would have room to “ride”, and whatayou know, an hour later they had all been triggered leaving me with about $30. Yes, it could have been much worse, at least I was up, but that’s not my point here.
I’m not a conspiracy theorist, but I gotta say that it can’t be coincidence that this happens so frequently. Now I’m scared to use them. I will no longer use them. I have several positions I would like to protect right now but I’m afraid to use the damn SL! So, either I let them ride without the SL or I just take my money and run. I’m leaning towards the latter.
I mean I love SL’s. You can literally set how much you are willing to lose if the trade goes against you. So, I would say if you don’t like using them then you’re risking too much
I always set stop-losses bu they are always well away from price. I exit manually if the TA turns weak, which is usually long before the stop is hit.
But I have stopped letting winners run, it doesn’t work. I exit on any weakness in the winner’s TA, and look to re-enter as soon asap after the trend has resumed.
I also close on unexpected price strength. Maybe you saw this in your example. So, if price suddenly moves 2ATR20 in your favour today, what are the odds of it doing as well tomorrow? Take the money.
yea, take whatever profits you make and have no trades open by the end of the day. I used to get stopped out allllll the time because I tried swinging. But, price would also hit my SL and continue to where I thought it would go. If you have a lot of capital then it works out better because you can set a wider SL, and not almost have your account blown
I completely agree. My biggest single losses have been from not using a SL or not exiting a trade at a certain point. Rookie mistakes. Now I’m using mental stops, I have no problem closing down a trade when it hits 1.5 - 2% of my balance and I can see there’s no chance (little chance, there’s ALWAYS a chance) of it turning back around. Sometimes a hedge will work out, but sometimes the risks of hedging are more than just cutting the loss.
Great reply, as usual tommor. If I decide to start using them again maybe I just leave them alone and not move them up. And I’m sure you’re right, this probably happens due to a price surge, then I get stopped out on the retrace. More patience or just exit the trade.
Sounds like a frustrating time! Personally I move stop losses to breakeven asap, if the market doesnt move straightaway, i dont want to be in it when it reverses lol.
I think the answer could be as simple as test both strategies out daily or at the end of the week. That way, you’ll know for a fact which one regardless of whether stop is at original position or at breakeven is profitable. Just keep a record of both going forward and if ever a time comes where the market is more whip sawing you’ll straight away see that it’s more profitable to not move your stop loss to breakeven. I think having the conviction of testing the strategies will help your psychology to accept when trades go a certain way.
Sorry to say Matt but at times you need to take profits. Without see charts its hard to advise on stop losses. Therefore I don’t know if moving stops to break even was the appropriate place to put your stop loss.
Perhaps if you post some charts then perhaps we can help you.
Just remember a profit is not a profit until you put that money in the bank.
Thanks for your reply.
I typically move SL’s to break even as soon as I can as well, but this week the market just seems to be out to get me, more than usual! Lol. Perhaps I just need to take a step back, my patience hasn’t been what it should be the last few days so yes, I need to work on me.
@MattyMoney, fear not the stop loss my friend for it can be a traders best friend.
I assure you that 99.99% of the tine if your SL is being triggered, there is no conspiracy behind it. Take it as a sign that your strategy may need some refinement.
Even if stop hunting exists i can guarantee you that as a retail participant in the spot fx market, our SL’s are meaningless in the grand scheme of things. With all due respect, we’re not even peanuts to the market makers, we’re more like subatomic particles to them. They have bigger fish to fry, retail traders are just collateral damage to the big boys.
You are right however most of the time retail traders are placing stops in the same position as bigger players in the market like small hedge funds small pension and superannuation funds and it’s these stops that the real big players, the market movers, are hunting.
How many times do you see that price runs through a major support or resistance level only to reverse. It is the market makers that are triggering breakout traders and trapping them into bad trades.
@Blackduck, I have to admit that you make a great point, however I would counter that major s/r levels are broken all the time.
And how can we be certain that the major players are setting their stops at the same levels we are? Can we be certain that the big boys are even using stops?
Price is never wrong tho, maybe there is a strategy that takes this into account, in essence turning what we would consider SL levels at obvious major s/r levels into potential entry zones instead?
Yes true. I am a price action trader and I really take note of price action at major support and resistance levels. What happens there can lead to some profitable trades.
100% true, Forex trading is unpredictable and highly liquid market. That’s why stop loss is the best way to decrease loss size. It’s better to set stop loss which can overcome easily or according to your capital.
It sounds to me that your main problem is not the stop loss, but an exit plan, which involves also the take profit.
What is your strategy? Place a stop loss but not a take profit? Then what about when you have a profit? Just move the stop loss to break even so you have the illusion that you won’t lose anything? That’s just an illusion. If you were up $300 and you close the trade at 0, you lost $300.
My main suggestion is: have a plan.
I trade with several strategies. I want to talk with you about one of them. It has a kind of trailing stop (executed manually, each x pips), it doesn’t have any take profit and it aims to catch strong trends.
Sometimes, it can be frustrating when the price is in a range and you see 3-4 losses in a row. Other times, like yesterday on GBP/USD, it works perfectly and I made an amazing profit, getting the best out of the up-movement, since I don’t have take profits, I just let it go, following the rules of the system.
The point is: why am I not frustrated when I see I have a profit that turns into a loss or breaks even? Because I have a plan. The system has been back-tested since 2013, forward tested for one year. I know it works and I constantly work on it to have a plan B, if market conditions change. When you know that you have something that works in the long period, you just have to sit tight during negative periods and wait for better ones.
Have a plan, my friend. This post will only be a distant memory after that
I agree, my strategy needs to be tweaked. Currently my strategy is based on catching a trend then scaling in multiple positions. This is where I’m running into trouble as every time I open a new position I move my SL to break even so that I don’t have multiple positions running at a loss. So, I’m going to leave the scaling in part behind and focus on 1 longer term trade.
As for an exit plan, most of my trades are based on TA and price patterns on the daily and weekly TF’s, but for the most part I just close when there’s decent profits regardless of where I expected the trade to go, which it quite often ends up there eventually. So again, it goes right back to patience and self discipline.
So I’m revising my strategy and I’m pretty excited about it. My main focus will still be on S/R levels and patterns, but I’m adding some indicators to see if it’ll help confirm trends as well as changes in trends.
I’m not used to using indicators. Some will be modified and I’m sure one or two will be dropped, I’ll know more in a few days/weeks.
My strategy for entry is:
EMA50 should be above EMA20 for downtrend (poached this off tommor ), opposite for uptrend (Duh).
XLV4 (color moving average) must be red (down) or green (up), obviously.
Stochastic crossover and confirmation further down (or up)
SR levels and chart patterns must be respected.
I’ve marked my ideal setup in the above chart. Further, before entry it is always wise to look at the 4H and 1H time frames to make sure you’re not entering a short at bounce on a support level or trend line.
I know I’m missing some things, but I’ll tweak as I go.
I would also caution you against trading GBP and its related pairs. GBP is a nasty currency to trade, IMO. I never trade them. The only exception I make is GBP/JPY and I trade that only occasionally when I spot A+ opportunities only and with great care, using conservative risk and lot sizes. Did you see what the guppy did yesterday after close of market? I crapped my pants as I watched it speed range nearly 300 pips for quite some time. Thankfully I was not in a trade in the pair.
), opposite for uptrend (Duh).