I Stopped Using Stops

[Fugazsy]

The way I see it.
Lets say im following a larger tf trend, By definition in this moment the trend is up. I merely hope that that situation continues (hope, another taboo).
I view short term falling prices as my opportunity. Ive no idea or view as to how deep they will be but I dont need to. I can manage size in and out at favourable prices, taking full responsibility for the trade in that moment. There is nothing for me to right or wrong about.



Like me, you dont know what will happen. Unlike me, you hand responsibility of the trade over to a stop, and put your self at further risk of bad execution. You are out, but you are at the worst price in that moment + any slippage, every single time. You dont give yourself the opportunity to turn -20 market into -10, -5, +5.
As far as being available, im still in what I see as the opportunity, you armt, subjective tho I agree.
As far edge goes, what is youe edge? Derived from price? You mean the same price that everyone sees? The same TA / patterns / profiles. That doesnt like much of an edge to me.

All in my view mate, no mallace.

This happen to me yesterday: I went long risking 5 pips, market moved in my direction of 5 pips and I moved my SL to BE, market comes back and I am out @ BE.

At the time of my entry I perceived bulls in control and I entered as a pullback, it was not, the PB after I got stopped @ BE was enough deep to make me realise the market as changed (which I could no know before the deep PB, anything can happen), after the deep PB prices went to revisit the recent high, there I shorted risking 5 pips and made 20.

Now If I did not have a SL on my first trade I would not be taken responsibility (anything can happen) for that trade and I would not make myself available for the second trade.

My point: I would be placing myself in a position to defend me being right instead of making myself available of what was offered and gain profits which is why we are here.

No mallace mate, it was clear to me, we are only sharing different points of view.

Fug

 

[sniper012]

In theory you're kinda doing the right thing because banks know where most people put their stops and the banks can push price in a particular direction and hit those stops. The reality is that you're still asking for trouble by not using a stop. We never actually know what the market is going to do but we can only try to tip the odds in our favor. I trade with a 20 pip stop in most cases and look for a 2:1 risk/reward at minimum.

 

[darktone]

Thanks Tim, sad to say I was never going to get there alone.

Now I understand the maths but I still don't get the point. The stop in this example would be a financial default stop at -92% of the account size. I'm racking my brains to know:

a) what practicable strategy could be used to trade £2k back to £25k in an acceptable time period. And that would have to assume no (or negligible) risk of further 92% losses in the meantime. And if there were such a strategy, why it wasn't already being used to trade the £25k.
Wouldnt waste time trading 2k back to 25k. Would run over the event to check that the play was sound and the player stable. Ie it was a market event.
"And that would have to assume no (or negligible) risk" id suggest you read this thread
Seriously tho. You are at risk,you are at risk. You Are At RISK!

b) what strategy would recommend a pro-active stop set with the broker at -92% of the account.
Any strategy that involves lots of leverage and a stop order.

The points Im trying to make:-
£ risk is not (entry - stop x size) as many like to believe.
Long only, 2k acc, Dax 11500:-
Trader 1 at 2pp is at risk for £23,000
Trader 2 (who trades with a stop) at 10pp is at risk for £115,000, whether they want to believe it or not.
Dax Quotes - 11500, 11510, 11511,1. Unless youre trading on the good graces of a bucket shop (guaranteed fills/stops), you aint getting out at -20! Even then, i reckon you might get the email. Due to blah blah blah, you owe us 90k.

That trading doesnt have to stop if the account gets wiped, as most serious traders respect leverage, understand the total notional risk, would only have a fraction of their risk capital in their margin account.
Our 25k constantly profitable trader would likely just peel off another strip of risk capital and go again.
Mind you, if Dax printed ticked 1, prolly better off shooting down tescos and max out the card tinned food!

I asked you what it would mean emotionally to have the account wiped. Cos for most im guessing it would a pretty traumatic experience.
They would have failed, be wrong, be usless, have been f**d over, Or any other stick conjured up by the mind to beat on its owner.

oops sorry, forgot about a anb b lol

 

[Forexmospherian]

The points Im trying to make:-
£ risk is not (entry - stop x size) as many like to believe.
Long only, 2k acc, Dax 11500:-
Trader 1 at 2pp is at risk for £23,000
Trader 2 (who trades with a stop) at 10pp is at risk for £115,000, whether they want to believe it or not.
Dax Quotes - 11500, 11510, 11511,1. Unless youre trading on the good graces of a bucket shop (guaranteed fills/stops), you aint getting out at -20! Even then, i reckon you might get the email. Due to blah blah blah, you owe us 90k.

