Trading without a stop ORDER

[Hotch]

I have come to the conclusion, that I may trade better without a stop loss order (bar an emergency one for black swans). This is NOT Spanish stops.

See, the stop (for me), is where price has to go if it invalidates your trade. However, it's not as simple as price goes to X, trade invalid, price doesn't go to X, trade not invalid. It depends on it's path.

When I make a trade, on one level, it's that I expect price to go to Y before it goes to X, but I also have some idea of how fast it's going to get there. If price goes straight to my stop then obviously it's an invalid trade, if it muddles around and doesn't go anywhere, and I've expected a rapid move, then it's more likely that I'm wrong, and my expectancy isn't what I thought it was, so I might get out.

The problem is, if I have a stop, I am loathed to move it, and I normally put them at the extreme of exits, because I DON'T KNOW if price is going to muddle around or not.

It might be easier to think about it with profit targets.

Imagine you're short, and you think over the next day or two, price is going to fall down to support level S, if price zooms off and gets close to S within 5 minutes, wouldn't you want to re evaluate, and maybe let it run, to see what happens, clearly the move is stronger than you anticipated.

Again, I am not suggesting trading WITHOUT A STOP. I am saying have an emergency one, and do a bit more work and monitor the trade. I find I'm getting out a lot more trades at <5 pips, and generally it would of gone to my stop. Expectancy is up is the main idea.

It's just me though, maybe you guys all know this crap.

 

[SimpleTrader09]

Yes this is good as long as you have the discipline to exit, and that you tighten that stop or are out before big news is about to break. Personally I decided that for me it was better to exit half as soon as it doesn't appear to be working for a small loss an then leave the stop in and if the second half returned to profit then exit that and It would be like a scratched trade. The really good trades seemed to fly soon after entry.

 

[Rossini]

I've always used a disaster stop rather than a 'normal' stop. One reason is the same as you give in your post. The other is that I pride myself on my discipline and I know that I wont just hang on to a loser because I don't want to take a loss.

 

[DionysusToast]

I'm in Bangkok - power cuts are not rare. Stops are essential.

Other than that, I am mostly trading with Ninja & using their ATM strategies which automatically places a stop.

As it is - it's just a line on the chart/DOM you can move up and down. I can't see any benefit at all in it not being there.

 

[Hotch]

Well, as mentioned, I find once I place it, I refuse to exit at a loss unless hitting the stop. Just found it interesting.

 

[Black Swan]

if and when I trade of the smaller TFs (10-15 mins) a lot of the time my stop is hit and then I'm reversing the trade, tells me I'm as spot on as I could ever be. I don't have time/cba to calc. a stop of the HH/LL of the session on the smalls, so I go for 35, but it averages out being hit at approx. 22, which is cool.

 

[robster970]

I just exit of my own accord. Developing the discipline to come out when it's not working out instead of delegating it to a stop reduced the size of my average lose quite a bit. I just seem to be happier without one now.

 

[brettus]

I have come to the conclusion, that I may trade better without a stop loss order (bar an emergency one for black swans). This is NOT Spanish stops.

See, the stop (for me), is where price has to go if it invalidates your trade. However, it's not as simple as price goes to X, trade invalid, price doesn't go to X, trade not invalid. It depends on it's path.

When I make a trade, on one level, it's that I expect price to go to Y before it goes to X, but I also have some idea of how fast it's going to get there. If price goes straight to my stop then obviously it's an invalid trade, if it muddles around and doesn't go anywhere, and I've expected a rapid move, then it's more likely that I'm wrong, and my expectancy isn't what I thought it was, so I might get out.

The problem is, if I have a stop, I am loathed to move it, and I normally put them at the extreme of exits, because I DON'T KNOW if price is going to muddle around or not.

It might be easier to think about it with profit targets.

Imagine you're short, and you think over the next day or two, price is going to fall down to support level S, if price zooms off and gets close to S within 5 minutes, wouldn't you want to re evaluate, and maybe let it run, to see what happens, clearly the move is stronger than you anticipated.

Again, I am not suggesting trading WITHOUT A STOP. I am saying have an emergency one, and do a bit more work and monitor the trade. I find I'm getting out a lot more trades at <5 pips, and generally it would of gone to my stop. Expectancy is up is the main idea.

It's just me though, maybe you guys all know this crap.

Averaging down. I've seen something similar done by a client, which usually fails in the end but often goes weeks and months without losing a single day.

