95% of traders lose... This is nothing more than a myth.

[tar]

Tight stops is good for newbies to protect their capital up to some point yes but it has nothing to do with making money , you may make money and you may not , and most likely you will not make money using tight stops , ie : if you trade cable with 3 pips spread , if it moved 10 pips against you your loss is 13 and if it moved in your favor 10 pips your profit is 7 pips , how are you going to make money ?!

 

[Splitlink]

Close stops are what keep traders alive. When I have practiced deeper stops I end up reverting to having closer ones. I feel much better being out of a trade that is not working the way I expected.

 

[tar]

If you use wider stops , ofcourse you have to adjust your dealing size accordingly , tighter stops means many consecutive losses = paying extra spread and commissions every time you enter a trade , you are a human you cant know what is the exact turning point , you have to give some room for prices to fluctuate and breath ...

 

[the hare]

Close stops are what keep traders alive.

Close or tight are context sensitive. 3 or 4 years ago, I knew people who where trading a similar method to me, and using stops half the size of the stops that I needed to use. Its all well and good them telling me that I should have halved the size of my stop, but it would been quite disasterous in my case as I wouldnt have benefitted on 1:2, 1:3, 1:4, 1:5 and above risk reward type trades that where actually responsible for most of my gains.

The point being, I was using as tight a stop as I could get away with at the time, and a tighter stop would have been detrimental.

As always on t2w, noone really acknowledges that a stop is one small component part of a highly synergistic and complex system, and actions that are beneficial in context A may be detrimental in context B

Dont get me wrong, I'm not advocating large stops but the size of the stop is of course irelevant, whats more likely to keep you alive, a 10 pip stop at 100 quid a point, or a 1000 pip stop at 1 quid a point ? the monetary losses are the same, but the frequency at which those stops will be hit are certainly not

 

[new_trader]

tighter stops means many consecutive losses

Sorry, but this is completely false. Incorrect timing means many consecutive losses.

you are a human you cant know what is the exact turning point , you have to give some room for prices to fluctuate and breath ...

You don't have to get the exact turning point to make money, in fact, being a little late in a move is the insurance you pay to make sure you are right.:idea:

 

[tar]

Sorry, but this is completely false. Incorrect timing means many consecutive losses.



You don't have to get the exact turning point to make money, in fact, being a little late in a trade is the insurance you pay to make sure you are right.:idea:

That's the point , if you use tight stops you have to get it right otherwise your stops will get hit more frequently . And remember my cable example 13 pips Vs 7 pips .

 

[The Leopard]

context sensitive...

...as I could get away with at the time...

...and actions that are beneficial in context A may be detrimental in context B...

Good post.

 

[new_trader]

That's the point , if you use tight stops you have to get it right otherwise your stops will get hit more frequently . And remember my cable example 13 pips Vs 7 pips .

I think you are missing the point. A trader has to get it right to make money, tight stops or not. You assume that a newbie has the skill to allow the correct amount of 'breathing room' in order to be right. They will start with a 5 point stop and if that is hit they conclude it needed to be 7 points to give the market more room to breathe...when that is hit they will make it 10 points...etc...I've been watching the ES market for over 6 years and there are still times where I think I've detected the turning point only to see the market move another 12 points. I'd be broke many times over if I traded with the 'breathing room' mentality.

 

[tar]

I think you are missing the point. A trader has to get it right to make money, tight stops or not. You assume that a newbie has the skill to allow the correct amount of 'breathing room' in order to be right. They will start with a 5 point stop and if that is hit they conclude it needed to be 7 points to give the market more room to breathe...when that is hit they will make it 10 points...etc...I've been watching the ES market for over 6 years and there are still times where I think I've detected the turning point only to see the market moves another 12 points. I'd be broke many times over if I traded with the 'breathing room' mentality.

You have to be right yes but if you use tight stops you have to be dead right that's what i meant which is impossible on the long run , not to mention the effect of trading costs on your trading if you use tight stops 13 pips Vs 7 pips ! , i think this forum mentality is one of the reasons why 90 or 95 % traders lose , trading forums are full of myths like that ... good luck ...

 

[Splitlink]

Close or tight are context sensitive. 3 or 4 years ago, I knew people who where trading a similar method to me, and using stops half the size of the stops that I needed to use. Its all well and good them telling me that I should have halved the size of my stop, but it would been quite disasterous in my case as I wouldnt have benefitted on 1:2, 1:3, 1:4, 1:5 and above risk reward type trades that where actually responsible for most of my gains.

