The only way to make money trading is to make more than you lose.....when u shift the stop to breakeven, u have a free trade...when u have the right system, the initial stop is very tight, and quickly goes to free trade position...it ain't rocket science...I doubt seriously if the 5% club {profitable traders} has a high representation on trade2win journals....especially this one....
Interesting thread.......I try and position trade...at most in the trade for one week....when i started off, i placed tight stops (dow)......i would get stopped out but the Dow would then rocket in the direction of my previously placed trade!
Started putting looser stops...was working.
I have placed a couple of trades without stops (only small amounts eg £2 per point/£3 per point spredbetting)......i did then place stop at breakeven plus some profit and trailing thereafter.....but stopped out(with profit) however, dow continued then to go in the direction of the placed trade.
whilst i am happy with the profit rather then loss.....
If however, i was trading intra-day(which does seem the place to be to catch the swings for the day and potential of making more money)...the risk must be matched too...therefore stops must be a "must"?
Started putting looser stops...was working.
I have placed a couple of trades without stops (only small amounts eg £2 per point/£3 per point spredbetting)......i did then place stop at breakeven plus some profit and trailing thereafter.....but stopped out(with profit) however, dow continued then to go in the direction of the placed trade.
whilst i am happy with the profit rather then loss.....
If however, i was trading intra-day(which does seem the place to be to catch the swings for the day and potential of making more money)...the risk must be matched too...therefore stops must be a "must"?
SOCRATES
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Now that I have recoverd from a fit of giggles, I will tell you that you have not a clue as to what it is I do or why, and, furthermore I will ensure it remains so.ducati998 said:
But what I find particularly hilarious in your post above is the following, and I quote :
"for me, the market while not irrelevant, is not the final arbiter of my decisions">
So who is the final arbiter of your decisions ? The Archangel Gabriel ?
Nonsense you post ducatti, really !
DARK,
Again there is no distinguishing in the above between MARKET RISK, and ACTUAL RISK.
They will at times be the same, but all too frequently they are not.
Stoploss is a method for managing market risk, but it does not evaluate market risk, and as such more often than not costs you money, directly contributing to your losses.
ROGUE,
Yes, of course, however, even utilising TA, there is a methodology that can be employed that has no need of a stoploss.
Actually almost the exact opposite. The assumption is that the future is an unknown, and as such a source of hazard...............to be guarded against.
TA, however makes the assumption, that based on the CHART PATTERN, that the FUTURE will closely resemble the pattern identified.............the trend in that timeframe will continue.
Of course the high rate of failure with this paradigm is proven by the need to run a stoploss.
A hazard to be guarded against.
Incorrect.
True.
No, use an APPROPRIATE tool to manage your risk.
PORGIE,
Not even warm my friend.
On this thread there is myself, in the 1 camp, KIWI, hovering inbetween, and all the rest in the other camp.....................
BAKULA
Just be careful to not confuse "STOPLOSS" as a factor.
Trade selectivity is the true issue here.
Stoploss was the title of the thread, to highlight the problem with trade selectivity.
cheers d998
Again there is no distinguishing in the above between MARKET RISK, and ACTUAL RISK.
They will at times be the same, but all too frequently they are not.
Stoploss is a method for managing market risk, but it does not evaluate market risk, and as such more often than not costs you money, directly contributing to your losses.
ROGUE,
Yes, of course, however, even utilising TA, there is a methodology that can be employed that has no need of a stoploss.
Actually almost the exact opposite. The assumption is that the future is an unknown, and as such a source of hazard...............to be guarded against.
TA, however makes the assumption, that based on the CHART PATTERN, that the FUTURE will closely resemble the pattern identified.............the trend in that timeframe will continue.
Of course the high rate of failure with this paradigm is proven by the need to run a stoploss.
A hazard to be guarded against.
Incorrect.
True.
No, use an APPROPRIATE tool to manage your risk.
PORGIE,
Not even warm my friend.
On this thread there is myself, in the 1 camp, KIWI, hovering inbetween, and all the rest in the other camp.....................
BAKULA
Just be careful to not confuse "STOPLOSS" as a factor.
Trade selectivity is the true issue here.
