It depends on whether you are a trend following trader or contrarian trader.
My gut feel is,
Most trend following trader set stop loss.
Most contrarian trader do not set stop loss.
At present, my take is a YES!. You definitely need to set a stop loss, regardless of whether you are a trend following trader or contrarian trader.
U need stoploss,whatever of types trader
In case unexpected ,like tsunami, terrorist attacks,trump tweets,
Shit happened
Most retail “traders” (and I use the term traders with a pinch of salt) open up under capitalized accounts and speculate on an over leveraged basis. So a 1% market swing usually kills them off pretty quickly, this is why in my view all you ever hear of in the realm of retail trading is that the use of a Stop Loss is essential, and for obvious reasons.
You then consider the opposite side of the same coin, the commercial, the high net worth individuals and the funds, they trade on leverage close to 1:1 and have very very deep pockets. The use of a Stop Loss for these guys is perhaps far less crucial as they are in for the long game. A 10% market move will not effect them like you and me if we got hit in the pocket, not to mention that they will be diversifying their portfolio whilst the retail crowed will likely be putting all the eggs in one rather thin basket.
The latter approach is perhaps more stable, but with a typical retail account of maybe $5,000 you’re just not going to get enough bang for your buck. This is why the argument still stands that you need a lot of cash to enter this game and play it correctly.
The best advice you will get above. If you don’t follow it, you will never make money long term. (As always, in my opinion)
Even if you have the largest bankroll every traded in forex history, use no leverage and are trading the minimum trade size you have to understand your analysis should start with the price swings of the currency pair you’re trading. Anything less that than that and you’ll be trading like this: Some trades win; some trades lose; so what; next.
Again, my opinion
Gp
In the beginning stage, it’s very common scenario to all. Basically, you need to set your stop loss under/above the support resistant levels; be flexible on it; don’t be too tight, breaking a level for 4-8 pips than comeback to the original trend is very common here!
Hey @asmstudio7, It’s one of the biggest debates in FX, to use a stop or not to use a stop…
Traders should understand that the criteria to exit a set position does not always have to be a Stop Loss… Unfortunately many don’t.
You can use the RSI or CCI Indicator value to exit a position such as demonstrated here.
Or the use of Hedging to recover from a losing position as demonstrated here.
All of these exit trade strategies require no stop loss calculation or particular value on a chart…
So you really have to think about and test what type of trade exit strategy is best for you… Demo any strategies that appear to work, the really successful systems won’t get much airplay for a number of reasons…
Price Action is constantly whipsawing on an hourly, 4 hourly and daily basis… it is an algorithm designed to have you on the wrong side of the market all day long…
If you rolled a pair of dice to choose market direction (Experiment has been done many, many times, See FXFactory threads) with a 1:1 maybe even 2:1 RR, you would be stopped out (~70-80%) more times than you will win… that alone should alert you that all’s not what it seems…
The FX market is a mathematical probability void in space and time…
The close mindedness in these forums is breathtaking… the “that’s how we have always done it…” or “that’s how everyone does it…” mantra is possibly the major contributing factor to the high loss ratio incurred by retail traders…
Over on the 25% per month thread, the cries of “Ohh, it’s impossible…”…" “cannot be done…” is such a cop out by close minded or incompetent traders… the exercise is averaging 50% per week…
The most profitable day 17th October was using a grid based hedging strategy…ie: no Stop Loss…
There is other threads here in BP that are achieving awesome results by using a well thought out strategy that don’t involve SL or TP’s…
Which opens up another point… should you use a TP??.. I know my style locks in profit once achieved, but I also miss the next 10, 20, 30 pips of some continuing trends… this is when you SHOULD use a stop, moved inside the trade to guard profits… ie: Break Even…
So you really have to think about what type of trade exit strategy to use… Don’t take what I have said in this post as gospel or what anyone states in a forum of any kind… think for yourself…
But never, ever say it cannot be done!!
Agree with you; this is why I use buffer- like 8-10 pips more in all of my SL’s according to the time frame.
There is no doubt that, forex is a highly uncertain market place. A forex trader will need to adopt proper risk management approaches if he wants to keep his trading position protected against the sudden price movements. And undoubtedly using SL is one of the pending orders that is used as a weapon of risk management approach.
This is interesting - a perfect example of when a SL will not work, regardless of placing one!
This is the point in time when Alpari UK (a top UK regulated broker) went bust over night and went into administaration. Edit: actually the more I think about it, I recall them going bust when the Swiss Franc depegged against the USD; another example of a crash however.
