Yes I am talking about having a fixed target compared to your stop....you can have statistical knowledge of where the market willl go next...but you miss the point the by having a positve reward to risk ratio depending on the ratio size you can have up to 60% losses and still break even. So long term your system breakseven. Uless obviously it drops below that level but you would have to go through a period of breakeven before it goto that stage.
Yes I am talking about having a fixed target compared to your stop....you can have statistical knowledge of where the market willl go next...but you miss the point the by having a positve reward to risk ratio depending on the ratio size you can have up to 60% losses and still break even. So long term your system breakseven. Uless obviously it drops below that level but you would have to go through a period of breakeven before it goto that stage.
nunrgguy
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No, I don't miss the point in that regard. I perfectly understand the theory of R:R etc. It's primary school maths. Seriously, without other considerations, just playing with R:R will only ever give break even at best. You move your target further away, it is less likely to hit, you move your stop nearer to it is more likely to be hit, the two cancel out.
And, we are talking about scalping here, so...what stop size are you talking about as that is what this thread is about. If your stop is 20 and you're aiming for 40 you aren't scalping.
no I am not talking scalping specifically, however I would suggest that the majoirty of people do not have the trading funds to scalp properly and efficiently anyway. But your comments were quite generic I think and I think it is important to have stops full stop not just as emergency.
"just playing with R:R will only ever give break even at best."
not the case in my experience. ONly be trading for 6 years so plenty of time to breakeven.
"
You move your target further away, it is less likely to hit, you move your stop nearer to it is more likely to be hit, the two cancel out."
I suggest you or anyone who can is interested. Choose a made up entry method. i.e select a market, and an entry trigger that occurs once a day. Then go over the last 2 years worth of charts by hand..trying 3 different targets using teh same stop. Then compare results. You may be surprised by how the results are distributed. If you get a win rate of 50% or more...then I would suggest forward testing the same idea for a year and you see if the best stop/target wins, loses, or breakevens.
Its the only way to explain it.
"just playing with R:R will only ever give break even at best."
not the case in my experience. ONly be trading for 6 years so plenty of time to breakeven.
"
You move your target further away, it is less likely to hit, you move your stop nearer to it is more likely to be hit, the two cancel out."
I suggest you or anyone who can is interested. Choose a made up entry method. i.e select a market, and an entry trigger that occurs once a day. Then go over the last 2 years worth of charts by hand..trying 3 different targets using teh same stop. Then compare results. You may be surprised by how the results are distributed. If you get a win rate of 50% or more...then I would suggest forward testing the same idea for a year and you see if the best stop/target wins, loses, or breakevens.
Its the only way to explain it.
If you trading mainly on technical signals that give a price target then I guess it makes sense for you to have a set stop loss - you have a known target so you should have a known stop loss to manage your money and risk - If you are using dynamic signals (EMA's etc) or some other dynamic approach then you would not have the need for fixed stop losses - they are completley different approaches - I prefer the latter approach myself but I always keep a close eye on the size of the risk compared to the size of my funds and have strick stop losses ultimatley based on that but I will frequently will trade out before the stop loss is triggered - as i said these are completley different approaches.
I dont use a stop loss either.
As for Hooya, i always an "emergency stop" at 100 pips. Many times i have seen impressive sudden changes in the trend, so it is always better to know what can be the worst. To be honest, it has never been reached because of the way i trade, but for two or three times in these last five years i have seen really impressive changes at a matter of seconds.
Normally, when the trend changes and moves against me i never lose more than 20 pips.
As for Hooya, i always an "emergency stop" at 100 pips. Many times i have seen impressive sudden changes in the trend, so it is always better to know what can be the worst. To be honest, it has never been reached because of the way i trade, but for two or three times in these last five years i have seen really impressive changes at a matter of seconds.
Normally, when the trend changes and moves against me i never lose more than 20 pips.
I think there are different styles, systems, markets and timeframes so everyone will have different approach.But what I don't understand is how can you not know what stop you should place? If u have specific entry rules, and you should have ones, cause otherwise it would be gambling, then you should check charts of last 2 years or so and see how many points on average of your entry you should place a stop. It's the same with targets. Other thing u can do is to check all your trades and see what was average stop level on your winning trades. This way you can decrease your loses. That's what I'v done and it is working.
I don't know if I'm scalping but I trade eurusd and ftse futures, make up to 5 trades a day, sometimes less or none if there is no signal. My trades last from couple of minutes up to 30 minutes I'd say.
My stop is always 5 pips and 5 points on ftse, target 20p. The target is hit 100% of my winning trades and stop is 2-3 points on 80% of my winning trades. Most of the time profit would be much bigger but I'm still on red after couple of bad days at the beginning and I take "safe profit" at the moment. My only problem is that I don't take every sygnal I see and I only breakeven since couple of months. That's a psychological problem that I'm currently working on.
I hope my experience will help someone
I don't know if I'm scalping but I trade eurusd and ftse futures, make up to 5 trades a day, sometimes less or none if there is no signal. My trades last from couple of minutes up to 30 minutes I'd say.
My stop is always 5 pips and 5 points on ftse, target 20p. The target is hit 100% of my winning trades and stop is 2-3 points on 80% of my winning trades. Most of the time profit would be much bigger but I'm still on red after couple of bad days at the beginning and I take "safe profit" at the moment. My only problem is that I don't take every sygnal I see and I only breakeven since couple of months. That's a psychological problem that I'm currently working on.
I hope my experience will help someone
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I think there are different styles, systems, markets and timeframes so everyone will have different approach.But what I don't understand is how can you not know what stop you should place? If u have specific entry rules, and you should have ones, cause otherwise it would be gambling, then you should check charts of last 2 years or so and see how many points on average of your entry you should place a stop. It's the same with targets. Other thing u can do is to check all your trades and see what was average stop level on your winning trades. This way you can decrease your loses. That's what I'v done and it is working.
I don't know if I'm scalping but I trade eurusd and ftse futures, make up to 5 trades a day, sometimes less or none if there is no signal. My trades last from couple of minutes up to 30 minutes I'd say.
My stop is always 5 pips and 5 points on ftse, target 20p. The target is hit 100% of my winning trades and stop is 2-3 points on 80% of my winning trades. Most of the time profit would be much bigger but I'm still on red after couple of bad days at the beginning and I take "safe profit" at the moment. My only problem is that I don't take every sygnal I see and I only breakeven since couple of months. That's a psychological problem that I'm currently working on.
I hope my experience will help someone
As you said, there are many styles,systems, TF´s, markets and approaches, so you can be sure that each trader works at a very different way as the rest of us. I wonder, why is it so important to know where to place a stop?. You know that at the markets everything is relative, so i could tell you how it works for me and i can also tell that it mightnot work for you.
The widely accepted rule is to place the stop at double the distance of your limit, so if it will work 80% of the times, at the end you win.
In my case if i scalp i use no stop, except for the security stop i explained before.
For the case of middle to long therm trading i dont use itat all.
I could but i will not. I tried some months ago to do something like that and found myself arguing with worthless people.
Anyway, to protect your capital and increase your R/R, that could be a good point, but why dont you simply follow the trend instead gambling with it?
TradeCrushers
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My stop losses change depending on the trade and the rationale for entering it. Static stop losses that never change from trade to trade should be avoided.
