Dow 2007

[dc2000]

Because trading without stops usually(*) means one thing: the trader is letting his/her ego get in the way of common sense. It's also an almost certain guarantee that the trader will be blind to see the other side of the trade. As several members -unfortunately- have shown over the last couple of days. :|

(*) I understand that there might be people out there who are comfortable trading this way. But I doubt the majority feels comfortable letting price go against them 150 to 200 points on intraday trading.

I think the first part of your answer is just your assumption, I was asking the question as I am genuinely interested in mindset behind the use of stops

 

[firewalker99]

I think the first part of your answer is just your assumption, I was asking the question as I am genuinely interested in mindset behind the use of stops

If you can tell me how letting price go against oneself 250 points, waiting for price to return to one's entry, finally exiting at breakeven with a big relief, is a way to be more profitable as opposed to stopping oneself out and reversing, I'll be all ears

Obviously, most people will use stops to protect them from taking too big a loss. Instead, they should be using stops so the market can show them when they were wrong.

 

[lurkerlurker]

I think the first part of your answer is just your assumption, I was asking the question as I am genuinely interested in mindset behind the use of stops

I would say that stops generally help traders to impose discipline by deciding where they will exit the trade and how much risk to assume, and involves an action which has the effect of implementing those plans. However, I quite understand large traders who wish to keep their stops out of the order book until they are triggered, and instead have soft stops on their trading platforms which use market orders if the price breaches the stop level. Further, I understand that stops (even those not directly in the book) may be vulnerable to the odd stop run if placed in obvious places.

I think it all depends on the trading style and the reasons for entering and exiting trades. I am currently trading hourly reversal "pin" bars on FX crosses and always place a stop if price makes a new high or low against my entry on the hourly chart. This is because I like to know my risk in advance, and additionally the setup I entered on is invalid if price breaks the other way, and therefore I have no reason to stay in the trade.

Finally, it is nice to have a stop in place if you leave your trades unattended for any period of time (including to go to the bathroom). Markets can change in a second, and it wouldn't be nice to come back to a massive loss which is continuing to run and the reasons for your entry no longer apply.

 

[dc2000]

Firewalkers answer is pretty much in line with my sentiment. I understand there are some traders who are comfortable with not using stops and who also know how to trade effectively in this way. However, in the case of Atilla I think he usually uses stops and from what I remember from his previous trading, taking stops out is not a good sign.

thankyou for your reply as I said I am interested in this, my descision to not use stops was taken some time ago, but recently had chance to ask professional traders about stops which rekindled my interest

 

[firewalker99]

I would say that stops generally help traders to impose discipline by deciding where they will exit the trade and how much risk to assume, and involves an action which has the effect of implementing those plans. However, I quite understand large traders who wish to keep their stops out of the order book until they are triggered, and instead have soft stops on their trading platforms which use market orders if the price breaches the stop level. Further, I understand that stops (even those not directly in the book) may be vulnerable to the odd stop run if placed in obvious places.

Those are still stops. As far as I can tell - dc will correct me if I'm wrong - he is refering to trading without stops. My interpretation of that means that there is no stop entered, neither a mental or soft stop. No stops means you wait until the trade is profitable or back to breakeven.

 

[dc2000]

If you can tell me how letting price go against oneself 250 points, waiting for price to return to one's entry, finally exiting at breakeven with a big relief, is a way to be more profitable as opposed to stopping oneself out and reversing, I'll be all ears

Obviously, most people will use stops to protect them from taking too big a loss. Instead, they should be using stops so the market can show them when they were wrong.

FW I think you are getting a little personal Its a shame that if you ask for a persons position and target you get a polite reply ask about stops and you are the devil incarnate.

To answer your question if every wrong trade was exited at B/E and every correct trade averaged 1.5x daily range how could you not be profitable

 

[Paul71]

If you can tell me how letting price go against oneself 250 points, waiting for price to return to one's entry, finally exiting at breakeven with a big relief, is a way to be more profitable as opposed to stopping oneself out and reversing, I'll be all ears

Obviously, most people will use stops to protect them from taking too big a loss. Instead, they should be using stops so the market can show them when they were wrong.

Hello, FW. You don't neccessarily need a stop in place or a stop to be 'hit' to know that you are wrong.

If a trader does not use stops, then they must be able to know or identify why, when or where they went wrong.

Then comes the exit.

Easier said than done? Well, it depends if the individual is into rollercoaster rides or not. Cue, DC.