That trading doesnt have to stop if the account gets wiped, as most serious traders respect leverage, understand the total notional risk, would only have a fraction of their risk capital in their margin account.
Our 25k constantly profitable trader would likely just peel off another strip of risk capital and go again.
Mind you, if Dax printed ticked 1, prolly better off shooting down tescos and max out the card tinned food!

I asked you what it would mean emotionally to have the account wiped. Cos for most im guessing it would a pretty traumatic experience.
They would have failed, be wrong, be usless, have been f**d over, Or any other stick conjured up by the mind to beat on its owner.

oops sorry, forgot about a anb b lol

I trade FX with brokers who have a negative balance risk policy - set in stone and confirmed

If I trade with say a $10k live account on even 500 to 1 leverage and we have another "black swan" - and I am in a trade on 5 lots in the wrong way and the market goes 2000 pips against me - my maximum exposure is 10k not $100k or $500k or any other figure the broker can come up with.

I have not got a clue with indices etc - just FX

Going back years ago I did get an account up over $200k - and it had no negative balance protection in those days - worrying when I look back.

Nowadays I would risk up to $70k in a capital account as a max - as the probability of losing its all is very very low - but I am encouraged as an experienced successful intraday trader to have a smaller capital account with higher leverage - its less risk for me - and if I lost $10 or $20K on a major "black swan" - i would expect to make it back within 4 -6 weeks anyway

Regards

F

 

[darktone]

People can invent all the idiotic hypotheticals they want to try and prove a point. I've been at this game now for almost 10 years. In that time I've traded through the global financial crisis, the flash crash, the US debt downgrade, the Greek "tragedy"...and I always used a close stop. No hypotheticals needed, just pure experience and an understanding of what is what and what is not!

Ive 15 years in, so what!?
Hypothetical? Unfortunately, Tom Baldwin, Jimmy Balodimas, Joe Viditch are all very real, high profile, intensely successful professional traders, who didnt and dont use stops.
Now im gona go out on a limb here, but id bet that these guys level of understanding outstrips yours as the sun does to a candle.

Schwager:-
What is your opinion on stop orders?
Joe Vidich:-
They are for fools.

Whoa, bit harsh there Joe!
But in your case nt, im willing to let it slide.

 

[darktone]

For me it's very simple, let the flowers bloom and pull out the weeds when they are small. Why anyone should sit watching themselves lose money in a trade is beyond me ! I've been trading for a living for 15 years and staying in good situations and getting out of bad ones fast works ! Having small losers is the cost of doing business, simple as that.
Embrace small losses, they come with the territory.

Good / bad / right / wrong. I should add up the times these words are used in this thread.
If you take a closer look at what ive presented, you might see that during the trade its a constant process of managing the position, scratching trades you dont want, always looking for the 'better' price. Scratching these positions at + / - , its all the same to me.

A stop always executes you at the worst price of the moment, or worse!

Its what you dont lose that counts.

 

[tar]

"A stop always executes you at the worst price of the moment, or worse! "

What does that mean ? at the moment of executing your trade there is only one price you don't have a choice , and many times after the SL is triggered the market continues to fall . Its ok if you don't use a stop loss pending order or if you scale-in in a small size , but at the end you have to exit bad trade/s , and the notion that the market comes back 90% of the time is a myth , the market doesn't come back .

Short Gold at 400

Long Cable at 2.05

Long Cable at 1.9

Long cable t 1.8

Short Cable at 1.4

Long EUR at 1.39

Short Dow at 12000

Long oil t 106

Long Gold at 1820

Long Silver at 40

Long silver at 30

Long silver at 25

Short FB at 22

Short FB at 30

Short FB at 40

Short FB at 60

Short Dax at 8800

Long Dax at 12300

Short F at 3.5

Long AU at 0.9500

etc

 

[darktone]

Darktone

The first two statements are contradictory aren't they?

I know its a subjective one but I dont think so.

"Hey, where you think the markets going?"
1) One sec , ill just check. The last 4hr close was above the ma (or any other way of defining direction) so it has been going up. You can ask me again at 3'oclock. Thats all I got.

or

2) The 4hr trend is up! price has closed above ma, weve just bounced off support, coincided with the 50 fib, the bullish index has just turned up and nt is buying the breakouts!
Im expecting prices to rise to xyz no later than friday because blah blah blah

so how you gona trade it?

