I Stopped Using Stops

[timsk]

First of all this thread is not about darktone , second this thread is about trading without stops or very wide ones . And then some of you guys introduced scaling-in to the equation/discussion , so it is very relevant . BTW when i said wide i meant 500 pips - thats the zulu's default - and they did occasionally close before that .

Hi tar,
Okay, fair point - it's relevant. But having made your point - which is an excellent one and one that no one disagrees with (that I'm aware of) - why keep repeating it?

Your point about the thread not being about darktone is also very true. However, he is the only member who has had the guts - and taken the time - to explain an alternative to 'conventional' trading using stops. If it wasn't for him, then all this thread would consist of is the pro-stops lobby telling the OP that he'd be crazy not to use them. That makes for a boring thread IMO, no one learns anything new and nothing ever changes. Surely the whole purpose of T2W is have discussions like this and questioning conventional wisdom from time to time is no bad thing.
Tim.

 

[tar]

Hi tar,
Okay, fair point - it's relevant. But having made your point - which is an excellent one and one that no one disagrees with (that I'm aware of) - why keep repeating it?

Many still disagree , so giving more than just a single example is just to make the point clearer .

 

[darktone]

Re the 32% loss i didn't believe it either

Of course you didnt mate.

BTW when i said wide i meant 500 pips - thats the zulu's default -

Sorry, just so I got this straight. Zulu enforce a 500 pip stop! You know where in gona go with this right.

Many still disagrees , so giving more than just a single example is just to make the point clearer .

I think there may well be a deeper reason for repeating the point.

 

[tar]

BTW whether you scale in or not it doesn't matter , whether your single entry point is at 12000 or your average entries is at 12000 its the same as long as you have enough funds .
These zulu traders in the screenshots - not all screenshots - have an infinite balances , these are just pips counts , and as they lose in scaling in their profits are made from scaling in as well . What matters here is that they dont have a clear stop loss and thus on average they lose more than what they make , their losses are bigger than their winnings . And that's the whole idea behind this thread .

 

[tar]

Re hedging : Dont want to open a whole debate here but if you are long Dax at 12000 and at 11800 you decided to make a hedge and short the Dax , thats a stop loss . It doesn't matter what type of order you used , at the end you did offset your loss .

 

[Anon1]

Hi Tar,

(and good morning Timsk)

Your screenshots are very insightful. There are probably a million more out there that show this example.

However, I would be interested in seeing your response to this (very crude) strategy set up. Please don't smash it to bits but this is what I have been using all my trading life and has worked to gain an ample return over its lifespan so far (17+ years) and still going.
Please remember that I prefer to focus more on what can be achieved as oppose to the million ways in which things cannot.

SIDE NOTE: As was quoted by Forexmospherian:

"Studies have shown that trading in the world's stock markets - traders who trade with stops - make more money than traders who do not use stops at all"

This is true for the obvious reason as using more leverage/risk will net more gain for those who make it. Those stats DO NOT account for those many that don't. Again I believe the general accepted consensus is that whether stops are used or not, more fail than succeed.

Anyway, back to my crude example in simple black and white fashion.

Firstly, I will remove

account balance (size/leverage)
specific entry and exit levels
weighted trades
All other markets &
Shorts
(all the above are major factors but for simplicity will not be discussed in this post)


Keeping it very bare bones simple.

If I were to enter on the FTSE100 at ANY time during the last 17 years using 100pt to chop out 'winners' and average in (equal weight) on 100pts down. Would I have lost a major amount of points or would I have gained by a major amount of points (percentages excluded as depends on risk appetite).

Bottom line: Would (I) one still be trading with a healthy balance and money in bank (including paying oneself) or would they be bust out looking for another strat or constantly tweaking (or twerking I think is all the rage now)?

Further note: This is not selective data I have pulled up just to prove a point as everyone has their own respected opinion for which in most cases will never change regarding of proof, rhyme or reason - this is simply how I have traded over this time period.

I would also be pleased to hear other peoples opinions on this so all please feel free to chip in.

See graph attached.

Regards,
Anon

 

[tar]

Sorry, just so I got this straight. Zulu enforce a 500 pip stop! You know where in gona go with this right.



.

