I Stopped Using Stops
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tokyojoe
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Monkeys pick nuts from the bottom !!
If the market is making new lows, you have no idea of further market depth (vice versa going north)
therefore good luck with buying more positions in a falling market thinking you are getting value taking "filling" those stops.
The skill required if the trade/position taken goes against you is to recognise the trap asap & bail.
It's not about waiting for higher high & all that baloney, all levels are tradable & most positions are rinsed.
If I have momentum with me in my long position, then happy days, if not, well maybe then I can offer it to you as it turns & continues to plummet south !!
If the market is making new lows, you have no idea of further market depth (vice versa going north)
therefore good luck with buying more positions in a falling market thinking you are getting value taking "filling" those stops.
The skill required if the trade/position taken goes against you is to recognise the trap asap & bail.
It's not about waiting for higher high & all that baloney, all levels are tradable & most positions are rinsed.
If I have momentum with me in my long position, then happy days, if not, well maybe then I can offer it to you as it turns & continues to plummet south !!
darktone
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Lol, my ego would love all o that mate. Like the class know all who just got a gold star in front o the class. Or the professional trader who just got out of $100 oil at $99 "GREAT TRADE! smuuuug. :smart:
Theres no need to stop it, just relax, sit back and observe it, as you might watching a little shìte playing up their folks in the Tescos.
Because the real you, me, them should realise, that were all just another chump in the market.
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darktone
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I dont have no skills Joe, thats the problem. Im surrounded by skilful / pro traders, like nt, tar, F,, you an others, 15 years in an it all just makes no sense to me man.
But listen, if you happen to be walking my way and you need to sell out the lows or buy them highs, let me know man. If I can ill try n help you out.
itspossible
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if dt makes money thats cool-each to their own-good thread-i always used stops as i wanted to control the market and not let it dominate me(very difficult)ive a new sig-couldnt resist
tokyojoe
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I dont have no skills Joe, thats the problem. Im surrounded by skilful / pro traders, like nt, tar, F,, you an others, 15 years in an it all just makes no sense to me man.
But listen, if you happen to be walking my way and you need to sell out the lows or buy them highs, let me know man. If I can ill try n help you out.
I think you are a highly skilled trader mate. I know my limitations & definitely am not a pro
I don't particularly subscribe to any set traditional methods, I certainly do not buy highs & sell lows (basically breakouts) but many people do & make their living from it.
Me, I read traps.
We all read the market in different ways, in our own way & our own time.
tokyojoe
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Hi All,
Great thread and discussion by the way. Its nice to know there are still civil people around on the net.
If I may, my 5 cents worth.
Stop losses are a must for lower timeframes, absolute must.
However, for large timeframes, ie, weeks or months - stops can be akin to leverage. If one has enough leverage then a stop is not needed.
Here is just an example so please dont smash it to bits:
I go long FTSE100 today at its current level using spreadbet (SB) at 6500. I'm not to know what it will do next, tomorrow, next month, next year and so on. I will rule out discussing supports/resistance etc here at this point as it will throw me off topic.
So at £1pp i would need leverage (or margin) for £6,500 to allow for the market to disappear.
Now it's fairly safe to say that I will disappear before the FTSE does. So, where do I leverage to? If I leveraged to half the market value allowing for a 50% drop would be to 3250 or the equivalent in sum of money. I'm not talking Spanish stops here, just a sensible use of leverage/margin. Bad use of this kills more traders than anything else.
I think it's also safe to say that the markets will come back/bounce back at some point in the future so if I had an assumed no margin to worry about, I would simply need to wait before I could cash in, however, how do I make money in the meantime. Well personally I prefer to average in but I wont discuss that aspect right now as again it will throw the core context of the conversation.
The main part of this is that providing one has enough capital, and without constraints, need never put themselves in a position to lose money, or at least a major part of their capital/investment. Its all timing and patience is a big key. If a stop is not used adequately, time and patience is taken away from the trader.
Regards,
Anon
Great thread and discussion by the way. Its nice to know there are still civil people around on the net.
If I may, my 5 cents worth.
Stop losses are a must for lower timeframes, absolute must.
However, for large timeframes, ie, weeks or months - stops can be akin to leverage. If one has enough leverage then a stop is not needed.
Here is just an example so please dont smash it to bits:
I go long FTSE100 today at its current level using spreadbet (SB) at 6500. I'm not to know what it will do next, tomorrow, next month, next year and so on. I will rule out discussing supports/resistance etc here at this point as it will throw me off topic.
So at £1pp i would need leverage (or margin) for £6,500 to allow for the market to disappear.
Now it's fairly safe to say that I will disappear before the FTSE does. So, where do I leverage to? If I leveraged to half the market value allowing for a 50% drop would be to 3250 or the equivalent in sum of money. I'm not talking Spanish stops here, just a sensible use of leverage/margin. Bad use of this kills more traders than anything else.