1) Well im buying falling 1 min prices (seeking value). No idea how deep they gona go but im sure i can manage (get it :cheesy. Hopefully the 4hr will stay on track and Ill get some. Who knows eh.

or

2) Im buying the 123 breakouts with a stop 2 ticks below the LL in the 1min after 9am and when rsi is above 30, back tested all o that so I know it to be best signal. Any retrace below xyz is a no trade because the 4hr trend is changing. If i get stopped out of 3 trades in a row ill stop and re-evaluate.

To me, one trader thinks he knows something about future prices, the other doesnt.

It's funny but I see the third one the other way round. I think having the stop takes responsibility for the trade being "wrong" whereas you are taking the route of not accepting that you have been "wrong" and trying to trade yourself out of the "wrong" trade instead.

Wrong, theres that word again.
1) trader has nothing to be right or wrong about. Hes viewed the past and hopes the situation will persist.
2) trader has given himself something to be right or wrong about, by building a picture of what the market will do in the future.

You given me something to think on at responsibility Jon, interesting. Both a limit and stop are, as such handing over responsibility of the trade to the order.Both orders end the opportunity of that particular trade. although one does it at better prices and the other at worse prices.
Edit:- Better/ worse. Lets change those to favourable / unfavourable.


I get the argument that you can't always get your timing bang on and it's a perfectly acceptable strategy to build a position through a range of prices. ie: I'm gonna start buying at 250 through 225. It's also true that you will often finish up profiting when others have taken a loss, but that assumes that they have not re-entered (which, in effect, is pretty much what you are doing, reaction exits aside).

I think that the normal forward and back rhythm of the market will generally save you and mostly give you your profit, but the abnormal will likely be extremely painful and undo much that you may have achieved.
I can agree with most of that Jon. The only thing Id add is that what we initially see as 'extremely painful' price action as a stop trader, turns to kinda average and sometimes very profitable action as a limit trader.

I sure havent learned to type any faster. Lard Jebus!

 

[sharesr4us]

Guys there is no such thing as "no stop" , your account balance is limited , your account balance is your stop , so technically this thread is about trading with a very wide stop 1000 pips 3000 pips , and aiming for 20 points or 200 points as a profit target !

Surely if your account balance is your stop, then how come brokers chase you for money when a black swan event happens? For example with swiss crisis, many people were caught out and went into negative territory..i.e. their losses were more than the amount they had in their accounts and I believe they faced bankruptcy.

Also, those who trade without stops, wouldn't it be better to have a stop many pips away, i.e. less chance of your stop triggering in too early, before the market goes in your favour?

For example lets say a trader places a Buy Limit that DAX which is currently at 10000 is to go up (500 points limit), but doesn't put a stop...he can end up with supposedly unlimited losses, can't he???? but whereas if he had put a stop at lets say much further at a 1000 points, then at least he may have some protection against total annihilation??

 

[tar]

Time stop is an another option , example close all by EOD .

 

[NVP]

Time stop is an another option , example close all by EOD .

a lot of traders in all timeframes use time stops ..........even scalpers will chose to close sometimes if the window is not yielding expected results

 

[Forexmospherian]

A question to @darktone

Would you ever use a trailing stop or a fixed stop that is already in a profit ?

Regards


F

 

[darktone]

If it works for you - then no one can say you are 100% wrong

Cheers F, lets go of the reservation a bit and devle into psych. All a work a in progress so forgive me it gets a bit fuzzy.

BUT

By accepting a stop - and a loss - you are ADMITTING - that your are wrong - ie NOT right
There is nothing for me to be wrong or right about.

You are admitting - you are not bothered about your ego - you take the punch and accept it - ie you are wrong and the stop as confirmed it - along with a loss of money in your account.
Theres no ego, theres no punch to take, theres nothing to be wrong about. If I close the individual trade it can be + / - but its irrelevant in that moment.


You are being humble
Im being (or at least aiming to be) present, nothing more or less.

You are saying that the market can beat me - ie you are accepting a loss
The only thing that can beat me in this game, is me. Is if I allow the pictures my mind paints to take me out of the present.