This is a one minute chart - yes one minute (a staggering 1,000 pip move)
I’ll also add my two pence in here… great you’re achieveing it with a micro account…now show me real results when decent money is on the line…ah that’s right, no one is willing to show the results because it can’t be done with decent amounts of money.
Hi Bacon -
I agree, there will be times when price gaps or moves so fast a stop-loss is simply passed by. I think the only way round this risk is to use a Guaranteed Stop-Loss, which nobody does because of the cost. At least UK firms now must afford negative equity balance protection to their clients so the worst you can lose is every penny you gave them, but not every penny you own.
Also, worth pointing out, while not trying to be a smart-aase, that both the EUR/CHF debacle and GBP/USD flash crash of 06/10/16 came out of unequivocal and established downtrends. Any decent trader long on these two occasions would have had to have had a genius reason. I argue that most of the worst single-day price dumps come out of downtrends, not clear blue skies.
Oh I agree with you, what’s funny though is what the short term traders do…even in the most evident downtrend they will ‘find’ a reason to long some magical set-up. Thankfully these crashes are rare, however they still come out in an unexpected nature.
It “has” to go up, right…
I think once you learn the lesson that, NO, it doesn’t, you’ve started on the right path.
quote=“Trendswithbenefits, post:8, topic:174831”]
Hey @asmstudio7, It’s one of the biggest debates in FX, to use a stop or not to use a stop…
So you really have to think about what type of trade exit strategy to use… Don’t take what I have said in this post as gospel or what anyone states in a forum of any kind… think for yourself…
But never, ever say it cannot be done!!
[/quote]
Hi Anthony Let me start by apologizing. In my original post I meant to quote “cigarmanstan” not you. So you might want to re read his post
I read the above post and firstly really want to thank this member for illustrating very well, why you have to pay attention to what you read. He has done you a and all traders especially beginners a huge favor posting his views. For example he says _the one of the biggest debates in FX, to use a stop or not to use a stop”
He is correct. However. Your question; from you; a trader NEW to forex; in a forum that is for BEGINNERS; is not up for debate and here’s why. Before you can learn what some people call: alternative, other, advanced or whatever new name they come up with this week. A NEW TRADER with no experience has to learn basics. The method you choose to approach trading changes as new info, tech and your experience etc comes available. But what never changes ever, ever or ever? Is Basics. You need to build a strong foundation.
You would not attempt driving in the Indi 500 if you don’t know how to drive a car would you? You wouldn’t jump out of an airplane without knowing how to put on your parachute and operate it would you? Would you attempt anything of any importance without first understanding the basics of whatever your trying to do? I don’t think so. And any serious, long term traders will tell you the same thing. Learn the basics 1st. then make your adjustments and try the latest some of which is hair brained strategies (not all).
When he tells you “the criteria to exit a trade does not always have to be a Stop Loss and traders don’t understand you can use the RSI, CCI or Man in the Moon to exit a position.” I think he tried to trick you to see if you’re paying attention.
Exit a position, use a fixed or trailing stop loss, close the trade manually, whatever you want to call it. It means limiting your risk. No matter how you say it, it’s the same thing “limit your risk.” So in answer to your question; yes you should limit your risk by some type of stop loss.
“All of these exit trade strategies require no stop loss calculation”??? He’s checking on you again. Both indicators, indicate when the market is oversold overbought by a %. I’m not a mathematician, but most people and I might be wrong, would say that % is a mathematical calculation. Like your other question about the RSI. Remember 75/25? You set or use default parametors
_So you really have to think about and test what type of trade exit strategy is best for you…” JACKPOT. So how do you a beginning trader, with no or not a lot of experience do this. You do what you should do whenever making a decision. F.O.E.
Gather the relevant facts, list the relevant options and then if there’s not a clear choice; pick the least of the evils. Facts: I’m new, have little experience, need to protect my trading bankroll. Options: complicated “exit” whatever I want to call it; pay or not someone who may or may not know what they’re talking about, but probably at best doesn’t know my experience, mindset, or situation but still choices to give me their opinion. Learn the basics that have been around from the start of trading, simply put; always protect your investment. And then, after you have a built a strong foundation which includes much more than indicators, RR and the multitude of BS people try to pedal as fact, you can tweak an exit strategy to “your exit strategy” Your question; your consequences, so you get to pick the least of the evils
“The close mindedness in these forums is breathtaking… that’s how we have always done it… that’s how everyone does it…” mantra. . .possibly why the major contributing factor to the high loss ratio incurred by retail traders. . .