I think it's also safe to say that the markets will come back/bounce back at some point in the future so if I had an assumed no margin to worry about, I would simply need to wait before I could cash in, however, how do I make money in the meantime. Well personally I prefer to average in but I wont discuss that aspect right now as again it will throw the core context of the conversation.
The main part of this is that providing one has enough capital, and without constraints, need never put themselves in a position to lose money, or at least a major part of their capital/investment. Its all timing and patience is a big key. If a stop is not used adequately, time and patience is taken away from the trader.
Regards,
Anon
barjon
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I think most o yawl been pulling your own tales might be nearer the truth
If you read what I said again, youl find that I book my scratches (at loss or profit) before the ma cross.
Re: its little different from those who have a stop level:-
I disagree, let me explain why.
If we take a look at the first chart in your article and focus on the bit in the yellow circle.
When the market was making new lows, thats where I am buying.
The trader is waiting for the entry youve shown, which is above the lowest red candle.
If the market goes there and I havent already scratched, I can help the trader, by filling their order with what I no longer want.
Now we are both long, them up here, me down there. We are both set to benefit from a favourable move.
If that doesnt happen and the market turns and heads south, breaking the low and hitting the stop level youve shown then...
A hard stop: Is executed right there (Ill help with that by filling that stop, because thats where I am buying)
A soft stop: Isnt executed straight away, leaving the trader with a decision to make. Like me he doesn't know whats gona happen next. If he
In any event, if I can help this trader. I will.
Repeat repeat repeat.
In short. Where they be buying I be selling. Where they be selling I be buying.
Re:The main difference is that they know the sort of loss they might suffer when they start:-
They might like to think they know. Id disagree.
They can be slipped, sometimes horribly. They can be chasing a fast market, after their mental stop has been triggered.
I think its fairer to say that all they know, is the level of loss that they would want to take.
Re: but you don't.:-
Exactly. I know I dont know. Which is why I start from the worst case scenario, and respect it with tiny size.
Yeah, I know that you scratch as you go along when the circumstances arrive but you keep on taking more, don't you, until the ma cross tells you to stop and look to close off the campaign?
Two things as far as the example is concerned: Firstly, I know from the experience of many such trades that waiting for that break entry gives a statistically significant better chance of price moving in the desired direction. While your hands are being cut to pieces trying to catch a falling knife I'm just sitting on mine and waiting until I can make a "better" assumption that a favourable move has started. Like you I don't know - but I can make an assumption and I do know the odds based on what's happened before (that's no guarantee either, of course).
Secondly, what you don't say is if the market turns south and triggers my stop is that I'm out with a loss that is known and quite containable for me in the overall scheme of things - and the ESSENTIAL element in my experience of what benefits my bottom line. I care not a toss if the price immediately turns round and I could have got out with a smaller loss or a big profit. I'm not a great fan of "could'ves". You on the other hand continue buying on falling prices with no real idea of what loss you can finish up with if it stays wrong.
Yes, I can be slipped. Yes, I can chase a fast market if I'm working with a mental stop. Those risks, however, are small compared to the alternative of no stop.
Hi Tar,
I've read the post you linked to:
I cannot comment on the individual you refer to, only from my own perspective. I wish to state that in principle you are right in what you say, however, its not as simple as the black and white that is portrayed.
So running with my example on the FTSE at 6500 for a moment, I'm going to concentrate on a way that it can be done rather than the countless ways in which it cannot. (I'm not going to put my 19 odd years profitable trading plus 5 years paper trading down to just luck or a random encounter).
So I've gone in long FTSE at 6500, lets forget about account balance for now and percentages and just talk cash or points. If I have leverage down to allow market to crash 50% from current levels then I could chip trades in and out from 6500 downwards to the half figure 3250. Each time the market goes up I can cash out a trade. Again I will keep it simple without weighting trades here but if one was to weight a trade heavier than the first(ie, put more money down), the set of trades would present more reward to risk the lower the market gets to zero. Again we all know it isn't going there unless WW3 breaks out (even then I doubt it).
The ones at the top you leave to mature, the ones at the bottom (where ever that be) gets traded all the time the market is ranging.
Markets ranging or range bound is an interesting but also lengthy discussion. I think its very safe to say that the markets range more than they trend, obviously bouncing off areas etc. Its these bounces that can be taken advantage of.
A quick example here:
FTSE daily moving average of late aprox: 110pts per day from high to Low
Range 6000 to 7100 from Jan 2013 to July 2015 - this alone gives a range of 1100 pts but the opportunity to chip in and out of trades over this amount of time. How many times would one have to chip in and out of a 50 or 100pt move to counter act the loss on the top end ones? But sticking to the point
If we go back as far as 1997 the highs of the market have been 7000 whilst the lows at 3500 - aprox 50% off from the highs. So in principle, if one had of traded since 1997 using this method of chipping in and out they would have had 2 opportunities to cash in all top end (losing) trades. The bottom ones (high reward minimum risk) would have topped the account off nicely.
Think of the (losing) trades at the top if you will as investments waiting to come true. Like buying a house in a depressed market for example. The commission paid throughout the years will be substantially less than the loss on the trade in its entirety.