No

 

[tar]

Hi Tar,

(and good morning Timsk)

Your screenshots are very insightful. There are probably a million more out there that show this example.

However, I would be interested in seeing your response to this (very crude) strategy set up. Please don't smash it to bits but this is what I have been using all my trading life and has worked to gain an ample return over its lifespan so far (17+ years) and still going.
Please remember that I prefer to focus more on what can be achieved as oppose to the million ways in which things cannot.

SIDE NOTE: As was quoted by Forexmospherian:

"Studies have shown that trading in the world's stock markets - traders who trade with stops - make more money than traders who do not use stops at all"

This is true for the obvious reason as using more leverage/risk will net more gain for those who make it. Those stats DO NOT account for those many that don't. Again I believe the general accepted consensus is that whether stops are used or not, more fail than succeed.

Anyway, back to my crude example in simple black and white fashion.

Firstly, I will remove

account balance (size/leverage)
specific entry and exit levels
weighted trades
All other markets &
Shorts
(all the above are major factors but for simplicity will not be discussed in this post)


Keeping it very bare bones simple.

If I were to enter on the FTSE100 at ANY time during the last 17 years using 100pt to chop out 'winners' and average in (equal weight) on 100pts down. Would I have lost a major amount of points or would I have gained by a major amount of points (percentages excluded as depends on risk appetite).

Bottom line: Would (I) one still be trading with a healthy balance and money in bank (including paying oneself) or would they be bust out looking for another strat or constantly tweaking (or twerking I think is all the rage now)?

Further note: This is not selective data I have pulled up just to prove a point as everyone has their own respected opinion for which in most cases will never change regarding of proof, rhyme or reason - this is simply how I have traded over this time period.

I would also be pleased to hear other peoples opinions on this so all please feel free to chip in.

See graph attached.

Regards,
Anon

Hi


Investing very long term buy and hold with scaling in no problem , but how much % you've made and whats your DD , surely other details are needed here . I answered this earlier in a hypothetical example . Making money is not the problem beating the market is , any decent trader can pull 1% annually by investing . What about inflation 6600 quids 20 years ago dont equal 6600 these days .

 

[Anon1]

Investing very long term buy and hold with scaling in no problem , but how much % you've made and whats your DD , surely other details are needed here . I answered this earlier in a hypothetical example . Making money is not the problem beating the market is , any decent trader can pull 1% annually by investing . What about inflation 6600 quids 20 years ago dont equal 6600 these days .

You did indeed, however, your hypothetical example was based on another market and mentioned specifically account balance and that specific market level. I'm only talking the specifics contained within my post in particular as that is very prudent to the conversation and my own example of making a healthy and (in my opinion) a good return. 20-30% year on year is nothing to be sniffed at and ultimately as the saying goes 'Profit is Profit'.

 

[tar]

You did indeed, however, your hypothetical example was based on another market and mentioned specifically account balance and that specific market level. I'm only talking the specifics contained within my post in particular as that is very prudent to the conversation and my own example of making a healthy and (in my opinion) a good return. 20-30% year on year is nothing to be sniffed at and ultimately as the saying goes 'Profit is Profit'.

I dont see how you can make 20-30% pa by buying and holding a market that it didnt make that amount itself not to mention that the max DD of the market is 50% so using leverage plus scaling-in is out of the question .

 

[Anon1]

I dont see how you can make 20-30% pa by buying and holding a market that it didnt make that amount itself not to mention that the max DD of the market is 50% so using leverage plus scaling-in is out of the question .

Hi Tar,

With all respect I think you may have overlooked some points noted in the post. I know a lot of people skip through posts without really looking at the details but I'm sure that's not the case here. Its this part in particular that describes it NOT as a sit and hold strategy but trading in and out using 100pt movements, so if the markets moving average (from highs to lows) is 100+pts, should lend itself to an opportunity, depending on levels of course but I wont discuss that here:


Here's the specific part of the post:
"If I were to enter on the FTSE100 at ANY time during the last 17 years using 100pt to chop out 'winners' and average in (equal weight) on 100pts down. "

 

[Forexmospherian]

Making 32% in one day is as bad as losing -32% in a single day ...