Stoploss was the title of the thread, to highlight the problem with trade selectivity.
cheers d998
Bad stop locations are rooted to bad money management and/or uncertainty about the trade selection. Don't get me wrong here, nobody can be absolutely certain about trade selection, but, putting to much capital into a trade can certainly lead to a tightening of the stop location.
RB,
The above is true, however it does not address the real issue.
Which is.
If you had a true quantifiable, statistically sound methodology,
With a statistically sound risk management methodology,
Then the methodology would not require a stoploss.
It is because TA is not a quantifiably statistically sound methodology,
That statistically sound risk management CANNOT be put into place.
You are forced by circumstance of a shoddy methodology to substitute a tool stolen from professional gamblers to ensure survival.
If you survive, just maybe, you can turn a profit.
cheers d998
The above is true, however it does not address the real issue.
Which is.
If you had a true quantifiable, statistically sound methodology,
With a statistically sound risk management methodology,
Then the methodology would not require a stoploss.
It is because TA is not a quantifiably statistically sound methodology,
That statistically sound risk management CANNOT be put into place.
You are forced by circumstance of a shoddy methodology to substitute a tool stolen from professional gamblers to ensure survival.
If you survive, just maybe, you can turn a profit.
cheers d998
barjon
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Ducati
Are there not two diiferent and distinct sorts of stop loss - fixed and "natural".
A fixed stoploss is a straight risk management quantum - 10 points, 2% or whatever - and if Kaufman's statistical analysis is right (my post http://www.trade2win.com/boards/showpost.php?p=184341&postcount=39) they may give inferior performance and point to a better form of risk management. He suggests position size.
A "natural" stop loss is a different kettle of fish entirely. That is set at the point where subsequent events and associated price movement would lead the analyst/trader to conclude that the reason for entry was no longer valid. For the TA adherent this is likely to be confirmation of pattern breakdown (when the bold might stop and reverse) and for the FA adherent it's likely to be when subsequent information indicates that the stock is now overvalued. The advantage for the TA camp is that they can quantify the loss they will take in advance whereas the FA camp have to take whatever price is available when their criteria no longer apply (eg: sell if forecast eps falls below x and forecast yield falls below y).
However good your trade/investment selection it surely makes sense to have thought in advance about when you're going to exit, whether that be at a loss or at a profit.
good trading
jon
Are there not two diiferent and distinct sorts of stop loss - fixed and "natural".
A fixed stoploss is a straight risk management quantum - 10 points, 2% or whatever - and if Kaufman's statistical analysis is right (my post http://www.trade2win.com/boards/showpost.php?p=184341&postcount=39) they may give inferior performance and point to a better form of risk management. He suggests position size.
A "natural" stop loss is a different kettle of fish entirely. That is set at the point where subsequent events and associated price movement would lead the analyst/trader to conclude that the reason for entry was no longer valid. For the TA adherent this is likely to be confirmation of pattern breakdown (when the bold might stop and reverse) and for the FA adherent it's likely to be when subsequent information indicates that the stock is now overvalued. The advantage for the TA camp is that they can quantify the loss they will take in advance whereas the FA camp have to take whatever price is available when their criteria no longer apply (eg: sell if forecast eps falls below x and forecast yield falls below y).
However good your trade/investment selection it surely makes sense to have thought in advance about when you're going to exit, whether that be at a loss or at a profit.
good trading
jon
Hello Ducatti. Well, putting it like that gives me the impression that you never get it wrong, i hope you don't, and good luck to you in the future! But, if that is the case, it seems to go against the grain a little. Method wise/trade selection, some people maybe happy to accept a certain amount of losers, and not try to refine thier strategy, i can only guess about this. But on a more positive note, it would be ideal if we could all iron out our mistakes. As mentioned before by somebody, i would guess that you do not short term trade and probably have a considerable percentage of your capital tied up in the market for any given position(s). There is another question though i would like to ask you, if you don't mind. What factor(s) do you use to determine trade selection, if not the market itself? Good trading, Rude.
Glenn
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DCducati998 said:
Reading your reply is like wading through treacle.
What seems very clear is that you are either deliberately ignoring what is being said to you and thereby necessitating further repetition and reminders of what has already been stated, or you are deliberately twisting it for some reason.
This is not helping you at all. It is just lengthening the thread unnecessarily.