My belief is that the problem people have is patience and timing and this is why the majority constantly lose money without realising it, practically blaming someone or something else whether it be the PC, the set up they use, Stochastics or capital, all have their own excuses to a very simple solution. Its only us that make things complicated. We all want high returns on small balances and we want them now.
Regards,
Anon
darktone
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Well the ma's dont tell me anything I dont already know. The first sign that something has changed is that im not getting filled anymore. They just provide a an easy framework for me to practise with, keeps me out the middle too. These are entry and exit tools.
Breakouts give a statistical advantage: Hmm, I wouldnt know about that mate.
Falling knives: I look at my hands, theres no cuts. I look in my account, all is rosy, no knives been in there.
I dont see It as falling knives, just more favourable prices, nothing more nothing less. Operating at favourable prices to me is good business.
Could you imagine walking into your special wholesaler (buys them off you as well as sells them to you) to buy your widgets. Hes calling out 40, 30, 20,40, 50, 60 and you shout BUY EM. Does that really make good sense to you? It doesnt to me anymore mate, and ive done plenty of that type of trading.
Assumptions: Yeah ive give them up to. Theyve mostly cost me in my time. Now I see them as just an unnecessary burden.
Your stop gets triggered: and youre out at -8. A nice manageable loss. At that moment it would be near my entry point, it then rockets down another 20 and youre feeling pretty pleased with yourself, and because you care not a toss about the price coming back up, you dont notice the retrace back up 10 to 326. Your mind is to focused on "man im glad I got out -8, much better than the -28 I could have taken". Youre effectively blind to the opportunity because youre trading from a fearful standpoint. Youve turned favourable prices into knives.
Not a fan of "could'ves": Me neither, thats why ive shown a good few example of "did do's".
Another thing. If you do get stopped once there may be re-entry opportunity's. Get stopped another couple times an your looking at a booked loss of -24 on the endeavour. The trade still might viable when another setup presents itself. Youve got your entry in the same type of 8 points above the low, and youve your booked -24 already. Your original target are is now a kinda breakeven target.
Done plenty of that type of trading too.
The only real mistake you could make would be the same one this idiot made, and think you know something.
When I did that thread I became very aware of what I was doing.
book 50 give back 30, book 70 give back 30, book 50 give back 50.
Its Ewoks on a treadmill trading!
Those risks, however, are small compared to the alternative of no stop: I think that it more likely your fearful mindset has a distorted view of what those risks actually are.
Mine certainly did.
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barjon
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darktone
I think I've got a pretty clear idea of what you do now which is not as risky as it first seemed. Still too rich for my taste, though. Over the years I've had far more reason to be grateful for my stoplosses than unhappy with them for taking me out of trades that would've (there's one of those damn 'ves again) come good.
Enjoyed the exchanges.
jon
I think I've got a pretty clear idea of what you do now which is not as risky as it first seemed. Still too rich for my taste, though. Over the years I've had far more reason to be grateful for my stoplosses than unhappy with them for taking me out of trades that would've (there's one of those damn 'ves again
) come good.Enjoyed the exchanges.
jon
Stops are for wimps. so naa-naa-na-naa-na back.
darktone
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Thats the 'Big Balls' myth imo. Perhaps stops are for the fearful comes closer.
No stops are for the enlightened
The Frog gets it (sorry postie
)So does Fido!
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You'll be sorry if I ever get parole.
@ Tar,
Both of those muppets can't spell let alone trade.
That aside - It's intersting that both examples posted above have taken a balance from (practically) zero to 25k and even 75k in roughly 4 years. That's a huge return and should send alarm bells ringing. Just think of what would have been made if they'd have started with a serious investment!!!!!
Although saying that, if they paid themselves along the way they would have taken a nice profit and what capital is left either goes back to market or stays for another day. Always pay thyself first - I think that's in the bible somewhere.
Just like in any walk of life though, one can always find examples of even the best solution being ruined by some idiot - and there's plenty of them out there, in fact we all know (those smart people of course) that there are a hell of lot more ways to lose money than to make it. Every day someone else comes up with a novel idea on how to lose money in the markets. It never fails to amaze me when all they have to do is keep it simple - now I know for sure that one IS in the bible.
Both of those muppets can't spell let alone trade.
That aside - It's intersting
that both examples posted above have taken a balance from (practically) zero to 25k and even 75k in roughly 4 years. That's a huge return and should send alarm bells ringing. Just think of what would have been made if they'd have started with a serious investment!!!!!Although saying that, if they paid themselves along the way they would have taken a nice profit and what capital is left either goes back to market or stays for another day. Always pay thyself first - I think that's in the bible somewhere.
Just like in any walk of life though, one can always find examples of even the best solution being ruined by some idiot - and there's plenty of them out there, in fact we all know (those smart people of course) that there are a hell of lot more ways to lose money than to make it. Every day someone else comes up with a novel idea on how to lose money in the markets. It never fails to amaze me when all they have to do is keep it simple - now I know for sure that one IS in the bible.