So you sell GBPUSD with a 20 point stop and the price rallies extremely quickly and stops you out. Ok fine you lost, but you only had 1/5 of your total size on. Sell 50 it goes up slowly 10 ticks sell another 50, goes up up another 5 sell another 50. It only has to go 7 ticks in your favour to break even, buy back when it goes 10 ticks back in your favour. One day it fails and price just moves up steadily, rarely happens though.

 

[Hotch]

It's nothing like averaging down.

 

[brettus]

It's nothing like averaging down.

yea it is in that you would never average down when the market is volatile. You would want to stop yourself out fast if the market is volatile, but when its struggling to move you're less inclined too. Basically you might aswell average down on your demo account, you will get the same result.

 

[Global World]

Personally, I have always been a little suspicious of "stops". There are a lot of people out there having as their only strategy to eat other people's stops. Usually being around 30pips (people putting 50p stops end-up losing all their money sooner or later) they are pretty easy to spot for someone looking. Other problem is your broker. No matter what they say about being independent, they always net-off positions in their books and if your stop represents a potential net loss for them they will execute it even if it's 1-2pips away. Ergo...beware!

 

[wackypete2]

I couldn't trade without stops. Stop loss orders are what keeps me disciplined. I sometimes exit before stop is hit but without the stop I usually get stupid and end upholding on to a losing position for longer than I should have. Kudos to traders that can trade without them and still keep their discipline!

Peter

 

[wackypete2]

Personally, I have always been a little suspicious of "stops". There are a lot of people out there having as their only strategy to eat other people's stops. Usually being around 30pips (people putting 50p stops end-up losing all their money sooner or later) they are pretty easy to spot for someone looking. Other problem is your broker. No matter what they say about being independent, they always net-off positions in their books and if your stop represents a potential net loss for them they will execute it even if it's 1-2pips away. Ergo...beware!

That's all part of the game. If you understand how they play you can trade around it. It's never easy of course.

Peter

 

[brettus]

http://tts.imtranslator.net/DeHp

 

[wackypete2]

http://tts.imtranslator.net/DeHp

Thanks, I'll be having hours of fun with that!

Peter

 

[wackypete2]

Brokers credo:

http://tts.imtranslator.net/DeKJ

Peter

 

[lewtz]

yea it is in that you would never average down when the market is volatile. You would want to stop yourself out fast if the market is volatile, but when its struggling to move you're less inclined too. Basically you might aswell average down on your demo account, you will get the same result.

His strategy is nothing like averaging down. You increase your position when you're averaging down, not moving your stop lower. I don't agree with his method, because you should indicate to yourself when the trade is over by knowing where price goes.

People talk about stopping for break evens, but then they miss out on other moves. The best thing you can do when you set a trade is get away. Let price move and either accept your profit or loss.

Personally, I have always been a little suspicious of "stops". There are a lot of people out there having as their only strategy to eat other people's stops. Usually being around 30pips (people putting 50p stops end-up losing all their money sooner or later) they are pretty easy to spot for someone looking. Other problem is your broker. No matter what they say about being independent, they always net-off positions in their books and if your stop represents a potential net loss for them they will execute it even if it's 1-2pips away. Ergo...beware!

No single person who is trading their own money has the ability to move price into a big stop order level. That takes a bank. Banks have a much more sophisticated trading style than, "haha i bet these newbies put a lot of stop orders there!" They have an intention, then they dictate where price is gonna go.

Also, when your trade is closed 1-2 pips prior to your level, you're probably not accounting for the spread.

 

[Hotch]

yea it is in that you would never average down when the market is volatile. You would want to stop yourself out fast if the market is volatile, but when its struggling to move you're less inclined too. Basically you might aswell average down on your demo account, you will get the same result.

Basically, you might as well of not read the thread. If you don't understand...ask, but don't just make **** up to try and look intelligent, you're not the church.

 

[trader_dante]

Imagine you're short, and you think over the next day or two, price is going to fall down to support level S, if price zooms off and gets close to S within 5 minutes, wouldn't you want to re evaluate, and maybe let it run, to see what happens, clearly the move is stronger than you anticipated.

I can't, obviously, speak for you but I, personally, have found the EXACT opposite with regard to targets.

If price zooms straight to my target I would always re-evaluate and then end up taking a loser.

 

[Hotch]

Maybe you just keep entering on spikes It's personal it's true, I just thought others might like to give it a go, I wasn't saying it's the only way to trade, just it had surprising results for me.