trading without a stop loss

barjon

barjon

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I swing trade, 0-30+days, and try to ride the intermediate trend.

For many years I relied on price action to limit my losses but, after
a few savage experiences, I started using stop-losses last year.
It has certainly reduced my gross losses but it has also reduced
my gross profits due to the number of occasions I have been
stopped out only to see the market reverse and gallop off in the
direction of my trade (is there anything more galling 😈 ).
How it has affected my net profit I'm not sure since it's difficult
to determine in hindsight when and if I would have retreated.

Reading Kaufman recently I was struck by two particular
comments:

Combining a small stop loss with a trend following system is
likely to conflict in purpose.

Fixed stops do not seem to enhance a trading programme(although stops based on support and resistance levels may be quite different)

He also charts a ten year test of stops on a simple moving
average system for stops ranging from 0.02% through to 10%.
Interestingly, with one exception, the difference between running
with stops or with NO STOPS is minimal.

Any thoughts :?:

good trading

jon
 
Seconded!!! (well kind of)

I agree that if nothing else, not having a stop prevents the frustration of seeing the trade eventually "come good". Indeed from a psychologicalalalal perspective, not having a stop may be a good thing, as it would then prevent the following trade being an attempt to "get-even" with the market and taking undue risk with trading capital.

i do of course employ a complete catastrophe stop in case there is another market panic event such as the Twin Towers, or Rod Hull falling off his roof 😛 but that is about 150-200 points, just so i live to fight another day

just my 5 roubels

FC

(edit - i mean 150-200 points on the DOW!!! 150-200 on the SP500 or the techmark and we could be in trouble! )
 
It is critical to have some kind of stop in place otherwise you might as well write your broker a blank cheque.

It is no good looking at what could have happen if no stop was used and how profitable it could have been.

Cut out the greed and make sure your account is increasing - that's all that matters!

It is no good losing all your capital for an extra hundred pounds!!

Don't do it. It's not worth it!
 
Blank cheque? my favourite.

Please could you make it payable to Mr. F. Chinos Esq

im sure i could give it a good home.

message understood about your stop though. 🙂 The art of setting stops is impossibly complex, and really, short of having a 100% success rate on your trades, it is one of the most important features in trading..

risk management, money management. lets all chant it together!

🙄
 
I would have thought swing trading the Dow would normally require a large stop i.e at least 100 points IMHO! ..........thats what i do anyway......
 
makes me wonder. does anyone know the braking distance of the DOW at 10,700 in feet? in snowy conditions, naturellement!


😆 😛
 
rglenn,

It is critical to have some kind of stop in place otherwise you might as well write your broker a blank cheque.
Click to expand...

This only applies to Spreadbetting companies and not other brokers as all they do is match your order with someone else. They do not derive any benefit whether you place a stop or not as what they want is you to do is to trade as many times as possible because they make their money on commissions only.


Paul
 
I go along with barjon on this. I also swing trade these days, on indices only, usually the FTSE100 but the choice isn't the key thing. I also use a catastrophe stop miles below entry in case of a 9/11 during the day when I'm out. But I don't trade against the trend, which means a fair proportion of the time the SB account stands idle as we run through corrections. I'd rather miss opportunities than take risks.

Tight stop-losses aren't right for swing trading in this fashion, they just serve to guarantee multiple losses.

I think...
 
If you trade without stops you are gambling.

If u cant handle the concept of stops you should become a buy
and hold investor.
 
You don't have to have stops in the market. Mental ones are fine as long as your strong enough to take them. Have an emergency stop in place. Just don't forget to cancel it when the trade ends.

I'm talking intraday trading here though. You know yourself how much you are going to give a market. You also know if you get a sudden spike that take out all the stops it generally rebounds back. Your in trouble when it doesn't though.
 
some say "do" , some say "don't".

I'm trying to look at it from a different angle.

How about your entry rules ?
Are you getting in a bit late ? And that is why your stops get hit ?

What constitutes your 'swing' ?
If it stops you out and then resumes the original move, does it break your 'swing' rules first ?
If not, why is your stop set where it is ? And why do you not re-enter? After all, your swing rules are still intact.

How do you calculate your targets ?
Are they too ambitious ?

I would be very reluctant to trade without some measure of whether my decision was right or wrong. And I use a stop to tell me just that.

As a swing trader, the stop you may have to place may be a long way away. That's just part of the concept isn't it ?
 
mmm, interesting stuff. A couple of points.

I've been at this game for around 30 odd years ( trading would
be too grand a term since I've never had to do it for a living) and
I'm still here even though 29 of them have been without stops.
Had some rough times as well as smooth, of course, but never
been wiped out although it's been within a whisker a couple of
times. Over the last 3 years (after hanging up my boots) I've
had a lot more time to spend in front of the screen, my
"system" has become more embracing and the timescales
considerably shorter.

I do not intend to go back to trading without stops - but I do
have work to do to establish what works best. I have certainly
found that tight stops are counterproductive too often.

bonsai raises some interesting points:

firstly, I'm happy with my entry rules and where I'm stopped out
because of a false start re-entry is not a problem. However,
when the trade has moved off in the right direction and then
retraced back to trigger my stop, re-entry is often a problem
because that may signal an apparent change of trend.

secondly, I don't target as such but rely on price action to tell me
when enough is enough (trailing the stop at various points). I do
have an initial view of where stalling is likely to occur to inform my
risk/reward money management.

I raised the topic to explore what others thought - thanks for
letting me know

good trading

jon
 
Barjon, 30 years is A LOT of experience and as you say, to still be here is worthy of note. BUT, you also mention 'coming within a whisker' [of wipe-out?] a few times.

That's the key point fo rme.

Assuming random distribution of luck, most traders WILL get wiped-out (at least once!) if they're not using stops. (Actually, thet'll probably get wiped at least once even if they are...)

You've obviously been lucky and found yourself over 'that side' of the luck distribution curve.

Now I know who's responsible for me being over 'the other side' of the curve....
 
barjon said:
mmm, interesting stuff. A couple of points.

I've been at this game for around 30 odd years ( trading would
be too grand a term since I've never had to do it for a living) and
I'm still here even though 29 of them have been without stops.
Had some rough times as well as smooth, of course, but never
been wiped out although it's been within a whisker a couple of
times. Over the last 3 years (after hanging up my boots) I've
had a lot more time to spend in front of the screen, my
"system" has become more embracing and the timescales
considerably shorter.

I do not intend to go back to trading without stops - but I do
have work to do to establish what works best. I have certainly
found that tight stops are counterproductive too often.

bonsai raises some interesting points:

firstly, I'm happy with my entry rules and where I'm stopped out
because of a false start re-entry is not a problem. However,
when the trade has moved off in the right direction and then
retraced back to trigger my stop, re-entry is often a problem
because that may signal an apparent change of trend.

secondly, I don't target as such but rely on price action to tell me
when enough is enough (trailing the stop at various points). I do
have an initial view of where stalling is likely to occur to inform my
risk/reward money management.

I raised the topic to explore what others thought - thanks for
letting me know

good trading

jon
Click to expand...


Learn the new way , how can I teach an old dog new tricks?😆😆

http://www.trade2win.com/boards/tra...hout-stop-loss-using-options.html#post2901946
 
barjon said:
Always learning, fl 🙂 a good few years have zipped past since that post and I cringe to recall how I was trading then.
Click to expand...

Got an archaeologist in the house, keeps digging up long dead threads, (links etc) but its good was thinking of diggin up an SSI thread from years ago myself c🙂
 
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