I know the usual take of most, well almost all traders is one needs to use a SL, I have been learning how to trade last 2 and half years and one of the most difficult part for me is use of a SL so I have been trading without any SL.
Initially I blew my account several times then I learn’t to use low leverage and allow a big margin to sustain trades and to place small/moderate lots.
I buy low sell high, I have Ichimoku indicator on my graphs for trend strength etc when I need to add on trades. I usually add on my trades so I am Taking Profits when the trade turns positive several times and my account suffers when a trade is going against me because I have 2 to 4 trades on a pair.
This is working for me and I am not looking at changing this. My question is how many pips on average are okay for a TP, I do 20 to 40 pips. Trades that took long to come to profit, I close manually as soon as I make enough to cover swap if negative.
I open many small trades usually with a 20 pip TP and I close 70 to 80 percent of these by end of the day. There is usually a few bad trades that take too long to come to profit. My oldest right now is one opened Jan 25th 1 month ago. But some take even 3 months.
I never set a fixed total of pips for the SL distance, that’s just a random number. I use TA in some form, either support/resistance, or ATR. ATR might appear close to using a set number of pips but ATR adjusts itself for you - it can be radically different this week from last week whereas what would be the basis for ever adjusting a fixed pip number?
On SL’s generally, I never do not have a SL. What is wrong with having a SL? If you get stopped out by a retracement you can always get back in again - and this time maybe at an even more favourable price.
Well in my case without a SL, since I use small lots I always add trades during retracement and benefit from both trades. the additional one and the one that could have been stopped out.
Keep doing what you doing as long as it works…
That’s an aggressive strategy. What happens when its not a retracement? In such a scenario you must have a price at which you would definitely get out, so why not automate it and set it as a stop-loss? That will get you out with not second-guessing your own rules plus if your firm’s platform crashes for some reason or your tablet goes on fire or you get knocked on the head and you’re out for three days, you are protected.
Actually, I draw down regularly. If my tablet gets lost, my trades will all TP hopefully. I perform best when I am busy and has no time to check my trades. If my broker platform crashes, would a SL save me even if I had one?
Yes. 9 times out of 10 when it isn’t a shallow retracement, a SL will save you. The only time it won’t is if price gaps past the SL so it isn’t triggered or travels so fast the SL is executed late. But the fact that a safety feature is “only” 90% effective doesn’t justify throwing it out the window. In any case, if price is moving so fast, you would never be able to execute faster manually than the software can.
The main problem is that such strategy has negative expectation at the long term perspective. Of course, it could offer consistent small profits or at least breakeven, but in case of the large trend movement it could cause huge loss. For example, important event (sometimes unexpected event) can create strong trend movement. If the trader adopting such strategy will just add more lots, he will ed up blowing his account, because the best decision in such cases is to stop trading and wait for the reversal.
Stop Loss orders allow traders to keep control on risk-reward ratio and to avoid sustancial losses. So,each time opening position you need to have a plan specifying the exit criteria - you should know where to get out of the position if something goes wrong. As the professional says: “ALWAYS trade with stops”.
The risk is there that I appreciate that fact, I have suffered due to lack of the SL but I have also learnt how to survive without one. Many times I tried trading with a SL the end result is net loss over days, weeks even. Small losses. What I need is the ability to spot precise good trades then I can use SL when I know the probability of winning is high. Due to poor analysis I have opted for small lots with no SL, I am willing to hold for as long as it takes. The losing trades I close are ones accumulating negative swap. I use 4hr, daily and Monthly TF.
Consistent small profits is good enough for me. As I said, I draw down regularly so my entire account is what I risk. With time I have realized that the spikes caused by the unexpected events or outcome, price goes back to the starting point or the general trend resumes. Note that my trades are in agreement with the trend on the 4hr, daily and monthly Tfs. If the trend goes against me I do not add trades against the trend but in agreement with the trend. The losing trade will close after a long time when the trend will change again. It is always a wave.
SL is a good idea for those who can, I agree with the professionals.
So on the trades in question you had a SL but got stopped out and failed to re-enter. Which if you’ll forgive me sounds like two mistakes not just one - potentially incorrectly placed SL, and failure to re-enter a favourable position.