What’s breath taking to me is when someone comes on the beginners forum and attempts to use word games to try and show he’s far above the lowly retail trader and spews a lot of unproven BS, paraded in a lot of cases as fact. What’s not breathtaking, or mindboggling is that any person with any common sense, would say that before you can run: you first have to crawl then walk. There’s no short cut to being able to race. It takes hardwork, experience, knowledge and persistence. But that all starts with Basics. Anthony, you’re from FL. How’d those homes with no, or weak foundations make out with Michael? Take a walk, look at the damages, what you’ll see the ones with a strong foundation built on basics are still there.
Last thing Anthony and all New traders. When ever anyone tells you everyone “don’t do what others before you have done” “Listen to me; think for yourself. .”.what they really mean is “Think like me. I know everything. I know what’s best for you. So always remember “even a blind squirrl gets a nut once in a while”
Again as always only my opinion
Gp
New traders here in BP are getting a glimpse of how this forum works… Don’t offer any alternative methods, ideas or actually demonstrate any strategies that MAY make your trading more profitable, more productive… no, no, no…shoot the messenger…
Nowhere in my posts did I state that Stop Losses don’t work or should not be used… Nowhere…
There’s a lot of waffle to cover in a single post so…
Firstly… I am a new trader… A retail trader… with no industry connections whatsoever like some of the jaw flapping pseudo experts in here… I have been trading FX for about 3 years, so compared with some in here I am new to this game… I trade full time and possibly work the best part of 55 hours a week trading, coding, reading and researching… and obviously wasting my time on BP…
James, if you bothered to read the threads and not just select posts… The experiment is to demonstrate to newbies that have limited funds, that with a little alternative thinking you can build a reasonable trading balance from $10 - $100 up to maybe $500 - $1000 in a zero sum environment.
Total risk management… you are now trading with other people’s money…
The percentages on micro amounts can not be extended (by me) to larger sums (say $10k+)… Read and you will see that I have pointed this out quite a few times… 25% gains were successfully added to a $1000 account in the same thread over a 10 day period…
The OP has PM’ed me and explained his strategy in full… so I am aware of his level of experience… an RSI with a 75/25 setting is not default parameters, and I can tell at a glance that there is some intelligence being applied here… his RSI setting will screen out a number of false signals… so straight away this punter is thinking outside the square for a newbie…most use 70/30… even the MM’s know this and move price accordingly…
The RSI/CCI Strategy I demonstrated was to show that stops did not need to be a point on a chart and can be set by price strength and volatility… I have been testing all indicators and even coding a few of my own to achieve similar results…not rocket science to most… It was to give newbie traders an alternative to a SL (and TP), and hopefully make them research their own ideas and strategies in the future…
Even when I posted it back in December… I had James and others throwing their toys out of their collective prams because it’s not a method that they agree with… close mindedness 101 again…
I can understand that you have your nose out of joint on this issue… Think for yourself… the hidden meaning to be found here is… er… Think for yourself… Don’t emulate the vast number of new traders that come and go in these forums (and this market)… the success rate is appalling…Don’t follow the herd…
Don’t think like me, your results will be limited to what I am doing… my strategies have limiting issues of their own, which I pointed out… I use Dennis’s SW Analysis strategy for trading with great success… I didn’t think of it… Dennis did… and it works… so I trade it…
Of late I have incorporated rrm2’s hedge, grid (however you name it) strategy to great effect and have demonstrated the results transparently in the forums…I didn’t think of it… rrm2 did… and it works with great success…
I have various strategies running across quite a few Brokerages, accounts, time frames and crosses… some work well, others struggle… some which I display here, others that will never see the light of day… It’s all about R&D.
My message, which was missed by a few… There will be other strategies out there that can be applied for exiting positions… and will possibly make my examples look average, so take a look around…
A lot of guru’s in here dis YouTube FX demonstrations… WTF… it has to be the single best source of ideas and trading concepts on the planet…
The really successful strategies won’t be found in a forum like this…
This got a lot of attention, thanks everyone.
I don’t usually do the back and forth thing, but in this case allow me to respond.
Original Question: “but anywho! whatcha guys take on the stop loss? do you use it?”
Not the question: “anywjp! Wjatcja guys take on the stop loss? Is there different ways to use one”
The same ol Mis Direction
New traders here in BP are getting a glimpse of how this forum works… Don’t offer any alternative methods, ideas or actual demonstrate any strategies that MAY make your trading more profitable, more productive… no, no, no…shoot the messenger…
Nowhere in my posts did I state that Stop Losses don’t work or should not be used… Nowhere…
I didn’t say you did. Here’s what you said. “one of the biggest debates in FX, to use a stop or not to use a stop”
I simply said that for a new trader, with little or no experience, there’s no debate. Before you attempt to anything learn basics first. I provided examples of why you would want to apply that method, idea or actual demonstration that on the balance of probabilities will give you a better chance to be more profitable and more productive in the long run. But I guess if you looked long and hard enough you could find someone with trading experience who would tell you forget the basics and dive right into advanced trading strategies.
