Stop loss

[Falstaff]

The only traders/speculators that ‘should’ have been harmed in the above event would have been long term positions, which as logic implies is the minority of retail traders?

"harmed " ? - You mean - Longer term traders deserve to get wiped out - because there are less of them ?

[Falstaff]

Luck really doesn’t come into it, if you’re placing a stop so wide that you are open to the exposure of the flash crash then you need to evaluate the trading approach which you are using.

And what if the “Flash crash” had taken place at the TOP of the day range ?

[anon88459104]

"harmed " ? - You mean - Longer term traders deserve to get wiped out - because there are less of them ?

I’m not trying to use semantics here.

I’m simply pointing out that longer term traders who tend to use wider stops will have been harmed compared to the contrary. No argument intended, just a discussion.

And what if the “Flash crash” had taken place at the TOP of the day range ?

A valid point, however this never has and doesn’t happen due to market sentiment. In simple terms a flash crash is driven from liquidity, or rather a disorderly array of orders which cant be matched. Therefore the top of a daily range, or even weekly range will be buoyant up to and even below the low of the range in question - I hope this makes sense?

Its when price is rapidly pushed outside of the ‘liquidity range’ [which is equal to the range between the high and low in question + a margin for stops outside of the range] whereby the fall in price accelerates to a point whereby liquidity is thin. This is why when you look at a liquidity report of any flash crash the momentum of the crash [and the likelihood of a stop being honored reduces] is most severe when the low of the range has been broken beyond the point of where the majority of the volume stops are situated. Hence, the place where longer term traders may have there SL because they don’t want to be effected by intraday or weekly spikes in price. A logical assumption to make, I would assume.

[peterma]

If interested in flashes then have a read, a lot of work was put into this report.

Reasonable chance of a recurrence in 2018.

mktc09.pdf

Edit: btw ‘fat finger’ gets a mention but is generally acknowledged as a thing of the past.

[anon88459104]

Yep, it’s a great report and very insightful to those that want to understand the underlying markets and how they give cause and effect to crashes. I attached the same report to post 70, however few comments on any of the quality info within.

[JimmBlack]

I asked many traders about stop loss and about 80% of 100% don’t use it in trading. I think this is the reason to reflect on those who like to put them to reduce losses.

[tommor]

Let’s say about 90% of traders don’t use stop-losses. Yet we also know about 90% of traders lose. Can these things be correlated?

[compact]

Describing them as traders is a gross insult.
The majority of punters wrapped around that statistic possess no more sense than they were born with & shouldn’t be let within a country mile of a betting account. In fact judging by the way they treat them I’d be hard pressed to trust them with a basic deposit account.

It’s got very little to do with broker platform features.
Little wonder the regulators are hot on the case.

[VarSine]

I’ve read many different opinions, some say that stop loss is a good things and it lets you control risks. Others claim it’s brokers’ way to drain traders’ money. I personally use stop loss regularly and I find it stupid to trade without it.

[alphahavoc]

I asked many traders about stop loss and about 80% of 100% don’t use it in trading. I think this is the reason to reflect on those who like to put them to reduce losses.

Problem with stop loss is that the bid ask spread can sometimes widen quite ridiculously and close off your trade.

Let’s say about 90% of traders don’t use stop-losses. Yet we also know about 90% of traders lose. Can these things be correlated?

I don’t think that is the main reason 90% of trader lose. Most likely it has to do with an over-sized position. It is similar to getting tilted in Holdem and going All in regardless of the odds. Lack of self control during frustrating times.

I’ve read many different opinions, some say that stop loss is a good things and it lets you control risks. Others claim it’s brokers’ way to drain traders’ money. I personally use stop loss regularly and I find it stupid to trade without it.

As of now, i think Stop loss is necessary, but then, i put it quite far as though there isn’t one. I do plan to average my position when certain conditions are met. If not i just have to catch a huge bullet.

[imbest]

Actual problem is when people use stop loss at low pips without good analysis , it hits very soon then they have to bear this loss. Stop loss usage is a skill that will manage risks . I will suggest to monitor trades even with stop loss so that you can get possible small profits , remain away from hitting stop loss.

[Edmund85]

One of the best option which I got in the forex market is the stop loss option. You can use stop loss option for a long term trading. It stops the trade when you reach to that loss. It also helps you from losing all the money you had in the account.

[Wonel]

When you have to do some other works and you are not able to give your full time to the forex market than stop loss is the best option. This option also helps you to save your money from huge loss. You can make a stop loss when you thinks there is a huge liquidity in the market.

[Baldursufate]

This is the very best option for the users. You should have to make a stop loss when you have a doubt on the forex market. This will helps you to avoid yourself from loss. If you don’t do so than there is also a huge possibility that you lose your all the money. Thanks