I Stopped Using Stops

[darktone]

Hi dt,
Forgive me if I'm being spectacularly dim, but I'm not too sure what it is that you're trying to show with the charts? My guess is that it's possible to be short in an uptrend and come out on top without using stops?

As much as I've tried to free myself from the 'prison of my own false thoughts', there's one thought that keeps coming back and biting me in the butt. Whichever way I slice 'n dice it, it appears to me to be very, very true. Namely, that sooner or later there's a ferociously strong move that's sustained for much longer than one expects or that one's account can withstand. True, they don't happen very often but, when they do then, potentially, it's bye bye account time. Been there, bought the T shirt. If you can explain clearly and simply how to get around this problem, then the circular nature of the discussion referred to by 'beastwork' might be broken.
Tim.

Ah I just thought

And it certainly won't turn a losing strategy into a winning one

was a bit of a funny thing to say, so I posted a long example of a trader being 'right' yet losing money.

Cut size, stop expecting and seek value Tim. Imagine your worst case 1 tick scenario then double it, and maybe double again. Dax -2000 in tick. Where would I be? -10% -40% -500%. Its one of the few aspects we have control over.

 

[darktone]

Also just realized what the goofy color coding was for.

So you think that simply getting rid of stop losses will turn a losing strategy into a winning one? Right.... the magic of raw dawg trading. Ain't it grand?

And don't back peddle. You LOL'd at the comment. I agree with your premise though, stop losses (as provided by your broker) are not at all necessary for profitable trading.

Post your losers, otherwise you're just trolling the thread.

No
Ok
Yes I did, cos I thought it was funny
Theres always common ground man
Sure. But just because I post up some losers doesnt mean that im not trolling the thread!
Theres some here

And some here

Theres definitely a couple over there

And here

Is that enough? Cos I got a shît pile more.

 

[darktone]

I don't know squat. My entire trading style is predicated upon that realization.

So you do close losing trades WOW! But you don't use the stop loss mechanism provided by the broker.. Whoopdie doooo!!! 'tis all the same pal.

Now ya talking
Is that linear realization by any chance? Dammit!!!....

Imo it isnt. It really really isnt. But who cares anyways

 

[beastwork]

Sure. But just because I post up some losers doesnt mean that im not trolling the thread!

Truer words have never been spoken.

I'm with you now man.

for what its worth, I actually believe you and I may trade a similar style...minus the "stop losses" of course

 

[kalott]

https://leaprate.com/2015/11/nyse-killing-stop-orders-as-of-february-26/

 

[tar]

New

Another averaging down system ...

 

[fxstrategist]

Wow, thats what happens when you stop using stops. Some people just dont get it.

 

[darktone]

Wow, thats what happens when you stop using stops. Some people just dont get it.

99% of this thread dont get it.

Thankfully

 

[Luc.Chase]

Use the experience to learn where your stops should reasonably have been; and what size position suits those conditions. You identified that the market was not trending. Ranging markets are forgiving, if you give them the room to do so; but you still need protection. Just need to understand where the stops should be ( some factor relative to the height of the range ); and should you add-on near them since the likelyhood has been that the market would still go back to the range.

 

[engulf]

ha, could someone sum up for me the thought behind no stops in a nutshell? I'm curious, I tried it once sim and got creamed, but often a stop seems like more of a hindrance than anything.

 

[timsk]

. . . but often a stop seems like more of a hindrance than anything.

I don't think I can do better than your own answer - so this is more of a variation on a theme . . .

In a nutshell, the issue with stops is that often as not, when in a long trade, you'll be stopped out at the ideal point to buy and, in a short trade, you'll be stopped out at the ideal point to sell.
Tim.

 

[doubletop11]

I think that because the market moves in waves and cycles much more like we see waves on an oscilloscope. So I think that why it can work. But your overall account balance is your stop loss and with no stops you're one trade from blowing out your account. I have a friend that lost 640K on one trade trading with no stops strategy. They didn't even blow out the account but it was the loss that destroyed them mentally. So then when they started using stops they were never able to get profitable again.

 

[engulf]

very interesting idea Tim

 

[timsk]

. . . I have a friend that lost 640K on one trade trading with no stops strategy. They didn't even blow out the account but it was the loss that destroyed them mentally. So then when they started using stops they were never able to get profitable again.

Whoa - are you serious - real money not demo trading? Was it his/her own account or someone else's money?
Tim.
PS. Welcome to the site btw!

 

[doubletop11]

It was real money from their other business that they owned, Funny thing, they said they did was buy/sell the breaks of trend lines that they would measure with a protractor. made about 1 mill that way then the one trade happened. I was at their house when they told me this. It's was also a female trader too, which I thought was interesting.

 

[Forexmospherian]

Anyone in a EU sell still under 0570 - or EA under 4500 ??