I will have one more attempt to respond, but have many more important things to do at the moment. It will have to wait, except for one brief point you made:-
"You yourself declined to participate, citing secret methodology, or some such. Therefore we shall never see a true expert at work, utilising the cutting edge of TA."
All I said was that I had an edge, nothing more. That does not mean that I am a true expert or that I am not, it just means that I have an edge. There is no need to twist or embellish what I said, whether for sarcastic or any other reason.
I declined to participate because it would expose the edge.
There is no benefit to anyone in just saying "Go long now", "Exit now" etc and getting it right without explanation, and I have no need or wish to prove anything by so doing.
I have posted price targets elsewhere in the past and been accused of moving the market against other peoples positions. The flak and anger caused was just clogging up the board with useless rubbish for people to wade through - something I hate. In the end I just left and let them get on with it.
Glenn
BARJON,
#1............
"that the reason for entry was no longer valid"
This is a very relevant point, and is the reason for including "RISK MANAGEMENT"
However, Risk management does not = Stoploss.
This goes back to Trade Selection.
What is your REAL RISK?
What events must occur or not occur, for assumption of real risk to your capital?
What is your reward?
What events must occur, or not occur, for you to realise your reward?
Are the two correlated in any way?
#2...............
"For the TA adherent this is likely to be confirmation of pattern breakdown "
And therein lies the problem.
A pattern breakdown is a "Market" risk.
Through the assumption of a stoploss you make reality of the market risk.
To consistently profit from the market, you must divorce yourself from market risk, or the psychological excesses of the market, based on nothing but sentiment, and wooly thinking.
The overwhelming mindset on this forum is one of making FAST money.
FAST money means fast-timeframe.
Fast timeframe means trading fast momentum.
Fast momentum means you need to guess where others WILL go, and join them just as they start..............hence the requirement for a stoploss.
If you have correctly analysed your position viz Reward and Risk, and have employed the correct risk management methodology, even should what you say be true, viz exit at a random price, you can still exit with a small profit.
cheers d998
#1............
"that the reason for entry was no longer valid"
This is a very relevant point, and is the reason for including "RISK MANAGEMENT"
However, Risk management does not = Stoploss.
This goes back to Trade Selection.
What is your REAL RISK?
What events must occur or not occur, for assumption of real risk to your capital?
What is your reward?
What events must occur, or not occur, for you to realise your reward?
Are the two correlated in any way?
#2...............
"For the TA adherent this is likely to be confirmation of pattern breakdown "
And therein lies the problem.
A pattern breakdown is a "Market" risk.
Through the assumption of a stoploss you make reality of the market risk.
To consistently profit from the market, you must divorce yourself from market risk, or the psychological excesses of the market, based on nothing but sentiment, and wooly thinking.
The overwhelming mindset on this forum is one of making FAST money.
FAST money means fast-timeframe.
Fast timeframe means trading fast momentum.
Fast momentum means you need to guess where others WILL go, and join them just as they start..............hence the requirement for a stoploss.
If you have correctly analysed your position viz Reward and Risk, and have employed the correct risk management methodology, even should what you say be true, viz exit at a random price, you can still exit with a small profit.
cheers d998
Glenn,
Actually I try and respond to all views and opinions.
It may however be that the view or opinion being propounded is one I disagree with.
But I will await your example.
Then my friend you should make criticisms on the material, not on the person.
You wish to attack me personally, fine go ahead, I'm a big boy, but don't cry about it when it comes back and bites you on the ****.
See, if you believe my knowledge to be rudimentary, fine, explain why you believe the analytical techniques employed to be rudimentary. You have an audience just salivating for TA wisdom.
Example #2,
Possession of considerable stats. etc. "Unique" position, tsk, tsk, wanting to make me look arrogant.............just ask, I'll fully admit to being arrogant, don't bother insinuating, I dislike cowards.
What exactly does my dayjob have to do with this thread?
Oh, possibly that I am not a "Professional Trader"
How do you define "Professional"?
I define it as being paid.
If you have something to offer it..........then be my guest.
If not, don't waste my time.
Cheers d998
Actually I try and respond to all views and opinions.
It may however be that the view or opinion being propounded is one I disagree with.
But I will await your example.
Then my friend you should make criticisms on the material, not on the person.