 

[lurkerlurker]

FW I think you are getting a little personal Its a shame that if you ask for a persons position and target you get a polite reply ask about stops and you are the devil incarnate.

To answer your question if every wrong trade was exited at B/E and every correct trade averaged 1.5x daily range how could you not be profitable

You must have pretty deep pockets to do that. Consider selling near the Feb lows, and having to wait 6 months and 1400 pips to get out even? What about being caught on the wrong side of gaps which aren't filled for years? I understand that you are probably taking about open losses of less than 500 (or at least less than 1000) pips, but surely it is possible that one trade will exceed any sane risk and show no signs of coming back.....where are you "wrong" under those circumstances, and where do you cover?

 

[black bear]

Time please lads, break it up

Those are still stops. As far as I can tell - dc will correct me if I'm wrong - he is refering to trading without stops. My interpretation of that means that there is no stop entered, neither a mental or soft stop. No stops means you wait until the trade is profitable or back to breakeven.

FW I think you are getting a little personal Its a shame that if you ask for a persons position and target you get a polite reply ask about stops and you are the devil incarnate.

To answer your question if every wrong trade was exited at B/E and every correct trade averaged 1.5x daily range how could you not be profitable

Hi Fw and DC

To many varibles, bound to end up in

Bank size, time frame person considers they are wrong or right in, timeframe they are trying to establish a position in, whole method etc etc the list goes on

I do think more care is required on this thread in general, new traders are reading it and I think Fw"s intentions without assuming of course are just to point out what to many is unusual approach to risk control and trade management.

May be not unusual to you DC

My 2 bobs worth = Hard Stop where I am very clearly wrong (1% of bank) Soft stop price acceptance in my short term time frame where I am very wrong (less than 1% if I am quick) if not

Carry on boys, lets see where it goes

Andy AKA

 

[bansir]

opportunity cost

The other benefit for me is that stops set you free.

If you're sat on a large loss waiting for the turn-around then your capital or at least a portion of it, cannot be used elsewhere. So you pay a price in terms of lost opportunities.

Best Regards,
Neil

 

[Hook Shot]

BUT is this a new rally if so then there will be a second chance to join it or is it a pullback chance to re short down to 11317

If I knew the answer.....

I do know the Dec S&P curiously stopped at it's 38% retracement yesterday @ 1475 ... which if it remains a cap....blah blah blah...

Regardless like you I'm waiting/hoping for more extension on the upside short term...
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General Comment
In fact I'm long Dec S&p at 1464 hoping to ride it to 1475 ... just a day trade... here I go multiple timeframes again.... Don't try this @ home ....
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[Hook Shot]

This is all getting silly....

The silly part is we are not all trading the same timeframes and looking for the same things........is it any wonder there are differences of opinion about stops and carrying losses etc.

Fire and Dc can obviously look after themselves but I think what newbies might want to consider is how they are going to skin this index trading cat.... sorry to our spanish moggie .........

You don't have to be an active trader to make good money trading.... as obvious as that sounds I get the impression sometimes that people think that 3, 4, 5 trades a day is what they should be doing but it's not for everyone... don't get seduced by the fast money boys.... that is but one way of operating...

I know some of you realise this and sorry if this is too obvious but I had to get it off my chest ......

For newbies and re-invented traders, I would start with the longer timeframe and get good at that .... xxxx the inactive periods after all there are loadza things you could be doing with that "spare" time.... I spend ages waiting .... it does not bother me cos I've got other things to fill the time...

Rant over..:cheesy:

 

[dc2000]

You must have pretty deep pockets to do that. Consider selling near the Feb lows, and having to wait 6 months and 1400 pips to get out even? What about being caught on the wrong side of gaps which aren't filled for years? I understand that you are probably taking about open losses of less than 500 (or at least less than 1000) pips, but surely it is possible that one trade will exceed any sane risk and show no signs of coming back.....where are you "wrong" under those circumstances, and where do you cover?

I seem to remember I was short from the highs in to March options expiry on the FTSE around that time but I understand what you are saying, If I enter a trade that goes wrong I work out where I will exit this may be at lower profit expectancy, B/E or if the situation dictated at a loss equally before I enter a trade I work out where the market can reasonably go where I want to enter and where my profit will be taken.

 

[firewalker99]

FW I think you are getting a little personal Its a shame that if you ask for a persons position and target you get a polite reply ask about stops and you are the devil incarnate.

Nothing personal at all, just an illustration.

