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LokshinTrader
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I would even say the ratio here is more like ∞:1
LokshinTrader
Junior member
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Trading without stops eventually stops the trading. Simple🤷♂️
Few years ago I used to work with a guy who took interest in trading. Started trading demo and traded without stops. For a good two months he made steady profits. I always told him he will cry one day for not using stops and that day arrived. All profit for the last two months wiped out in space of about two days. He felt so defeated & discouraged that he actually stopped trading (before even starting with real money).
Few years ago I used to work with a guy who took interest in trading. Started trading demo and traded without stops. For a good two months he made steady profits. I always told him he will cry one day for not using stops and that day arrived. All profit for the last two months wiped out in space of about two days. He felt so defeated & discouraged that he actually stopped trading (before even starting with real money).
TLN
Well-known member
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Underlying is wiped out.
But OYW is still +8.75%.
Is it a strong evidence of very great job that Darwinex Risk Manager has done?
If this strategy is profitable. Just, deposit next 100$ and continue. Risk Manger will take care the risk.
However, as investors point of view, it's quite scared. I think!
I disagree. Trading/Investing success has very little to do with stops. It's always first and foremost Risk! If a trader or an Investor (on Margin) risks too much or everything on one trade, no stop loss order will be able to save him. Take the carnage of the EUR/CHF on 15.01.2015, that day even went on to kill some Brokers. Even with a stop loss order in place, there was no scenario where it would have saved the trader from utter destruction. That's because by definition a stop loss is a Market Order and dose not garuantee a fill at the price it's placed.
It all comes back to leverage, to much of it will eventually kill a trading account.
LokshinTrader
Junior member
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But I think there is a difference here. That EUR/CHF crash does not happen that regularly. But price can move against a trader so much more regularly than the frequency of occurrence of such crashes. You know the estimates that good traders predict market movement/direction correctly 65% of the time. If you are above this rate you are one of the exceptionally good traders. But even so no trader can predict the direction correctly 100% of the time. Even exceptional traders get the market directions wrong frequently as well. So the stops are there to prevent unnecessary huge losses against such occasions. Obviously, stops are not the only component that determines success but they definitely have an impact on the success of trading. Stops simply mean defined risk on a trade. So if you don't have stops you haven't really defined risk so you can't manage it, this minimises probabilities of success.
These sort of situations occur more often then not. Sorry I still disagre with your satement. It always depends on the style of trading, underlying and risk per Capital. There are many ways to protect against losses. The first and most important step to protect against unforseen events is always the amount of leverage. By that I mean, Trade Value (underlying x contracts) / Capital = Risk. The higher that ratio, the more a Trader or Investor is at risk.
Then there are methods such as time in the Market, Hedging, pre determined exit point etc. Stopfishing is a very estabilished practice when trading Forex for instance. I personaly don't trade Forex markets, because I have no edge in that enviroment. But edge has nothing to do with "win ratio's" as we can see here on OYW...
CavaliereVerde
Senior member
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Stops are a way to limit risk but can be seen also as an exit strategy.
Every exit strategy has both to make sense and be profitable.
There has to be always a way to limit risk, stops are a way but not the only one.
Every exit strategy has both to make sense and be profitable.
There has to be always a way to limit risk, stops are a way but not the only one.
LokshinTrader
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Yes, this a good example of what the Darwinex signature product is all about.
@CavaliereVerde summed it up well in his portfolio thread 👇
LokshinTrader
Junior member
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I get what you are saying. In principle, this darwin can still be rescued but practically I doubt (I can still be proven wrong). The trader would have to change some things before if can remove it from the "dangerous darwins" list. But if the trader will continue in the same trading style I wouldn't touch this darwin. For example the inverted risk:return ratio & no use stop losses.
Here is the problem: she can deposit another $100, but you don't know when the cluster of bad trades will occur. In this first run it happened after 192 trades. What if after the deposit the cluster of bad trades comes just after 2 trades🤷♂️️ the underlying will be wiped out again. In the long run this strategy is unsustainable.
LokshinTrader
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Just remembered the other day this show I used to watch several years ago. This particular episode reminded me of this conversation👆 with @Sterso7, where he disagreed with my sentiments on stop losses, which is ok, I don't worry about disagreements, this market is too big to agree on everything. Just wanted to share this video👇 with professional trader Garth Mackenzie talking quite a bit about how stop losses actually contribute to trading success.
Do yourself a favour, when quoting someone never qoute out of context, qoute the whole argument. It really dosen't help your argument, on the contrary it makes you look stupid. A bit like todays Fake News press.
I still stand by my point, NO STOP LOSS ORDER would have saved a trader vs. the EUR/CHF or other Black Swan events. It is always leverage. The thing is most traders are way out of their depth when it comes to leverage, if things go well "they look good", but once the tide turns, or sigma event happens, the wheels come of.
There are many traders who where bankrupted on that day, like here one in my country Germany he lost 280k of a 2800 account:
Franken-Kurs: Ingenieur setzt 2800 - und verliert 280.000 Euro
Die plötzliche Aufwertung des Schweizer Franken schockte die Finanzmärkte - und kostete deutsche Kleinanleger viel Geld. Ein 26-jähriger Ingenieur steht nun vor dem Bankrott.
So yes I strongly disagree that Stop loss orders have anything to do with trading success!
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LokshinTrader
Junior member
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Really no need to get worked up. I have already said it's ok to disagree. Really!Do yourself a favour, when quoting someone never qoute out of context, qoute the whole argument. It really dosen't help your argument, on the contrary it makes you look stupid. A bit like todays Fake News press.
I still stand by my point, NO STOP LOSS ORDER would have saved a trader vs. the EUR/CHF or other Black Swan events. It is always leverage. The thing is most traders are way out of their depth when it comes to leverage, if things go well "they look good", but once the tide turns, or sigma event happens, the wheels come of.
There are many traders who where bankrupted on that day, like here one in my country Germany he lost 280k of a 2800 account:
Franken-Kurs: Ingenieur setzt 2800 - und verliert 280.000 Euro
Die plötzliche Aufwertung des Schweizer Franken schockte die Finanzmärkte - und kostete deutsche Kleinanleger viel Geld. Ein 26-jähriger Ingenieur steht nun vor dem Bankrott.www.spiegel.de
So yes I strongly disagree that Stop loss orders have anything to do with trading success!
I didn't quote anything out of context. Actually, your EUR/CHF crash argument doesn't make you look smarter either because the original context here was the fact that Darwin OYW's underlying account was wiped out because the trader didn't use any stops, it was not because of some random market crash.
I wasn't even trying to change your mind, stick to your guns it doesn't bother me. I just wanted to share the video with this community.
