A Step by Step for everyone: Cut your Loses short

I've been reading a lot of posts and some are too large or too numerical for me to read it, i guess most newbies do the same as me: skip the post. And hence i've decided to create a series of step by step threads starting with what i consider the most important thing in trading: To Limit your Loses. So I ask some help to explain and extend this issue and please be creative and try to avoid the same old stuff, i mean you must say it again but i ask you to explain your own experience.

Well this is sort of what I do to limit loses:

For start I am a mix of day and swing trader and for now i trade with Cable (GBPUSD for those who doesn't know) in 1hr charts. If posible i risk less than 1% and I've defined my SL level at 25 pips and TP upto 75 pips. Let's start with big picture and a little of sel experience: Skiping all the initial pain and the strategy to strategy stage i was making upto three trades per day with the scheeme mentioned above. Then I've noticed the loses were to painful and so i've reduced it to one trade per day and it was painful too. So after it I scaled it down to thre loses per week maximum and it was painful too. Dam! what i should do now? Ok, I changed to one loss per week an voialá, the best days of my life and then decided to stop trading once the monthly balance was reaching green numbers and start over next month. Well this adaptation took months to do because going from overtrading to just trading is not an easy thing to do, is just like smoking 1 pack of cigarrettes per day and then just smoking 1 per week. Analysing previous montly sheets I noticed something: the more I traded the more I was losing and the last months with fewer trades i was losing less and finally ended up with green numbers. But just trading less is not enough, I do something more, whenever I can I close orders manually before the price hits the SL, I mean, for me SL is a catastrophic exit when things goes out of control. My trading is based on the first minutes after opening the order, if price does not rise just a little in the next five minutes I just close the order and I try again next week.

So what you guys do for limiting loses?

at first i thought trading was about earning money, but I think (personal opinion) trading forex is about cutting loses, the less you lose the more you earn, I started as a scalper, fast in fast out, when i lose the more i stayed in a trade the more i lost, so i shifted to swinging and to position trading, longer trades with fixed number of pips as your SL, I check the 1d charts and see a trend I follow it and set my SL and let it go for days and weeks even, and works wonders.. if i lose it aint that painful but when the trade starts drawing profit i start shifting my SL closer and closer until its on a positve number of pips then im good for that trade meaning no matter what happens its still profit right?

and i limit the number of trades per week at time its a couple of trades a month.. its fun and bring a decent amount of pips

Trading without SL is not good, anything can happen.

angelnish said:

Trading without SL is not good, anything can happen.

Click to expand...

I tried to trade without SL at my first time, of course it was my first mistake, everything was good the first month but in one moment i have lost everything i had on my account. So now even i have 100% guaranty about open position i have SL. (except that cases when i have long positions).

a good discussion ..........

The way you limit losses is by having a robust and profitable trading system ............that you understand completely and follow 100,000% !

and you need to differentiate between Stop loss and a Losing trade as they should ideally be seperate things most of the time (especially higher TF's)

the way you define what is the acceptable "limit" is also based on how you expect that system to perform

some systems that hunt the big moves need more drawdown....now I dont like that in a system but it is a strategy that many sware by ....Drawdown will need to be much bigger than scalping say

I think it is best to not get your trousers drawn down too much. What follows is kinda asking for it. Similar principle works in the prison. Here's a story about the fashion of sagging and it's origins. Sagging is a way to draw down for someone's convenience. I would suggest extreme caution when being cavalier on drawing down in the markets.

Yeah it's true. They used to make their bytches wear their shirts tied up in the front and their pants and boxers on backwards so they can run up in 'em anytime they felt like it. Not all prisons have jumpsuits. My Dad was a warden (that's how I know this) and they used to have pants and shirts. I think they still do. The saggin came later when they were told they couldn't wear their pants backwards. It was baggy pants and oversized shirts first because no one could ever get their right sizes issued. They pretty much had to take what they got. Then the bigger dudes started making the little guys wear their clothes when they claimed them. The convenience of pulling their bytches loose pants down and "gettin' it in" so to speak later evolved to saggin.
What proof do you want? Just because wikepedia don't say it, don't mean it ain't so. I'm sure there is a documentary or two about. When I get time I'll dig it up for you.

Hi, guys. I use stop loss. Before to start trading I've opened demo account and got experience on it. So I use stop loss obviously.