AND

By doing that - you will end up with more profit and rewards over time than by playing the game of - "never accepting you are wrong"

The classic case for me is Marius the private fund manager already mentioned - ie waiting up to 12 months plus to get back into a profit on a trade and having to use extremely small stake sizes on trade entries to allow for massive pip drawdowns - and capital tied up - not making him anything and in fact costing him money.
Well that doesnt compare much with what im presenting F. The average campaign lasts around 30 minutes.
Your buddy thinks he knows something. Seemingly one of them being that the market always comes back to give you a profit.

The stronger pysch comes with the trader admitting he's got it wrong and living with it and accepting losses - knowing his strategy will still produce the gains to overcome any losses incurred.
I wouldnt call it stronger pysch. Perhaps realistic pysch. Or perhaps no words can really describe it.
Hard to describe, and really, you dont need to understand it lol. You just have to accept, accept the moment and be present, so that in trading at least you are free to take action in your favour.

It's a bit like going backwards - to move forward - its more efficient to do it if your strategy is geared to high RR's - low drawdowns - and not having to have a 97 - 100 % win ratio - when 65 -80% is more than adequate in the overall equation - especially if you are a retail trader with accounts under $250 k
In my time, the vast majority of it as a stop user. ive done a lot of backwards and forwards. Been a survivor for most of it, before graduating to 'survivor plus a bit'. I believe its poor way to play the game

Just my opinion - but like Fugazsy and timsk - I agree its good to discuss all the alternatives and to hear different opinions
Certainly, discussion is always good.


Regards


F

cheers

 

[darktone]

This happen to me yesterday: I went long risking 5 pips, market moved in my direction of 5 pips and I moved my SL to BE, market comes back and I am out @ BE

At the time of my entry I perceived bulls in control and I entered as a pullback, it was not, the PB after I got stopped @ BE was enough deep to make me realise the market as changed (which I could no know before the deep PB, anything can happen), after the deep PB prices went to revisit the recent high, there I shorted risking 5 pips and made 20.

Now If I did not have a SL on my first trade I would not be taken responsibility (anything can happen) for that trade and I would not make myself available for the second trade.

My point: I would be placing myself in a position to defend me being right instead of making myself available of what was offered and gain profits which is why we are here.

No mallace mate, it was clear to me, we are only sharing different points of view.

Fug

Well, you say you were risking 5pips. Id say you were risking far more that.
If the market were to tick '1' after your entry but before your stop had been filled, then you getting filled at 1.
From there it depends on what your broker offers, guaranteed stops, no neg balance etc. And then the good grace of the broker to make good on that offer.
Thats how i see it.

Responsibility: I realise now thats a bad way to put it. With either a stop or limit, you giving up responsibility to an order that will execute at some point in the future. Not to say that you cant hit the market before the order executes mind.
Its more about how youre setting your orders up to execute in the future and what that means to you.

Your conversation with the market:-
Hey buddy, price is x, what you wana do?
ill buy that price thanks. Oh, but if you offer me -5 ill take it (your stop)
Hey buddy, +2, 100% of this move, deal?
No thanks mate. Oh, but if you offer me -5, ill still take it.
Hey buddy, +5, 100% of this move, deal?
No thanks mate. Oh, but if you offer me 0, ill take it.(moved your stop up)
SOLD at 0!
Cheers mate.

And so ends your opportunity in this current play.


Through the pullback the market was always talking to you. But you didnt want to play and stood aside, for whatever reason.
The market then retraced, talking to you all the while.

Hey buddy, the price is at xy, what you wana do?
Ill sell that price please mate, Oh, but if you offer me -5, ill take it (your stop)

Now from here I dont know if you took your 20 profit on a stop / limit / at market.
But if it was on a stop, at some point the market said.

Hey buddy, + (whatever the MFE later turned out to be). you wana take 100% of this move?
No thanks mate. Oh, but if you offer x points less than this for x% less than 100% of this move at +20, ill take it. (your stop)
SOLD at +20!

---------------------------------------------------

If Id started buying when you did, also not knowing how deep the pb will be. The market would have had the same conversations with me, just a whole lot more of them cos i got my size divided up
Theres just one subtle difference, Im always looking for prices in my favour.

Hey buddy, -15, 100% of this move, whatcha wana do?
No thanks mate, Oh but if you offer me -5, Ill take it (my limit order)
Hey buddy, -25, 100% of this current move, deal?
No thanks mate, oh, but if you offer me -10, ill take it (moved my limit)

Over the course of the PB id have had many conversations with the market. Overall I might have lost a little bit, broke even, made a little bit all the trades ive scratched, but id still be in the game, likely with a position averaged near the lows, id still have the opportunity to profit when that retrace to the highs took place.