I appreciate some "non stop " traders try and accommodate even 1000 - 2000 pips stops by making 500 pips just worth 1 % of their capital - but its so inefficient. Even if you have hedged using other oppositely correlated pairs - they will not always work out - even on adjusted ratios etc

One Fund manager looking after a few million in his private fund had to live with over 4000 pips of negative trades a few years back - but still ended up with a profitable year - although well down

If you are happy with low returns ( ie like the big boys with the multi million capital accounts ) then fine - but if you account is under $50 k or less then is it all worth it for $2 -8K per annum and all that stress ??

 

[doubletop11]

If you are happy with low returns ( ie like the big boys with the multi million capital accounts ) then fine - but if you account is under $50 k or less then is it all worth it for $2 -8K per annum and all that stress ??

The Stress I think is an important part for me in this idea of no stops. How do you know that when you wake up the next day after putting on the position that you won't owe your broker your house. just saying...

 

[tar]

Not using stops is not the holy grail thats for sure , instead of losing 20 pips you are going to lose 500 - 1000 pips or even more , at some point you are going to get it wrong and you are going to pay for all the losses that you've managed to avoid by not using stops .

Whether you use stops or not and whether you scale in or scale out , average up or average down , its not going to work long term unless your downside is hedged or you have some edge and i dont mean TA edge or "retail" edge .


GL

 

[Wicked_Daddy]

Wow, this is still going.

The most interesting thing about this discussion is how passionate some people are about how wrong the idea of not using stops is. In fact I would say that 95% of traders adamantly believe that the use of stops is absolutely necessary. Maybe 5% have argued that it's not. This thread takes a random sampling of traders and the percentages seem to apply.

What a strange coincidence, given the often reiterated statistics regarding trader performance.

I am reminded of something Albert Einstein said: "If at first the idea is not absurd, there is no hope for it."

My method is still working quite wonderfully, even with all the recent market surprises. It's important to note that my strategy (which is far more robust than just not using stops) put me on the correct side of those conditions, or kept me away from them. Thus, much to the dismay of those here who are wishing for my failure, I am still at 100% profitability.

Trading styles will differ from person to person and each must find their comfort zone. I have found mine. My goal, before I ever started trading, was to figure out the formula for being in the 5% that don't lose money. I approached the issue as to solve a problem (because it is a problem), much like I had done throughout my corporate career. It was not to find a holy grail or to beat the market or become a master trader. I just wanted to solve that which is a very complex problem. Have I done that? Maybe, maybe not. I believe this is an on-going experiment in which I am responsible for controlling every condition in which I am able - and using a fixed, pre-determined stop removes a variable that, in my application, removes my control. But I'm sure some, or most, will argue that point.

I should mention that I do actually use stops, but only after a trade has become profitable by a percentage I determine based on that specific trade. I place a stop into profit to preserve the profitability of the trade. I may even move it to preserve increased profitability. But I usually close the trade manually when I feel it has performed as well as expected.

It works for me. That's all that matters. I hope that every trader can find that same level of comfort and success.

Get out your flame throwers...

Have a wonderful holiday season.

 

[wallstreetwarrior87]

Wow, this is still going.

The most interesting thing about this discussion is how passionate some people are about how wrong the idea of not using stops is. In fact I would say that 95% of traders adamantly believe that the use of stops is absolutely necessary. Maybe 5% have argued that it's not. This thread takes a random sampling of traders and the percentages seem to apply.

What a strange coincidence, given the often reiterated statistics regarding trader performance.

I am reminded of something Albert Einstein said: "If at first the idea is not absurd, there is no hope for it."

My method is still working quite wonderfully, even with all the recent market surprises. It's important to note that my strategy (which is far more robust than just not using stops) put me on the correct side of those conditions, or kept me away from them. Thus, much to the dismay of those here who are wishing for my failure, I am still at 100% profitability.

Trading styles will differ from person to person and each must find their comfort zone. I have found mine. My goal, before I ever started trading, was to figure out the formula for being in the 5% that don't lose money. I approached the issue as to solve a problem (because it is a problem), much like I had done throughout my corporate career. It was not to find a holy grail or to beat the market or become a master trader. I just wanted to solve that which is a very complex problem. Have I done that? Maybe, maybe not. I believe this is an on-going experiment in which I am responsible for controlling every condition in which I am able - and using a fixed, pre-determined stop removes a variable that, in my application, removes my control. But I'm sure some, or most, will argue that point.

I should mention that I do actually use stops, but only after a trade has become profitable by a percentage I determine based on that specific trade. I place a stop into profit to preserve the profitability of the trade. I may even move it to preserve increased profitability. But I usually close the trade manually when I feel it has performed as well as expected.

It works for me. That's all that matters. I hope that every trader can find that same level of comfort and success.

Get out your flame throwers...

Have a wonderful holiday season.

Im certainly no flame thrower Mr WD, but am always interested in what other traders do. What I would like to know ( but completely understand if you dont want to say) is that you say profitability is 100% (but I think by that you mean your strike rate?) but how much has your account grown by in percentage terms since you started this thread in June?

Obviously you have had no losers thus far, so how many trades have been taken in this period to achieve your percentage return on the account.

This will give other traders of all levels a better vision of the pros/cons and restrictions that apply to using an approach such as this.

Many thanks
WSW