It is workable yes, until it stops working. You may or may not have heard of forexcruizecontrol from Zulutrade. He did the same thing. Also another trader from Currensee did the same approach. It worked great until it stopped, erasing all the profits in several trades just because a large stop was used. Take a word from me, don’t even bother unless you are willing to go through this on your own instead of learning from others. It is a common mistake and on the mental paper it is very straight forward. If anyone used excessive stops and wish to share with us the results after 12 months of trading please do.
shall search for forexcruisecontrol and zulutrade - I am very new to the forum so not acquainted with the personalities here.
mmm - I see what you mean - if there’s a super big swing (negative) the stop loss may actually be activated and a subsequently much larger loss is incurred, wiping out an account/previous profits.
Me - willing to learn and not super rushed … was an idea floating around my noddle most of the day ! … demo account being set up. thank though.
I’m agree with Pollar
(and, hi Pollar)
setting your Stop Loss much much greater than your Profit is very ilogical decision
the ideal ratio of SL:TP is 1:2
setting large and wide SL could (oh, I think It’s better to use the word “will” instead of “could”) wipe all your profit
You collet few amount of pips
20
10
13
18
and then massive price action come against your position
then you lost
15 winning trades weeped out by one trade
Agree and disagree. A 1000 pip stop loss isn’t going to wipe out your account if you you have set your risk appropriately. Problem is that you need a equally massive swing your way in order for the trade to pay. End result, you would be better putting your money in a managed account. Secondly you also need a massive account (well more than most of us have here), in order to service such a stop loss. Even at 500 pips if you risk 2% on just 0.1 of a lot trade, you would need a balance of $25 000. This is such a tough gig for us retail speculators.
Stop loss should be called Take Loss, cause thats what you do.
When a trade is against you and you have a tight or wide SL, doesn’t matter really. Whenever that point is hit you descide to take a loss.
I think this massive stress about stop loss is way out of proportions. I more or less never use stop loss and if I do I use S/R on higher timeframes to set it.
Let’s say that you are trading 1H charts and you wants to make a trade based on some signals appearing in the 1H chart and WITH the main trend.
Now…where to set the SL? …to tight and you’ll be out in no time when market moves against you because as we all know or should learn, the market needs space and time to play out any pattern.
Going on a higher timeframe as a 4H or Daily charts it is easier to see where the S/R in the bigger trend is and therefor giving a trade much more room to play out before you agree to be wrong and Take a Loss.
SL should in my opinion only be set at a point in the maintrend were you know it has broken a S/R level and has reversed.
At some point you will hit the top or bottom of the trend and flow with a reversal and take a loss. If you had 20 trades in profit with 100 pips you are 2000 pips in profit. Having a SL at 2000 pips will at that point brake all your work into even. This is where experience comes in, cause there is in many ways possible to be persceptive and recognize when the trend is coming to an end and get out before a reversal. If you aren’t sure, get out anyway and only re-enter if it turns out to be a retracement.
As long as you trade with the trend, there is room for wide SL and your trade to play out in profit. Countertrend trading and/or ranging markets are something completely different.
So…the answer to your question:
Whatever suits your trading style.
If you trade WITH the maintrend AND you have an understanding of the bigger picture, yes there is room for AND should be wider SL.
Countertrend and ranging market trading…maybe not.
It is very okay to ask a question like that, but the problem becomes that when you have got 20 answers you still don’t know what to rely on.
That’s where the value of Demo accounts come in…trade, loose, win, swear…sweat, cry both out of joy and pain and find out what suits you. In the end of the day, there are just as many trading styles as there is traders in this world.
“If you had 20 trades of 100 pips” and “If you aren’t sure, get out” is not reality. I have seen traders adopting such a strategy and it all goes wrong when the big picture disappoints. In your example of 20 trades, you are referring to a succss rate of 19/20, which is 95% success rate. A trader will not just have one trade with a huge stop but multiple trades. When they are all in a loss do you think the trader will stop placing trades? The loss will just continue growing. Another factor you did not relate is the swap. If there is a negative swap it will be costly. If there is a positive swap, just carry trade in one trade, holding it for 9 months and enjoy the interest. In theory it sounds great but there aren’t many people that can gold onto a trade for that long. I am not one of them and I am not ashamed to say it. Like I said, such strategies work perfect until they stop. did you know that for than 75% will profit in a demo account? In my opinion, demo accounts should not be used for trading experience but just to understand how the platform works. Many may argue with it but these are my views.
Agree and disagree…But, what I tried to point out was an example with easy figures… I might didn’t get my point down to the letters like I pictured it in my mind.
And no…I am not ashamed to admit that I’m trying to figure all this out myself. I hate SL and I try to trade as safe as possible without or around it.
As I said in some other threads, the only safe way to trade without SL is to trade without leverage or with a maximum leverage of 1:5… Those are the safe ways…everything else requires some form of stop.
@OP
Strategies like yours exist, but as everyone else said it’s risky…100 pip SL with 10 pip TP will hit that SL someday and take all your profits away…
Learn to trade with positive expectancy, not negative…
… not confused yet, but enjoying conversation. thanks folks for bothering to answer - appreciated
3:1 2:1 etc … yup this is what I 've heard before.
the idea was if following the trend and say just targeting 20-30 PIPs. setting a massive -SL (take loss) to avoid sudden negative ’ noise (sudden,brief/downward spike)’ taking the trade out of action. I guess testing comes in at this point.
ZuluTrade has even created and even trailing stops for followers to be happy. Its quite a new thing for the autotrading platforms for the risk-mitigation feature.
i’m now trading on the daily timeframe, and my stop loss is set at 500-600 pips. but i move it if the price gets to close. it is more like a catastrophic failure protection. i take a lot of small trade on 12 different pairs, so i always have winners and losers at the same time. so to answer your question, yes you can use very large stop loss and make money, but not with 50 pips target.
Well
It is a good idea, since it boost your probability to take your profit
narrow TP=high probability
but sometimes
when price move against your trade
you need to wait until the price comeback for your favor
please consider that:
for just may be 20 pips, you need to wait for maybe 4 days…
or even longer
or even your waiting be in vain
SL or cut loss is a shield which protect your capital
think the risk as priority is the key of becoming good trader
since i use a stop lost at a 1000 pips away , and few micro lots at the time
i don t loose anymore money .
i play around in the dya trade , and take by example 2 position up 1 down …
and it is working allright , no big gain , i close a position if only i make a good bit of money before
Trading is war and it needs strategy
Trading isn’t Oh, I want to trade now, and I will go long USDX
Nope
trading is calculating risk
seeing opportunity
the best timing and signal doesn’t come everyday
but It comes
and we need to be patient
for those who believe a bit pofit could be collected slowly (with wide SL)
believe me
there is a time when a sudden move weeps all your pip at any instant
This is my exact method for setting SL at the moment and it seems to work the best for my style.
Trading on 1H time frame, I use the most recent swing low/high on the 4H or 1D chart.
As you say though, it all depends on the trading style. If I trade a ranging market, I will set very tight SL and focus more on getting the timing right.
… demo account being set up. thank though.