Hey buddy, +35, 100% profit on this move, deal?
No thanks mate, but ill take +40 if you offer me it.
SOLD at +40!

If I wanted to sell the market when you chose to start selling, theres no reason why i couldnt. Id say that perhaps its not me thats missed the opportunity here.

All subjective because i wasnt there. But i do know how id play it.

 

[darktone]

In theory you're kinda doing the right thing because banks know where most people put their stops and the banks can push price in a particular direction and hit those stops. The reality is that you're still asking for trouble by not using a stop. We never actually know what the market is going to do but we can only try to tip the odds in our favor. I trade with a 20 pip stop in most cases and look for a 2:1 risk/reward at minimum.

I could be wrong, but i reckon big guys push the market around to puke out the little guys.
Be unpukeable.

 

[darktone]

"A stop always executes you at the worst price of the moment, or worse! "

What does that mean ? at the moment of executing your trade there is only one price you don't have a choice , and many times after the SL is triggered the market continues to fall . Its ok if you don't use a stop loss pending order or if you scale-in in a small size , but at the end you have to exit bad trade/s , and the notion that the market comes back 90% of the time is a myth , the market doesn't come back .

Short Gold at 400

Great point in bold, and you sir, along with Jon have helped clear my view on things.
In any moment there is only one price (that excludes spread gents!). When we place and order, we hope, or not, that it will execute at some point in the future.
A stop order always executes at an unfavourable price in the future.
A limit order always executes at a favourable price in the future.

Theres one o them words again, 'bad' .

the market doesn't come back

Lets have a look at that. Ill pick Gold, for no particular reason! :whistling

Short 400!
Ok, we got Fxmofos mate whos still short gold. Filed away in acc 88888, hes been waiting on 400 again for years. Thankfully, hes savy enough to keep it small, and been a busy boy fading other stuff thats been profitable, still got enough punters to cover the monthlys on the ford focus.

Whats the market saying to him right now?
Heeeeey buddy, -775, 51% of this mama jama multi year move....Deal?
No thanks mate. But if you offer me 399 ill deal! (Well, at least hes using a limit eh! )


Now I heard, on the grape vine, that this guy was advised to set a stop! At 1919! By a now very prominent, devastatingly smart yet back then very inexperienced, T2W member!
Apparently,, 1919 was the ultimate break out level for gold and that if 1919 went, then gold would see 10,000+ before the end of 2013! Legend has it that said T2W member filled his boots at 1920! He doesnt talk about it much... :cheesy:

Being a complete fool, Fs mate didnt set the stop.
The markets offering him every moment its open but he just cant bring himself to execute. Poor chap is a victim of his beliefs.

sai la vie


PS

Long Gold at 1820

Hmmm, you think gold wont 'come back' to that? Well see shall we. And if I dont. I know a certain someone definitely will!!
Heeeey you arrogant Ɉǚɔk, You wana take -100 on that!?
Whaaat!! Only a fool would take less than 10,000 before 1st april 2016!!:smart:

 

[darktone]

I trade FX with brokers who have a negative balance risk policy - set in stone and confirmed

Regards

F

I comprende F. If youre dealing with those guys trading size relative balance then it gives you a card to play in a black swan. In my experience those offers tend to disappear pretty quick when the punters start to use them.
To me, our entire financial system is a house o cards. Theres no such thing as set in stone.


Riiiiiiing
"hello dealing desk"
Hi. I was just wonderin. I got an email from you guys saying that due to market conditions youre not offering guaranteed fills anymore. Is that true?
"No were not offering that anymore."
Ok, how come?
"Cos were getting killed!"
Really, no shìt.

A question to @darktone

Would you ever use a trailing stop or a fixed stop that is already in a profit ?

Regards

F

Have done that to death in the past. Now? Never.

 

[mike.]

Riiiiiiing
"hello dealing desk"
Hi. I was just wonderin. I got an email from you guys saying that due to market conditions youre not offering guaranteed fills anymore. Is that true?
"No were not offering that anymore."
Ok, how come?
"Cos were getting killed!"
Really, no shìt.

Love these little hypothetical scenarios...

 

[darktone]

Love these little hypothetical scenarios...

Youl like it even more then when you realise that this one was a conversation that I actually had!
p

 

[mike.]

Youl like it even more then when you realise that this one was a conversation that I actually had!
p

Ahh yes, remember the guy and the thread now, must of missed that post though