Hi tar

I would really disagree with your comment

On first impression - yes we all immediately think this is the work of a real gambling punter - ie taking big risks and the result all down to either loads of "good luck" - or in the minus 32 % - really bad luck along with risking too much stake size etc etc

Maybe this is not the thread to discuss your comment as I appreciate its all about "using stops or not using stops" - so what shall we do start another thread with your comment as the question - or do Darktone and other members here think it is still relevant to this thread?

Will await a response from either Darktone or Tar to get that ball rolling

Regards


F

 

[new_trader]

That makes for a boring thread IMO, no one learns anything new and nothing ever changes.

Correct, that is the way it should be. Trading is a profession that must be learned properly, it isn't an activity intended to provide something fun and new every month. How many more successful traders would this site produce if more people who come here understood this simple fact.

 

[hhiusa]

Correct, that is the way it should be. Trading is a profession that must be learned properly, it isn't an activity intended to provide something fun and new every month. How many more successful traders would this site produce if more people who come here understood this simple fact.

I concur. It seems like people are using it like Facebook instead of an education resource. (A, P, F)

 

[tomorton]

Any learning experience is only as good as the learner wants it to be. I continue to find good ideas, strategies, market understanding, product recommendations etc. at this site. Of course, I might not want to learn and adopt what I believe to be a poor strategy but I do want to understand why some people seem to be able to make it work for them.

 

[wallstreetwarrior87]

Just a few observations:

I have not seen anywhere in this thread where Darktone says he does not take losses, it seems to have got lost that he simply stated there are other ways to get out of a position than using a hard stop.

With regards to the method, calling it scaling in, or what ever you want to call it - If you are a major player and want to build say a 500 -1000 + lot position on the Dax; how would you do that??????

Hit market??? Will that seek out the best value for them??

Its all about understanding who we are as individuals and where we sit in the grand scheme of things.

The major difference is that Darktone can not move the market when he has his position, whereas the major player can (transparent market volume to prove it) , and if there is no response to the encouragement, they will start to off load (but not on a stop).

Cause and effect for every participant, of which there are many types.

We, as smaller traders in general, have to try and jump on board and make a profit/loss based on the following price movement. So is Darktone's method the most efficient for account growth (considering he may only get a partial fill on a move)? Well that is for the individual to decide.

Big traders can not guarantee a certain % risk, they try to, but due to size it can be more than planned, but its all part of their business model.

The biggest sticking point from other posters ( and I can understand their stance) is that traders must know where to get out, or how much risk is in play before the trades are taken.

 

[tar]

No problems with soft stops and scaling in/out ofcourse the devil is in the details ...

 

[tar]

Hi Tar,

With all respect I think you may have overlooked some points noted in the post. I know a lot of people skip through posts without really looking at the details but I'm sure that's not the case here. Its this part in particular that describes it NOT as a sit and hold strategy but trading in and out using 100pt movements, so if the markets moving average (from highs to lows) is 100+pts, should lend itself to an opportunity, depending on levels of course but I wont discuss that here:


Here's the specific part of the post:
"If I were to enter on the FTSE100 at ANY time during the last 17 years using 100pt to chop out 'winners' and average in (equal weight) on 100pts down. "

Its either you trade the FTSE :

1- With leverage : then you need some sort of a stop as you cant survive holding it all the way down .

2- Without leverage : Then you wouldn't be able to make 20-30% pa .

 

[wallstreetwarrior87]

No problems with soft stops and scaling in/out ofcourse the devil is in the details ...

For sure!

 

[timsk]

Re hedging : Dont want to open a whole debate here but if you are long Dax at 12000 and at 11800 you decided to make a hedge and short the Dax , thats a stop loss. It doesn't matter what type of order you used , at the end you did offset your loss .

Hi tar,
Like you, I don't want to take the thread off topic by discussing hedging. That said, I don't view hedging as a type of stop loss as the original trade remains open and the loss will continue to mount - even though a corresponding gain will be accruing in the hedge trade. Those that scale in, average down or dollar cost average etc. will be looking to manage the trade in a way that gets them out at break even at worst or, hopefully, with a profit. That's a very different proposition from the trader who is taken out of a trade when their stop loss is hit and the loss is realised. Not better necessarily (potentially a lot worse some would say), just different. Just my $0.02 worth of course.
Tim.