What’s breath taking to me is when someone comes on the beginners forum and attempts to use word games to try and show he’s far above the lowly retail trader and spews a lot of unproven BS, paraded in a lot of cases as fact
Firstly… I am a new trader… A retail trader… with no industry connections whatsoever like some of the jaw flapping pseudo experts in here… I have been trading FX for about 3 years, so compared with some in here I am new to this game… I trade full time and possibly work the best part of 55 hours a week trading, coding, reading and researching… and obviously wasting my time on BP…
Blah Blah Blah always ends the same “obviously I’m wasting my time on BP….really means (I don’t have an answer so I’ll just accuse, attempt to belittle and say it’s a waste of my time.)
The OP has PM’ed me and explained his strategy in full… so I am aware of his level of experience…
It doesn’t matter if he did or didn’t PM you. In my opinion your post should have been sent him a PM This is the Beginners Form. The question is from a Beginner. The answers and advice from experienced traders like yourself should be geared toward Beginners; unless of course the almost 300 people who have viewed this thread so far have also sent you a PM with their strategies in full and in an effort to not waste your time, you decided to post to this thread instead of messaging them individually.
Even when I posted it back in December… I had James and others throwing their toys out of their collective prams because it’s not a method that they agree with… close mindedness 101 again…
Don’t know about that. . .sounds like everyone’s wrong about something; except you again. After all sounds like (in your mind, anyone who disagrees with you has to be wrong, ignorant and of course never as intelligent as you)
No disrespect like I said don’t know anything about December, you or anything else, but in this case, in this thread, I’m just stating my observations.
Sorry to disappoint you, but my nose is not out of joint. You can misdirect the words all you want. You can state BS opinions as to why traders come and go, especially the ones of course that don’t listen to you. But in the end it’s all the same. You and those like you say the same; don’t put in the time, patience, learning, or get the experience that it takes to succeed. . .no, no; spend your time looking for the short cuts, the alternatives, the strategies. When everyone who is not selling a strategy or a service, will tell you the same thing, build a strong foundation not on indicators, methods or computer programs, signals trading programs or whatever BS people like you push, you just don’t understand and that’s what most of the James and the others try to tell you. “ the method is not what makes you succeed or fail, it’s your ability based on your strong foundation and experience to put the balance of probabilities on your side when making a decision.
Last thing but you’re a smart guy so you would already know this but for the rest of us over 300 who view and will view this thread
“Stop Loss”
stop-loss
/ˈstäpˌlôs/
adjective
1. denoting or relating to limit a loss.
Again no disrespect intended to anyone’s opinion.
These are just mine
Gp
@gp00053, Don’t take this the wrong way… Back to basics… ./ˈstäpˌlôs/
One of the biggest issues for Newbie FX Traders, and a topic that is raised at least once a fortnight (BP Search)… is getting constantly stopped out while trading… It’s the component of risk management that brings new traders undone the most… Death by a thousand cuts…Which indicates to me that the methods and application of using a Stop Loss is fundamentally wrong… flawed… whatever…
So knowing that doing the same thing over and over and expecting a different result is the definition of insanity… I am trying to get newbies to seek alternatives to the current misguided* FX education…
After a quick look around I now realise you are from the ALWAYS USE A STOP LOSS religious sect.
I’m from the broader church of SURE USE A STOP…BUT LOOK AT OTHER ALTERNATIVES…
Again no disrespect intended to anyone’s opinion…This is just mine…
/mis.guided/
adjective
1.ensuring that new traders lose money to the markets.
Please continue!
So I’m clear, I am no forex expert. I’m just a small fish in a rather large tank, but it also seems that when you enter a trade, you put a stop loss, so essentially you are saying…I’m prepared to lose this one, and the next one…and the next one and so on and so forth. I understand the importance I’m one, earthquake or something bam market could spike…but why not set like a 10% and just let thouse trades ride? I hear a lot of the times when a trade starts going wrong, people panic, jump to the computer screen and instantly start thinking of plan b and working making irrational decision, I find it best when a trade goes bad, to do nothing. Assuming you took a proper position size, even 100 pip swing should not hinder your account any more than a night out on the town. If a proper position size is in place, I really don’t see the need in a stop loss, maybe it’ll end me one day! Who knows…but yeah…just figured since everyone was going back and forth I had to jump in and feel apart of the topic I started.