to stoploss or not to stoploss?
This is a tough one of course.
Because there can be plenty of trades that are better without a stoploss. Because GBL cannot go beyond 150, and NG cannot go below zero. And similar.
Recently, I missed the NG trade because i approached it as non-stoploss trade, but then, when I was about to enter it at 3.1sh, I got afraid because I said to myself: what if it falls all the way to 2.5? I wasn't ready to lose 6000 dollars and drag it on for months. So I didn't enter it and I missed 4000 dollars of profit as a consequence.
In that case, I should have approached it as a stoploss trade and set the stoploss at 3, and run the risk of losing about 1000 dollars.
So I made the mistake of not realizing that a non-stoploss trade could be a approached as a stoploss trade, too.
When NG was at 2, it was undoubtedly a non-stoploss trade. So was GBL at 146. Why?
Because what happens when in a day of panic price goes all the way to 147, or even 148, for a few minutes and then comes back down to 146 where you entered?
You lose 2000 euros, and for no reason, because it simply won't go higher than 150.
What happens if you set it tighter to 146.5? You lose 500 euros, you are out of the trade, and when you come home, price is at 145. So you lost 500 euros and missed another 1000 euros of profit.
But a stoploss can also be good in those cases where a lack of stoploss scares you as to the downside potential (in case your long).
I will add this stoploss remark to my "trade-offs", which are now 4:
1) entry trade-off: enter with a LMT and you might miss an entry vs. use MKT and you might miss a better price
2) - exit trade-off: set a loose stoploss and you might lose lots vs. set a tight stoploss and you might miss a profitable trade
3) + exit trade-off: exit with a nearby LMT and you might miss profit vs. exit with a distant LMT and you might miss profit, too
4) stoploss trade-off: don't use it and miss profit out of fear for losses vs. use it and a peak/bottom might turn a profitable trade into a loss.
I will also mark the markets that qualify for
stoploss-less-ness, which are only GBL and ZN right now. Had i done this before, I would not have missed out on NG, which was good enough as a trade with stoploss, but not good enough as a trade without a stoploss.
Right now, with the present level of capital, a trade that qualifies for stoploss-less-ness is a trade that if it goes wrong, can keep me in the red for days but not weeks and make me go in the red for only up to 5k.
NG didn't qualify at 3.1 because it could have gone to 2.5 for months, and even as low as 2, and it could have stayed there for months. It was extremely oversold, but it still didn't qualify for stoplosslessness. My mistake in assessing its stoplosslessness caused me to approach it with what it's called a
stoplosslessness attitude and therefore to stay out of it, and miss thousands of profit.
As a rule, no currencies and no indices or commodities should be stoplossless. But there are exceptions: NG at 2sh, CL at 35sh (in 2008). It also depends on your capital. If you buy an NG contract at 2, all you can lose is 20k, should it go to zero. And CL at 35, you could buy QM, and all you can lose is 17500 dollars, should it go to zero, which of course won't happen. So you could lose about 10k on each one.
But you stand to make much more.
Now GBL and ZN are in the stoplosslessness situation. Nothing else qualifies for stoplosslessness.
Never let the market find you unprepared on the stoplosslessness question, like I just did with NG, where I thought it qualified whereas, subconsciously, I feared it didn't, and this resulted in me staying out, whereas I could have easily entered with a risk of 1000 dollars.
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