You wish to attack me personally, fine go ahead, I'm a big boy, but don't cry about it when it comes back and bites you on the ****.
See, if you believe my knowledge to be rudimentary, fine, explain why you believe the analytical techniques employed to be rudimentary. You have an audience just salivating for TA wisdom.
Example #2,
Possession of considerable stats. etc. "Unique" position, tsk, tsk, wanting to make me look arrogant.............just ask, I'll fully admit to being arrogant, don't bother insinuating, I dislike cowards.
What exactly does my dayjob have to do with this thread?
Oh, possibly that I am not a "Professional Trader"
How do you define "Professional"?
I define it as being paid.
If you have something to offer it..........then be my guest.
If not, don't waste my time.
Cheers d998
roguetrader
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roguetrader said:
ducati998 said:
Interesting, from that response i assume then your particular brand of FA, does not rely on research and examination of a corporation's financial statements and balance sheets to predict the future price movements of their securities. Nor study past records of assets, earnings, sales, products, management and markets to predict future trends. You simply post commentary on these with your trades to pass time.
And a FA follower does not assume the likelyhood of future performance matching or exceeding past but rather just puts money to work as it is idle, a novel philosophy.
ducati998 said:
contradicted by............
ducati998 said:
Which is in essence incorrect since it merely identifies one facet of TA with which you seem fixated.
Ducati,
In my post earlier, I mentioned that one method of managing risk without stop losses is you buy a stock with say 5% of your capital, use no margin and hold as long as you need.
I cannot think of any other way: could you give an example? Thanks.
You mentioned something about Frugi revealing an alternative (post 23). Are you writing an article in the Knowledge Lab section?
In my post earlier, I mentioned that one method of managing risk without stop losses is you buy a stock with say 5% of your capital, use no margin and hold as long as you need.
I cannot think of any other way: could you give an example? Thanks.
You mentioned something about Frugi revealing an alternative (post 23). Are you writing an article in the Knowledge Lab section?
peterpr
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TA is not a methodology - sound or otherwise. Neither is FA. Both are trading/investing toolsets to be incorporated or not in a trading/investing methodology. Regardless of what you may choose to believe about its validity, a substantial proportion of the funds committed to trading/investing in any instrument are committed on the 'evidence' of TA. In other words, if enough people regard a particular unfolding pattern or price level, or whatever, as significant, then it becomes significant and therefore potentially tradeable. No amount of semantic logic-chopping or contrary belief will change that simple fact. The trick is to identify such trading opportunities and have the balls to act on them.ducati998 said:
So, for me, TA tools are just one way of helping to assess the trading/investing psychology that brought the market to where it is and will take it to where it is going during the next whatever timeframe.
Funny how nobody has taken up the point about the suffix 'loss'. Could it be that it has something to do with psychology too? For example, I make strenuous efforts not to monitor any trade in terms of either profit or loss. I think P & L should be totted up as an accounting excercise at the end of the appropriate period just like any other business. In the meantime I have a job to get on with and it isn't the job of an accountant either. I have a business plan that will produce my required income provided I achieve my points X contracts target. I therefore focus on points and contracts - to the point that I do not even display the running p/l on TWS. That is why a stop for me is emphatically NOT a stop LOSS, it is simply one of a number of trade management tools employed to get me to my points X contracts target.
ROGUE,
My response Incorrect.
Let me expand.
Makes use of past data...........correct.
Projections................................some do certainly, I don't.
Assumes nothing detrimental will occur.........incorrect, I assume a worst case scenario.
Yes there is, and it will I presume be posted in due course by FRUGI.
Sure, you want to trade the reversal, but the reversal is suggested by past data, and you will then require it to trend for X amount of price or $value, should it not REVERSE but continue, then the STOP is required.
cheers d998
My response Incorrect.
Let me expand.
Makes use of past data...........correct.
Projections................................some do certainly, I don't.
Assumes nothing detrimental will occur.........incorrect, I assume a worst case scenario.
Yes there is, and it will I presume be posted in due course by FRUGI.
Sure, you want to trade the reversal, but the reversal is suggested by past data, and you will then require it to trend for X amount of price or $value, should it not REVERSE but continue, then the STOP is required.
cheers d998
roguetrader
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ducati998 said:
Thanx for expanding, I realise you are dealing with a fair amount of comment.