The point being, I was using as tight a stop as I could get away with at the time, and a tighter stop would have been detrimental.

As always on t2w, noone really acknowledges that a stop is one small component part of a highly synergistic and complex system, and actions that are beneficial in context A may be detrimental in context B

Dont get me wrong, I'm not advocating large stops but the size of the stop is of course irelevant, whats more likely to keep you alive, a 10 pip stop at 100 quid a point, or a 1000 pip stop at 1 quid a point ? the monetary losses are the same, but the frequency at which those stops will be hit are certainly not

You have to take the time factor into consideration, as well. I have waited long periods for my trade to come right. When you are in a spot between break even and the stop you will still lose money if you close. The size of the stake that one may lose by closing prematurely is one of the factors that has persuaded me that it is preferable to stay tight.

 

[ega2freedom]

Question:

So is trading a case of not losing rather than winning?

 

[new_trader]

You have to be right yes but if you use tight stops you have to be dead right that's what i meant which is impossible on the long run , not to mention the effect of trading costs on your trading if you use tight stops 13 pips Vs 7 pips ! , i think this forum mentality is one of the reasons why 90 or 95 % traders lose , trading forums are full of myths like that ... good luck ...

What is this 13pip vs 7pip anyway? I said TIGHT STOPS not tight profits, you invented that bit

 

[The Leopard]

Question:

So is trading a case of not losing rather than winning?

There's a good line in Floored from a former pit guy - he says something like "It's not about what you win, it's about what you don't lose. There were guys that made way more money than me, but for some reason the market took it away from them".

I think a major improvement that most traders could make (certainly discretionary traders) is just to trade less.

 

[new_trader]

Question:

So is trading a case of not losing rather than winning?

In a way, yes. A newbie must fiercely and ruthlessly control losses so that they last long enough to become proficient at picking winning moves. Some here seem to think you will make money from the get go if you give the market enough room to breathe...that is pure insanity.

 

[ega2freedom]

There's a good line in Floored from a former pit guy - he says something like "It's not about what you win, it's about what you don't lose. There were guys that made way more money than me, but for some reason the market took it away from them".

I think a major improvement that most traders could make (certainly discretionary traders) is just to trade less.

New_trader...you seem like you know a lot about trading, thank you for the reply.

Why do so many new traders think they can "spank" the markets?

 

[tar]

What is this 13pip vs 7pip anyway? I said TIGHT STOPS not tight profits, you invented that bit

no i gave an example of 1:1 50/50 odds with 10 pips movement , now if your TP target is 100 pips is not important to me cuz the odds will change as well , but lets say 50/50 , 10 pips movement would have the effect of : 13pips :7 pips , i wanted to show you the trading costs effect if your are trading on a small scale , it has nothing to do with your trading style ...

 

[tar]

In a way, yes. A newbie must fiercely and ruthlessly control losses so that they last long enough to become proficient at picking winning moves. Some here seem to think you will make money from the get go if you give the market enough room to breathe...that is pure insanity.

I didnt say u will make money if you gave the market some room to breathe , not necessarily , what i said your odds will be better instead of having tight stops and getting chopped out by the smallest price fluctuation ...

 

[new_trader]

no i gave an example of 1:1 50/50 odds with 10 pips movement , now if your TP target is 100 pips is not important to me cuz the odds will change as well , but lets say 50/50 , 10 pips movement would have the effect of : 13pips :7 pips , i wanted to show you the trading costs effect if your are trading on a small scale , it has nothing to do with your trading style ...

There you go, that's why we disagree. You're talking coin flips, stabs in the dark, hit-and-miss trading, I am talking proficiency.

The End.

 

[tar]

There you go, that's why we disagree. You're talking coin flips, stabs in the dark, hit-and-miss trading, I am talking proficiency.

The End.

We disagree because you are talking about your trading style which i dont know , and i am talking about the idea of using tight stops to get better results which is a myth .

 

[The Leopard]

New_trader...you seem like you know a lot about trading, thank you for the reply.

Why do so many new traders think they can "spank" the markets?

Unrealistic expectations are crazy among retail punters.

Even crazier is the fact that you don't need to do a lot to become very wealthy.

I've pointed this out before, but:

Average net 1 point a day on ES with a large account (say, trading a hundred lot), you're looking at over a million bucks a year. All you need is to made modest gains and build size.

100 contracts ES will swallow without blinking. Ditto 200, 300.

I really don't know why people can't grasp this simple concept.