To answer your question if every wrong trade was exited at B/E and every correct trade averaged 1.5x daily range how could you not be profitable

That is taking the assumption you will be able to exit every wrong trade at breakeven. Which is, a very bold and "hoping for the best"-assumption. Not only can one be hours, days, weeks or months offside, but in theory he would need unlimited capital to keep afloat during that time. Next to that, there's also the opportunity cost as bansir correctly pointed out. Why would anybody want to deny themselves the countless opportunities the market offers each day, all because of a single trade where he denies to stop himself out and wait for price to return to breakeven?

All I'm saying is that, regardless of capital, strategy, system, bankroll, w/e... being unable to see when the market proves you wrong, is nothing more than a matter of ego.

 

[firewalker99]

Would I make more money as a day trader....? Probably a lot more... but in this kind of volatile environment swingers do okay

Don't underestimate the potential as a swing trader. It obviously carries more risk, but on some days the move a trader exited the previous day at the close continues nicely the next day whilst us, daytraders are sitting on the sidelines.

 

[firewalker99]

I do think more care is required on this thread in general, new traders are reading it and I think Fw"s intentions without assuming of course are just to point out what to many is unusual approach to risk control and trade management.

And this thread happens to attract a lot of newbie views...

 

[Atilla]

Those are still stops. As far as I can tell - dc will correct me if I'm wrong - he is refering to trading without stops. My interpretation of that means that there is no stop entered, neither a mental or soft stop. No stops means you wait until the trade is profitable or back to breakeven.

Hi guys,

fwiw I do use stops sometimes but not always.

I always have mental stop losses in mind when I'm entering trades.

Yes I do let my ego get in the way of setting stop losses sometimes - I need to work on this.

However, when the trend is so strongly down, I use SL when going long as I feel the upside is limited.

I don't trade big position sizes so big moves don't impact my capital. I have been known to place double and once or twice quadrouble sizes but I have mended this bad practice. I'd like to think I'm good with my risk management.

Finally, I have lost potential earnings and made losing trades purely on SL where given high volatility my SL would get taken out.

It's almost personal to a point or two irrespective of where SL is placed. I think it's a conspiracy by the Spread Betting firms to make money. I can't prove this but the losses from SL evens out those from not having stops.

Yesterday I should have gone long after R1 was breached. Fact I didn't is what I have learned from.

I'm merely stating my behaviour - right or wrong based on passed experiences.

Good trading everyone.

 

[black bear]

not to mention

And this thread happens to attract a lot of newbie views...

Could"nt agree more FW

Good Post


ye and not to mention a lot of the on line bull Sh..t trade calls, made against that particular days obvious intra day trend, made by traders who claim to trade intra day for a living

The posts have so many discrepancies it makes you cringe

Most SB propo ganda trades IMO to suck money out of suckers

Swing trading = tight stops if the day low falls why would you want to stay :?: find out latter perhaps if it manages to re-gain it after falling for 50-80 pts

just another 2 bobs worth from

Andy AKA

 

[Hook Shot]

It doesn't have to be that way....

Don't underestimate the potential as a swing trader. It obviously carries more risk, but on some days the move a trader exited the previous day at the close continues nicely the next day whilst us, daytraders are sitting on the sidelines.

It does not have to carry more risk ... carrying triple digit losses it probably because I've not taken the trouble to really fine tune my game......

It's obviously ......an area for improvement.......

If I'm being really candid... because of some newish traders reading this...... I know I should wait for the trades I really want but succumb to doing trades just to be in the game... I know that carrying triple digit point losses is not the most efficient way of operating my system it's just a comfort zone I've lulled myself into... a bad habit!

If I'm being really really candid........I probably don't want to be a really really successful trader ......... deep down. If I did I would cherry pick the very best trades from across the markets and only execute/manage those...... there I've outed myself :cheesy:

That's pretty astounding.......... I'll see you guys whenever ......... all the best to one and all !

 

[dc2000]

I do know the Dec S&P curiously stopped at it's 38% retracement yesterday @ 1475 ... which if it remains a cap....blah blah blah...

Regardless like you I'm waiting/hoping for more extension on the upside short term...
================================================== ======================
General Comment
In fact I'm long Dec S&p at 1464 hoping to ride it to 1475 ... just a day trade... here I go multiple timeframes again.... Don't try this @ home ....

interesting if it is a cap would it not trade shy of the mark the second time say at 70 or 72

PS I see the FTSE has a target to fill at 208