Re: TA without stoploss, i am already familiar with at least one such strategy.It will be interesting to compare
It is why I asked for a definitive definition of a stoploss originally to ascertain how many others there may be.My father was an investor who never used stoplosses, however he did on occasion extract himself from trades that no longer exhibited the qualities that caused him to enter the trade, this was of course a discretionary stoploss whether he saw it that way or not.
Partly my point about one facet of TA. In my view if you look at the concepts of trading the market and remove fundamental analysis everything that is left falls under the remit of "technical" trading
PRATBH,
Diversification, ( one of several methods ) spot on, and when employed under the correct stock selection methodology, a statistically sound method of risk management.
Yes, it has already been written.
The "No stoploss" component was always going to be contentious, hence the thread to pre-empt the outrage.
cheers d998
Diversification, ( one of several methods ) spot on, and when employed under the correct stock selection methodology, a statistically sound method of risk management.
Yes, it has already been written.
The "No stoploss" component was always going to be contentious, hence the thread to pre-empt the outrage.
cheers d998
PETERPR
Absolutely true. No argument.
There would also anecdotally seem to be much disatisfaction with returns from professional management generally?
True. And you need to "identify" their "beliefs" via the .......chart, P&V, ???
And here we also agree, absolutely.
I have the balls to go with a no stoploss based on my analysis.
Do you?
If not, WHY NOT?
That analogy has already been made.
It is my contention, and based on a certain amount of research, that STOPLOSSES do exactly that.............decrease your bottom line.
cheers d998
Absolutely true. No argument.
There would also anecdotally seem to be much disatisfaction with returns from professional management generally?
True. And you need to "identify" their "beliefs" via the .......chart, P&V, ???
And here we also agree, absolutely.
I have the balls to go with a no stoploss based on my analysis.
Do you?
If not, WHY NOT?
That analogy has already been made.
It is my contention, and based on a certain amount of research, that STOPLOSSES do exactly that.............decrease your bottom line.
cheers d998
SOCRATES
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This again, ducatti, is further nonsense, rather like a repetitive tune, yet again played in a different key, at a different beat, but the silly closed loop argument remains the same one.ducati998 said:
No one, but no one, ought to ignore the provision of a stop loss, however proficient you ever become.
To follow on from my post number 73 on this thread, on the previous page, I am willing to take this even one notch higher in the hope it will break the cycle of this silly closed loop argument of yours.
It is this:~
When you finally evolve as a trader such that you consistenly get it right, and I don't mean ten right and one wrong but rather higher multiples than this one, and not just as a persistent and chronic bear in a falling market or a persistent and chronic bull in a rising market, but as an immediate effective respondent to every or nearly every combination of market condition you can immediately imagine and not imagine, day in day out, you are apt to naturally be lulled into a sense of false security that all of this is a doddle.
When you finally and eventually arrive at this level of proficiency as the result of years of hard work on everything including all the work you have to do on yourself, even then you are not safe. You are not safe because you can easily persuade yourself that on balance you are never wrong.This may be correct or not, because you can on occasion take positions at the wrong time, at the wrong price, for the wrong reason, in the wrong conditions, in the wrong direction, for starters and still come out smelling of roses.
Then one day comes along and you are seriously wrong, either for one of the above reasons or because, perversely, in the first place you were right, but no sooner have you committed
than conditions suddenly change and you are no longer right, you are suddenly wrong, seriously wrong.
It is at times like these that a stop, a tight stop, rigidly enforced and sustained is invaluable from you suffering damage, as a result of being in the opposite habit.
No one is exempted from taking sensibe precautions in advance of an event. Not the most experienced or the less experienced or the totally inexperienced. No one. To suggest the opposite is more than ridiculous, it is morally indefensible and cannot be justified on any grounds whatsoever.
Last edited:
darktone
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For sure it doesnt evaluate MARKET RISK! Thats my job! The stop controls the risk of my opinion ('opinion' that ones for u soc
).If im playing a potential turning point in a larger TF id rather have 5 attempts at 8 pips each on tick than the possibility of big time drawdown waiting for the larger TF to 'no longer be valid', let alone event risk
. Has size / % risk been considered yet? because a non-stop vs tight stop RR arnt even in the same galaxy!
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